Family feud over estate of bakery magnate, Harbor East developer Paterakis

The second wife of the late John Paterakis is suing the bakery magnate’s children, alleging in a lawsuit she filed Monday that they concealed millions of dollars of his estimated $1 billion fortune to deny her what she calls her “rightful share.”

In a suit filed in Baltimore Circuit Court, Roula Paterakis charged that his six children from his first marriage, a grandchild and two others took millions of dollars from the “cash hoards” the owner of H&S Bakery kept in his office safe and elsewhere.

The lawsuit makes explosive charges and describes a feud within one of Baltimore’s legendary families, including allegations of cash being secreted out of an office safe while the patriarch was hospitalized, and arguments erupting in fancy Harbor East restaurants.

Paterakis, who was 87 when he died on Oct. 16, 2016, famously turned his immigrant father’s small rowhouse bakery into a huge commercial operation that supplies McDonald’s and other major buyers. He also developed the waterfront neighborhood of Harbor East, and was a major political donor to the state’s politicians, from Spiro Agnew, the Baltimore County executive and Maryland governor who became President Richard Nixon’s vice president, to the current Baltimore mayor, Catherine Pugh.

For all his wealth and influence, Paterakis led a largely private life, portraying himself as a simple baker who got lucky, as he said in June 2016 when he was inducted into the inaugural class of The Baltimore Sun’s Business and Civic Hall of Fame. He took the occasion to quote his mother, first in Greek and then translating into English: “Like my mother used to say … everything in life we do it for our children.”

The lawsuit lays bare an acrimonious relationship between those children and his widow, whom he began living with in 2001 and married in 2015.

She is suing Paterakis’ four sons, William, John, Stephen and Charles — who all hold titles in H&S Bakery and its subsidiaries — and two daughters, Venice Paterakis Smith, also known as Vanessa, and Karen Paterakis Philippou. They are his children with his first wife, Antoinette, whom he married in 1950. They divorced about 40 years later.

The suit also names a grandson, Alexander Smith, a restaurateur who owns Ouzo Bay, Loch Bar, Azumi and Tagliata in Harbor East; George Philippou, a son-in-law and general counsel of Paterakis’ businesses; and Peter Grimm, a Paterakis business associate.

Several of the Paterakis siblings and Smith declined to comment for the story, and other defendants could not be reached.

“We categorically deny any of the alleged conduct in the lawsuit,” said David Irwin, a Towson-based lawyer representing some of the defendants. “We look forward to defending the lawsuit in court.”

Another lawyer, representing defendants, Steven A. Thomas, called the charges in the lawsuit “outrageous.”

Arnold M. Weiner, who represents Roula Paterakis, declined to comment on the suit beyond a prepared statement.

“The complaint describes this serious matter in meticulous detail and speaks for itself,” Weiner said. “We will vigorously pursue further discovery and seek a timely trial in which we will ask the court and jury to provide the appropriate remedies.”

The suit said Paterakis promised to give his second wife $20 million when he died, and committed that desire to paper. The suit notes that Maryland law allows her to claim one-third of the estate, which she is seeking.

In alleging that John Paterakis was worth $1 billion, his widow cites a figure that far outstrips the last public estimate of his fortune. In 2010, the Greek-American publication The National Herald estimated that he was worth $240 million. That sum made him the 39th richest Greek-American in the country, according to the publication. After that year, Paterakis asked the publication to no longer include him in their annual tally.

According to the lawsuit, millions of that fortune was in cash. The suit alleges that two of his children, William Paterakis and Venice Paterakis Smith “raided” his cache while he was hospitalized after eating bad oysters.

“In 2013, when John became suddenly ill and was hospitalized, William and Venice raided John’s safe deposit boxes and other cash hoards and took possession of the millions of dollars of cash that John had accumulated,” the suit said.

They also took checkbooks to his “play money” accounts, according to the suit.

“When John was discharged from the hospital and discovered that William and Venice had cleaned out his cash hoards, he was furious,” according to the suit. “John demanded that William and Venice return his cash and his check books … Even after they did so, John complained about their actions, and he reiterated his anger in conversations with family members and friends.”

He later was diagnosed with myelodysplasia, a bone marrow malignancy.

The suit alleges that the defendants funneled Paterakis’ money into a number of “sham trusts.”

In September 2014, for example, the suit says, the defendants created an irrevocable trust into which they transferred approximately $23 million of Paterakis’ assets.

The suit says Paterakis began “pursuing” his second wife in 1993, when she was working at Maryland National Bank. In 1995, she joined Alex. Brown, later acquired by Deutsche Bank, and was a trader in the Equity Finance Division. They started dating in 1997, the suit said.

The suit claims that Paterakis’ children from his first marriage developed “ill-will, malice and hatred toward Roula, and this “malice, as well as sheer greed” led them to seek to “deprive Roula of benefits that she might otherwise obtain upon John’s death.”

The suit points to his grandson, Alex Smith, as bearing “exceptional ill-will” toward his second wife, saying he spread false stories about her and tried to break up the marriage. It describes a scene that purportedly happened on July 4, 2016, at Azumi, where Smith allegedly tried to persuade Paterakis to leave his wife. Paterakis allegedly called his grandson profane names, and said, “You make my life miserable,” the suit said. “Leave my wife alone.” The suit goes on to describe another argument at Loch Bar, a restaurant in the Four Seasons that Smith owns.

Roula Paterakis’ suit said that the defendants made clear they were displeased that he remarried, and “ramped up attacks” on her.

The lawsuit describes attempts to split up the couple by his descendants and even a lawyer who “nominally” represented Paterakis but began to work with his children as the family’s “next generation of leaders.” There were allegations that Roula Paterakis had hired a lawyer “to take over the bakery,” which she denied, according to the suit.

In February of this year, the suit alleges, William Paterakis and Venice Smith filed a “false and fraudulent” inventory of Paterakis’ estate in Baltimore County’s Orphan’s Court, saying it totaled $116,866.56, later updated to $155,354.87.

The suit argues those sums did not include Paterakis’ cash hoards, his “play money” checking and bank accounts, the money in various trusts, or any of his interests in his bakery and development businesses.

jean.marbella@baltsun.com

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