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Lawyers for estate: Hsieh's state of mind made him 'vulnerable to exploitation'

LAS VEGAS (KLAS) — In the months before his death, former Zappos CEO and Las Vegas entrepreneur Tony Hsieh was running out of cash as he planned a time-traveling spaceship and theme park where visitors would pay in seashells — all while living in an environment where those around him allegedly took advantage of his deteriorating mental capacity, lawyers for his estate claim.

Hsieh died in a house fire in November 2020 in Connecticut. He was 46. In December 2020, a judge named his father, Richard Hsieh, and brother, Andrew Hsieh, as special co-administrators of his estate since the late tech visionary did not have a will. Andrew Hsieh resigned as a special administrator in July. The lawyers representing Hsieh’s estate make the new allegations in their response to a lawsuit from Hsieh’s former lawyer, Puoy Premsrirut, who is seeking payment per a creditor’s claim.

Lawyers for Hsieh’s estate have repeatedly written in court documents that Hsieh did not have the mental capacity to sign off on contracts in the months and years leading up to his death.

“In the months leading up to his death, Tony’s mental and physical condition rapidly deteriorated,” the updated court documents filed Friday said. “Tony suffered from paranoid and disorganized delusional thinking and engaged in erratic behaviors that posed a danger to himself and others. As a result, Tony was unable to exercise reasonable diligence and judgment in his health and business affairs and vulnerable to exploitation.”

As the 8 News Now I-Team has reported, while Hsieh lived in Las Vegas, he had purchased several properties and was living most of the last year of his life in Park City, Utah. Previous court filings have estimated his wealth at nearly $850 million.

In a court filing from earlier last month, lawyers for Hsieh’s estate claim “the balance on Tony’s line of credit ballooned to more than $250 million through a series of transactions,” including a $2.2 million fixed-fee for Premsrirut, a $7.5 million contract for another man to provide “financial consulting services,” a third contract worth $30 million for another man to “operate a boat bar and ice castle” and the purchase of the Zappos headquarters “for nearly $40 million more than its value.”

In addition, documents filed Friday said, “Tony was in a ‘CODE RED’ negative cash position” as two of Hsieh’s confidants, Connie Yeh and Chrissie Yim, “[doubled] their salaries,” received “excessive bonuses” and money toward other projects. The documents include the claim that someone accessed payroll software to raise their salaries.

In court filings, Hsieh’s former assistant Jennifer “Mimi” Pham claimed Hsieh gave power of attorney to Yeh. Previous reports have indicated Yeh is Hsieh’s cousin. The signed document indicates the power of attorney began in October 2017 and was to expire in 2030.

“Despite Yim deeming the situation ‘CODE RED,’ Yeh (who received the daily liquidity tracker and assisted in its preparation) and Yim abused their positions of trust and confidence to further exploit Tony for their own personal benefit,” the estate lawyers said. “Yeh and Yim both wired millions of dollars from Hsieh’s accounts to their own owned-and-managed entities in the weeks after Hsieh’s death, lawyers for the estate claim. Neither Yeh nor Yim disclosed these self-directed payments to the estate or its representatives (despite working for and with the ESTATE for months following Tony’s death). Indeed, at the time Yeh and Yim paid themselves in December 2020, Yeh and Yim lacked any authority to exercise control over any of Tony’s accounts.”

Lawyers for the estate also allege for the first time in court documents that Hsieh planned to lease a Utah film studio where he would build “a time-traveling rocket ship.”

Documents filed last month provided new insight into a large project in Park City, which Hsieh was reportedly working on and funding in the months leading up to his death. Around this time, lawyers for Hsieh’s estate said Hsieh “became fixated with [a] tarot card deck” he called “Earth Warriors” and believed “he had discovered the algorithm for world peace.”

The Park City Project was to be built as a ranch where visitors would be “centered around the idea of no shoes, no tech, and no obligations,” lawyers said. According to court documents, Hsieh referred to the park as “Disneyland 2.0” and “County Zero.”

The ranch, or “cashless theme park” was to require tarot cards for entry, the filing said.

“Once inside the park, visitors would participate in activities to earn seashells that could be exchanged for food, balloon rides, and spa days. After 100 hours, guests would leave the theme park, in Tony’s mind, committed to Country Zero and world peace and would continue to live on Earth Time from their personal residences,” lawyers said.

As the 8 News Now Investigators previously reported, throughout 2020, lawyers for Hsieh’s estate said, “continued [abuse of] hallucinogenic and dissociative substances, including nitrous oxide, which combined with his delusional thinking, fundamentally destroyed Tony’s ability to exercise reasonable diligence and judgment, and rendered him vulnerable to those seeking to take advantage of him,” they wrote in court documents.

During a trip to a rehabilitation facility that year, “Tony was very altered in his mental status and would say “unusual things” (that unbeknownst to medical providers, was typical for Tony at that time) like he could “stop his heart at will and could do it with his mind.” Police also told providers that Tony’s house was “completely trashed” and that Tony was “doing a lot of damage to it internally.”

In addition, the newly filed documents indicate some encouraged Hsieh to sell some of his properties for cash.

“It was clear to anyone who spent time with Tony that he was not in any condition to plan, analyze, or negotiate any business deals,” lawyers said. In July 2020, months before Hsieh’s death, Hsieh’s “longtime general counsel departed, describing Tony’s situation as an approaching freight train she could not stop but which she did not want to enable,” lawyers wrote in court documents.

“Motivated by his need to raise capital to pursue his fantastical ‘Park City Project,’ Tony initially entertained their offers to sell a portion of his Las Vegas holdings for over $100 million below market value,” lawyers wrote Friday.

A month before his death, Hsieh purchased the Zappos campus for $70 million, “over $30 million more than the property’s value as of Tony’s date of death just five weeks later,” lawyers for the estate said.

Premsrirut later “consulted with a medical doctor to discuss having Tony involuntarily committed,” lawyers said.

“Just weeks before his death Tony was taken to the emergency room after stating that he believed that he was ‘crystalizing,’ that he believed he was in a simulation, that he had been chewing cigarettes, and professing, ‘I just don’t know what’s real and what’s not,’” court documents said.

Before the 2020 fire, Hsieh had retreated to a shed at a Connecticut home after a fight with his girlfriend and was using a propane heater to stay warm before the fire that killed him, the 8 News Now Investigators reported.

According to witness reports, Hsieh was lying in a storage area with a blanket near candles. Part of the blanket and a plastic bag had caught fire earlier in the night, the report said.

A court date on this matter was not scheduled as of Monday.

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