By marblehead@cnc.com Thursday, August 16, 2007

It was a day more than four years in the making. Scholarship winners and their proud parents crowded into a conference room in attorney Robert Welch’s Salem office Monday. Mounds of cookies had been laid out on platters on the table, adding to the festive mood. And there, in the corner, was an artist’s rendition of the man responsible for all the smiles, former Marblehead resident Oliver P. Killam.

Killam died on Feb. 15, 2002, at the age of 94. His will provided for some $15 million in securities to fall to the Oliver Killam Private Foundation, 80 percent of the proceeds from which would be used to fund college scholarships for Marblehead High School graduates, the other 20 percent “to upkeep a children’s room” at the Abbot Public Library.

What seemed like a straightforward bequest proved to be anything but. For one thing, Killam’s death remained hidden for some nine months. Neither Killam’s son, Roger, nor his daughter, Patricia Eggerman, had an obituary or death notice published in local papers, nor did they notify the Marblehead town clerk of the death, according to the complaint Welch would come to file.

The reason, a series of courts would later affirm, was so Eggerman could use improperly the power of attorney she had been granted over her father’s affairs to divert the securities to a private trust benefiting her and her brother alone.

When Welch finally learned of Oliver Killam’s death in September 2002, he rushed into court and was appointed temporary executor of Killam’s estate, thus initiating a four-plus-year battle to retrieve the funds. Over the course of those four years, Roger Killam and Patricia Eggerman, would challenge the validity of the will, claiming, among other things, that Oliver Killam was not mentally competent at the time the will was made and that he was subjected to undue influence in making the will. Welch and his associates, most prominently Frank Muzio, not only had to do battle with Oliver Killam’s children and their attorney but also the IRS, to whom Eggerman and Roger Killam had paid some $6 million in inheritance taxes, a sum that would not have been due had the funds been used for charitable purposes.

Countless court appearances and reams of legal briefs later, the vast bulk of Killam’s estate, some $11 million, was back in control of the charitable trust by the start of 2007, allowing Welch and fellow trustee Scott MacAllister to convene a committee to tackle the happy task of awarding the first round of Oliver Killam Scholarships.

In all, some $270,000 in scholarships was awarded to 30 students, and the amount should only go up in subsequent years as the remainder of the fund is invested. The recipients are not only recent graduates of Marblehead High but also students entering their sophomore, junior and senior years in college. Recipients are encouraged to reapply to renew their scholarships until they graduate.

At Monday’s ceremony, Welch and scholarship committee members and sisters Mary MacAllister and Cheri Saltzman tried to offer a glimpse of the man behind all the scholarship money.

Mary MacAllister noted that Killam was a fixture at many of her family’s celebrations. He was there with a camera, for example, when she came home from the hospital with her first child. Not that Killam was the life of the party. On the contrary, MacAllister explained, one had to draw stories out of Oliver.

She shared one such story, which she said conveyed Killam’s “sense of adventure.” She noted that, after getting married at 17, Killam and his bride embarked on a cross-country drive to California in an era before highways. A graduate of Lynn Classical High School, Killam never attended college. Had he gone, MacAllister explained, he would have probably become an architect.

He instead wound up amassing his fortune both from his company Ivy Hall, which manufactured furniture for schools and libraries (the motivating force behind the beneficiaries of his trust), and playing the stock market. Welch noted that, for a time, Killam’s experience with the stock market was a roller coaster.

“He made a million, he lost a million; he made a million, he lost a million,” Welch said. Then, he stumbled across a certain software company named Microsoft.

“He didn’t know what software was, he just figured people might want it,” said Welch, noting that he also became adept at buying stocks on margin.

Saltzman said that Killam “didn’t believe in handouts” and would have been suitably impressed at how hard all of the scholarship recipients had been working during their academic careers.

Recipients and their parents indicated that the awards were likely to redouble their efforts.

Jimmy Baker, who is entering his sophomore year at Boston College, called the scholarship “really helpful” after BC cut back the financial aid from the package he had been given his freshman year. He said the scholarship came as a total surprise, since the winners from the Class of ’07 had been announced at graduation. He figured he had gotten left out of the loop until a letter arrived in the mail, notifying him of his award. A finance major, Baker said he was particularly inspired to hear that Killam had earned part of his fortune with a bold approach to the stock market.

Ali Letendre, who is about to join Baker at BC, said that, absent the scholarship, her college path may well have take a detour elsewhere to a school with a smaller pricetag.

Neal Imber, whose daughter Michelle is returning for her second year at Miami of Ohio, called the award “life changing for the students.” He said his daughter, who could not attend the reception, was very appreciative.

“She was already a hard-working student, and she’ll continue to work hard,” he said.

Marblehead Fine Arts Curriculum Director Beth Delforge, who served on the committee that selected the scholarship winners, called the trust an “amazing gift” from Killam to local students.

“I can’t get over how many people he will influence, how many families, how many children,” she said. She felt the awards would “propel the students into the next stage” of their academic careers.

Joining Delforge, Mary and Scott MacAllister and Saltzman on the scholarship committee were Steve Flanagan, Muzio, Richard Bowen and Lisa McCarthy.

This year’s winners will be eligible to reapply to retain their scholarships until graduation. Scott MacAllister also urged members of the Class of 2008 to apply for next year’s awards as soon as possible once the school year starts by contacting their guidance counselors.

Welch said that the library had not yet decided how to spend the first installment of its annual windfall, but that he and his fellow trustee Scott MacAllister would be keeping a watchful eye to ensure that the library did not lose any town funding as a result of the gift.

The library will also be the permanent home of the painting of Killam that was on display in Welch’s conference room Monday. As a result, don’t be surprised if traffic picks up on Pleasant Street over college breaks, as a growing group of grateful students drop by to give a nod to a man who put their dreams within closer reach.

By Kris Olson/marblehead@cnc.com
Thursday, December 21, 2006 – Updated: 05:00 AM EST

Barring unforeseen complications, it will be a very happy New Year indeed for the current students and recent graduates of Marblehead High School as well as patrons of the children’s room at Abbot Public Library.

Salem attorneys Frank Muzio and Robert Welch will head into Salem Probate Court Jan. 5 to take one of the final procedural steps to approve a settlement reached with the children of the late Oliver Killam, one which will see the vast bulk of Killam’s estate — some $11 million — placed into the Oliver P. Killam Jr. Private Foundation, a charitable trust.

Under the provisions of Killam’s will, 80 percent of the income on that trust will be used to create “substantial” scholarships for Marblehead High graduates attending four-year colleges. The remaining 20 percent will be used to supplement the Abbot Library children’s room.

If the trust netted $500,000 a year in income (around 5 percent interest, less administrative costs), it would mean $400,000 in scholarships and $100,000 for the children’s room, annually and in perpetuity. Muzio noted that the $400,000 would exceed the sum total of all of the other scholarships currently handed out at MHS graduation ceremonies combined.

Oliver Killam died Feb. 15, 2002, leaving a will, written in 1995, which bequeathed rental properties he owned at 263-269 Pleasant St. in Marblehead to his son, Roger Killam, and daughter, Patricia Eggermann. But the courts have since validated a reading of the will that Oliver Killam’s “cash and securities,” valued at the time of his death at approximately $15 million, were to pass to a charitable trust to fund scholarships and “upkeep” of the children’s room.

On the same day Oliver Killam wrote his will, he also conferred power of attorney to Eggermann to manage his affairs if he became incapacitated. On Oct. 15, 2001, with her father’s health failing, Eggermann misused that power of attorney to “self deal,” creating a separate trust of which she and Roger Killam were the sole trustees and would be the sole beneficiaries upon their father’s death, according to the complaint Muzio and Welch filed in Salem Probate Court Sept. 30, 2002. Eggermann then transferred the millions of dollars worth of securities her father held to the new trust, continued the complaint.

Eggermann and Roger Killam even went so far as to conceal their father’s death by not having Oliver Killam’s obituary published in local newspapers, according to the complaint.

After the Essex County Probate Court determined that Oliver Killam’s will was valid — a decision that has been upheld on subsequent appeals — Muzio and Welch spent the remainder of what has been a four-year legal battle negotiating settlements, not just with attorneys for Eggermann and Roger Killam but also the Internal Revenue Service to whom Eggermann and Roger Killam had paid some $6 million in inheritance taxes on what the courts have since determined to be ill-gotten gains.

Given how rapidly the value of real estate has escalated over the past four years, Eggermann and Roger Killam will not be “left destitute” by the settlement, given that they will retain ownership of the Pleasant Street parcels, currently valued at approximately $2.86 million, noted Welch.

“It’s a win-win for everybody,” he said.

The state attorney general’s office, which oversees charitable trusts, has approved the settlement agreement, leaving the Probate Court as the primary remaining obstacle before the town can reap the rewards of Oliver Killam’s generosity.

Muzio and Welch said that they have already spoken to Marblehead school officials about criteria for selecting the initial scholarship winners. Welch noted that the language in Killam’s will dictates that, rather

than many smaller scholarships, a handful of “substantial” scholarships be created, which Welch envisions would be able to be renewed throughout a student’s four-year college career.

Because charitable trusts are required to dispose of all of their income annually, Welch noted that in the scholarship fund’s initial year, applications will be welcomed from Marblehead High graduates heading into their sophomore, junior and senior years in college, along with members of the Class of 2007. Awards for each recipient would then renew each year through his or her graduation. Welch said that he and fellow Oliver P. Killam Jr. Private Foundation trustee Scott MacAllister would sit on a committee that would choose the scholarship winners.

Muzio and Welch said that they had not yet met with the Abbot Library’s board of trustees but planned to do so in the near future. Welch noted that, in his view, it was Killam’s intent that the money be used to supplement, rather than replace, funding for the children’s room in the town budget, a desire about which he pledged he and MacAllister would remain vigilant.

Library Director Bonnie Strong said that, while the staff and trustees aren’t counting their (several million) pennies just yet, they have been abuzz about the possible windfall. Noting that the current children’s room is prone to flooding and that parking can be problematic at the library, Strong said that one pie-in-the-sky plan that has been pitched is to put the children’s room up on stilts and build parking underneath.

In reality, Strong said that she and the trustees would have to wait and see just how much money becomes available and what type of restrictions are placed on its use before batting around any serious plans.

If the annual amount approached or exceeded six figures, however, “it would be stunning,” said Strong. “It would be very well received.”

By Julie Manganis Staff Writer

MARBLEHEAD-A settle-
ment that will create an $11 mil- lion endowment to fund scholar- ships and a new children’s room at the town library has been reached between the children of a wealthy furniture maker and the town, lawyers said.

Oliver P. Killam was the founder of Ivy Hall, a furniture company that outfitted schools and libraries.

In 1995, he drafted a will leaving the bulk of his fortune to the town he loved so much, asking that the money be used to fund college scholarships and a new children’s room at the Abbot Library. The will left all of his real estate in his two children.

But before his death, one of his two children, Patricia Eggerman, got power of attorney over Kil- lam’s affairs – and, a judge later found, quickly transferred all of Killam’s fortune, at least $15 mil- lion, into trusts controlled by her- self and her brother, Roger.

And when Killiam died in 2002, while living in Nevada, the chil- dren kept it quiet, not even pub- lishing an obituary in the local pa- pers. It took months for Killam’s longtime lawyer, Robert Welch, to learn that his client had died.

That touched off a four-year le- gal battle over the validity of the 1995 will, with Eggerman and Roger Killam contending their fa- ther wasn’t in his right mind when he signed it and Welch and fellow lawyer Frank Muzio saying he was.

In 2004, an Appeals Court Judge ruled that the will was valid and ordered that the money be turned over to the town to create the scholarship and library fund.

Now more than two years after that ruling, that is about to hap- pen, said Earl Weissman, a lawyer for the town of Marblehead.

The settlement must still be ap- proved by a judge, but Weissman and Muzio say that it has been signed by all parties.

And while the town won’t re- ceive quite as much money as it

initially expected, “I think the town came out OK.” Weissman said.

“We were going to end up with nothing after what the kids had done,” he said.

Muzio and Welch spent months tracking down the money Egger- man had moved into other
counts. He believes they managed to recover about 87 percent of what they knew about.

The money will now be turned over to the Oliver P. Killam Chari- table Fund, which will invest the money. Earnings on that $11 mil- lion endowment – estimated at $400,000 to $500,000 a year – will be divided 80-20, with 80 percent funding the Oliver P. Killam Schol- arships and the balance going to
the library.

The first of those scholarships is expected to be awarded this June, Muzio said.

Eggerman and Roger Killam re- received their father’s real estate, in- cluding a 14-unit apartment house on 5 acres of land, currently as- sessed at just under $3 million.