Eccentric might be a kind word for the shipping magnate Larry Hillblom, who put the “H” in the world’s largest courier system, DHL.
A genius, undoubtedly, he revolutionized how the world communicates, helped upend long-standing institutions and had a savant-like ability to use legal loopholes to his advantage. He did this wearing dirty jeans and novelty T-shirts, which served to highlight his unnaturally round “baby face,” according to a book on the relatively unknown mogul called “King Larry.”
Like with other self-made billionaires (Steve Jobs comes to mind as a close kin, down to their pathologically casual attire) genius goes hand-in-hand with general unpleasantness. And this is certainly the case with Hillblom.
To escape taxation, he moved to an island in Micronesia, where he earned the title King, all the while pillaging its underage natives (he claimed to have bedded 132 virgins during that time).
Yet, despite his crazy life that seems lifted from the headlines, the man remained in relative obscurity — and even his death in a plane crash is still uncertain.
Hillblom grew up as the stepson of a peach farmer in California’s Central Valley. His biological father died when he was 2 and his mother remarried a farmer, from whom he learned the value of hard work, but he knew from a young age that he was destined for greater things.
“Someday,” he told a friend. “I’m going to move far way, and I won’t write any letters.” He added, “I’ll call you once in a while but I will not write any letters.”
He fixated on fellow eccentric Howard Hughes at a young age, even aping some of his behaviors. Like Hughes, he had a “irrational hatred of his mother,” author James Scurlock writes in his new biography.
“Larry would tell his friends all these amazing things that his mother had done for him, and then he’d be like ‘that bitch,’ ” Scurlock writes.
Also like his hero, he developed “quirks” — carrying Lysol and ketchup bottles because of a claimed germaphobia, though the author believes this was more of an affectation than true paranoia.
He did “the switch” at a young age, transforming himself from a nerdy momma’s boy and a devoted Lutheran into a popular class president who bought a Corvette from the money he made from his stock-market winnings. After a year at community college, he attended Fresno State and then the University of California at Berkeley’s law school. There he dumpster dived and lived in cars to make ends meet.
He only returned to his hometown a handful of times, before he disappeared from his mother for the next quarter-century.
Hillblom’s idea for DHL came from the job he had working for courier company MPA, moving documents from Oakland to Los Angeles, exchanging the papers for new ones, and flying them back again.
In 1969, he developed a courier system of his own, with the help of a middle-aged MPA salesman named Adrian Dalsey, who was the “D” in DHL; the “L,” Robert Lynn, dropped out before the company started up. Eventually, Hillblom bought the older salesmen out.
It was simple but groundbreaking: DHL would help cargo save money by getting documents to customs before the ship docked, saving the company days or weeks at port. This was a full four years before FedEx entered the game.
They hooked in top clients like Bank of America and Standard Oil. From 1969 to 1971, sales increased by 1,000%, from $64,750 to $661,376.
By the third year, it was a million-dollar operation, though still a fly-by-night one. Hillblom and his friends often hand-delivered papers, flying between the West Coast and Hawaii, where DHL was headquartered.
And not everyone was a fan.
DHL battled several more established institutions, including the US Post Office, which saw this express courier system as a threat to its monopoly over mail. By 1979, DHL prevailed, and the Postal Service was no longer the only game in town. DHL was now operating in 120 countries.
Meanwhile, Hillblom’s unorthodox and often counterproductive behaviors were starting to plague his business partners. When stories hit the US about Hillblom’s escapades in the Middle East, which included getting into a near-death motorcycle accident and engaging in coke-fueled parties with sheikhs and high-end prostitutes, his partners urged him to quit. He did, but retained his controlling stake in DHL — and never allowed the company to go public until his death in 1995.
In 1981, he relocated to Saipan, a US commonwealth isle in the Northern Mariana Islands in the Pacific. “It was similar to the Western frontier of the US,” says Scurlock. “Relaxed immigration policies, legal prostitution. Larry could make it his playground.”
But the main attraction was its tax-haven status. Every resident got a 95% rebate on their income taxes, a huge sum for the nascent billionaire. At the end of the day, he was “not a a tax evader, but a tax eluder.” Tax evasion is illegal, tax eluding takes smarts, Scurlock explains.
He treated the island like his private domain, driving his DeLorean, a gift to him by a Saudi prince (although he preferred his roughed-up Suzuki). He was an unlicensed pilot who often flew even though he had notoriously bad vision. In 1993, he nearly died when his vintage plane crashed, causing his lung to collapse. But Hillblom always exploited an opportunity and asked the doctor to give him a face-lift that made the 51-year-old look 10 years younger.
He opened a restaurant, bought the island’s bank, its cable and phone company, and drove a delivery truck for the newspaper he published. Sometimes, he even bartended at a beachside restaurant where he was “known less for the quality of his drink than for his proclivity to throw people out — even his friends — if he didn’t think that they were spending enough money,” writes Scurlock. Often, locals saw him dancing to his favorite song, “Every Breath You Take” by the Police.
Teenage Asian prostitutes were his favorite hobby. He boasted to friends that he spent $10 million on women — paying extra for a virgin, a “cherry fee,” because he was deathly afraid of getting AIDS.
Most of these young women, some of whom were hardly even teenagers, were forced by their parents to get into the sex industry so the family could repay debts. One girl, Josephine, whom he met as an 18-year old “waitress,” became his girlfriend, though he refused to marry her, write her into his will or stop cheating.
Still, Hillblom was a hero among the islanders, who saw him as their savior against the US government, which they felt mistreated them.
But it was mostly for his own benefit. When fighting Continental Airlines for control over Air Micronesia, he used the court system, eventually filing for bankruptcy — forcing the powerful company to try their case in Saipan. He not only got control of Air Micronesia, but he became the largest individual shareholder of Continental.
Hillbolm also successfully sued the US government for its treatment of locals, persuading a judge in Guam to sanction the US for not issuing enough passports to Mariana residents. He became president of the Bank of Saipan, ran for office and even served as the Special Justice of the Supreme Court of the Northen Marianas.
In 1991, he filed a lawsuit on behalf of the citizens of Saipan against the inspector general (who had been trying to get to Hillblom’s tax returns). When the suit came up in court, none other than Hillblom himself was presiding over the court as judge. Instead of recusing himself, he rendered his decision: The inspector general was not allowed to audit tax returns of commonwealth citizens. Advantage: Hillblom.
He may have seemed to have it all figured out — but cracks started to form in his business and personal life. He failure to report various incomes, including the sale of DHL shares to Japan Airlines and Lufthansa, made him owe the IRS a total of over $29 million.
Also, the $120 million that he had invested in Vietnam was not going as planned as projects ballooned in budget. In doing so, he also had violated the United States’ Trading with the Enemy Act.
Meanwhile, a “crazed” woman followed him around insisting that he pay child support for the boy he fathered.
With these pressures mounting, Hillblom boarded a World War II-vintage Seabee plane on the morning of May 22, 1995 and was never seen again. The plane’s wreckage and the bodies of two of its other passengers were recovered. But Hillblom’s body was never found.
“Larry loved to have fun, and his life was not very much fun at the end,” explains Scurlock. “Some people think he committed suicide, some people think he’s really not dead, that he never got on the plane in the first place. There’s speculation that it was a great practical joke.”
Though Hillblom had a will in place, it was only 11 pages. In it were 20 references to not paying taxes.
Yet Hillblom made one mistake: He never altered his will to exclude the possibility of heirs coming forward for inheritance. It was no surprise, then, that eight children (all from different mothers) claimed to be heirs.
In the end, only four were able to prove that they were related. But the damage was done: Each of them received $90 million.
Like lottery winners, it hasn’t been smooth sailing for Hillblom’s children. The most famous son, Larry Hillbroom (the last name was misspelled by his mother), a striking image for his father, was 11 when Hillblom died. Just a few years ago, he was arrested for possession of methamphetamine and for trying to bribe a police officer.
But Hillblom would roll around in his watery grave if he heard the next part of the story. Hillblom initially arranged for his estate to end up in an untaxable trust, but since his heirs came forward, a sizable portion of the fortune became subject to an inheritance tax. Scurlock estimates that the IRS got $100 million from him.
His lifelong quest to foil the government was foiled by his loins. “I think he’d be beside himself to know that the IRS got that much money,” Scurlock says. “He didn’t want the IRS to get a dime. That they got so much would have upset him very, very much.”