The War for Ted Ammon’s Children

New Beginnings: Top, Ted and the twins, in Big Flower tees, celebrate his new company in 1993; below, Generosa and Pelosi in England last year.Photo: Courtesy of the Ammon family; Lee Busford/Rex Features

It was Easter weekend, 2001—six months before Ted Ammon was murdered—and Sandi Williams had taken the two flights from her home in Huntsville, Alabama, to visit her multimillionaire brother in New York. She remembers how Ted had been aching to get out to East Hampton with his two kids and three dogs: He’d even purchased a black Chevy Suburban for the occasion (deciding that neither his Porsche nor his BMW was up to the task), and he had arranged for Easter eggs to be hidden on the grounds of his gabled English-style country house on secluded Middle Lane.

Sandi had always thought of her younger brother as a man of action: He’d made his first $50 million deal before he was 40, as a star banker with the leveraged-buyout firm Kohlberg Kravis Roberts & Co., and a decade later he was still riding motorcycles and running marathons. But she had watched as his custody battle with his wife, a former artist and real-estate agent named Generosa, had chipped away at him. Pickups and drop-offs of the children, 11-year-old Ukrainian twins named Alexa and Gregory, were full-blown diplomatic disasters. Generosa—blonde, trim, and tightly wound—would pick fights on street corners, jabbing and poking at her husband as Ted, a lanky six foot four, bobbed and weaved, desperate not to provoke her.

Generosa had negotiated at the last minute for Good Friday with the children. On Saturday morning, Sandi and Ted went to collect them at the Stanhope Hotel, where Generosa was living with them and her new boyfriend, Dan Pelosi, while they were sinking more than $1 million of Ted’s money into the renovation of a $9 million townhouse on 87th Street just off Fifth Avenue. Alexa and Grego appeared at the elevator; their scowls suggested something was up. Accompanying them was Generosa’s butler, Steven Guderian, who would later sue Ted for millions of dollars in supposedly promised bonuses. “You tell your father what the truth is,” he instructed the kids as they left. Ted started seething.

“I thought, Ohhh, boy,” Sandi remembers. “These kids have been set up to make this weekend absolutely miserable.”

The kids waited to explode until, in the living room of Ted’s Fifth Avenue apartment, he asked them to get ready to go to the beach house, one of his five homes. That beach house was Mom’s, not Dad’s, they snapped; he had no business being in that beach house ever again. Then came the rough stuff: “Mom says you cheat at business! Mom says you have a secret girlfriend—and a 2-year-old son! Mom says you spy on us with hidden cameras! Mom says you should give her all the money! You can always make more!

Ted sat in silence, collecting himself, before he spoke: “None of what you just said is true. Your mother has told you lies about me.”

“No, she hasn’t!” Sandi remembers them crying, finishing each other’s sentences. “She wouldn’t lie to us!”

Ted took a deep breath. The son and the spying, he flatly denied; the girlfriend, he sidestepped.

“I’m separated,” he said. “I have dated several people. But there’s nobody I’m ready to introduce you to.”

“But we know all about Danny!”

The children didn’t really know everything about Dan Pelosi—as Ted had once remarked to a friend, Generosa’s boyfriend had a rap sheet “as long as my arm”—but he let that one pass. Instead, he let loose a brief salvo in his own defense. “I don’t cheat at business,” he said. “And I am furious that you would be told something like that.”

The egg hunt was canceled. A tense Manhattan Easter followed.

When Ted left KKR in 1992, he reshaped his life around his newly adopted children. Starting his own business, he’d take them along on private planes as he globe-trotted; in New York, he regularly skipped meetings to take them to ball games. Now they appeared to be slipping away. Sandi Williams considers herself a no-nonsense Southerner—by choice, not by birth; she and Ted grew up outside Buffalo—but even she found herself speechless. That weekend, she lost any hope for a domestic armistice. “For the first time,” she recalls, “I thought things wouldn’t ever calm down. I just thought, Generosa’s not gonna let go.”

In phone calls over the summer, Ted supplied Sandi with a play-by-play of his wife’s increasingly bizarre behavior: how she told the kids he was spying on them via a satellite dish on the roof of the Metropolitan Museum of Art; how she would run up tabs of tens of thousands of dollars at the Stanhope with her boyfriend, holding court at the bar for hours and leaving $200 tips. Sandi wasn’t exactly surprised. The previous year, Generosa sneaked through the doggy door of their beach house just before midnight, suspecting Ted was with a girlfriend, and, finding he was alone, screamed at him and even kicked one of the dogs while the children waited in a car outside.

“She’s crazy,” he’d say again and again.

But as summer turned to fall, Sandi and her husband, Bob, noticed that Ted’s mood had darkened. “She wants me dead,” they remember him saying. “I think she’s going to kill me.”

On Monday, October 22, 2001, Ted Ammon’s body was discovered in the bedroom of his house on Middle Lane. Police said he had been beaten to death, but there were no signs of a break-in; the house’s alarm system had been disarmed. Murder a short bicycle ride from the Spielbergs’ and the Seinfelds’ doesn’t happen every day: Rumors raged about a business deal gone sour, or, to the bafflement of Ted’s girlfriends, a disgruntled gay lover. But no one failed to notice that the electrician who had installed the alarm system was Dan Pelosi, the same hard-drinking, parole-violating ex-con who happened to be working for—and sleeping with—Generosa Ammon.

Ted’s friends waited, incredulous, as police failed to make arrests, much less name suspects; even now, nearly two years later, charges have yet to be filed. Twelve weeks after the murder, Generosa, still Ted’s wife at the time of his death and therefore the principal inheritor of his estate—now valued at $54 million—married Pelosi and whisked the children away to Coverwood, the Ammons’ 22-room mansion in Surrey, England. If they’d planned on making a new start of it, it didn’t pan out: Pelosi was forced to return a month later to face drunk-driving charges and was eventually jailed for four months. By spring 2002, Generosa had decamped with the twins from the seventeen-acre estate to a modest house in Dan’s working-class hometown of Center Moriches, Long Island. There she was diagnosed with breast cancer—which she blamed on Ted—and those close to her say she now has months, possibly weeks, to live.

Last week, on July 2, Generosa and the twins moved back to the scene of the crime—the house on Middle Lane. Pelosi stayed behind in Center Moriches. “I think he’s attracted attention that has violated her sense of privacy,” explains Generosa’s lawyer, Michael Dowd. “What she needs now is the capacity to rest and to be with her children.”

Making provisions for her death, Generosa has designated their British nanny, Kathryn Mayne, as the children’s standby guardian. In response, Sandi Williams has filed a petition for custody of the twins, offering as evidence a bombshell psychologist’s report that makes Generosa out to be a psychopath.

But this is not the only new front in the Ammon war. Two weeks ago, the case of the murder of Ted Ammon, mulled over for so long by both real and armchair detectives, was finally brought before a Long Island grand jury.

On a bookshelf in her ranch house in Huntsville, Sandi keeps a few mementos of her brother: his dime-store reading glasses; accolades from Bucknell, his alma mater, to which he had donated $15 million, and from Jazz at Lincoln Center, where he was named chairman the spring before his death; and snapshot after snapshot of Ted and her family with the twins.

Sandi hasn’t seen Alexa or Grego in almost two years. A week after their father’s murder, they sat with her at Ted’s memorial service in Alice Tully Hall, listening as one speaker, Mark Angelson, Ted’s business partner, locked eyes with them and said, “This is a confusing time for you guys, but don’t be confused about this—your father was a wonderful human being. You were the most important things in his life. He would fight to the end for the people he loved.” Sandi, using two different intermediaries, had requested that Generosa stay away from the memorial—though, in a conciliatory gesture, she also let Generosa know which entrance to use to avoid paparazzi in case she did come. She didn’t.

A few weeks later, Sandi called Generosa and was smacked with a ten-minute tirade—about how Sandi should apologize, about how Generosa was broke, about how the co-executor of Ted’s estate, J.P. Morgan Chase bank, was trying to deny her access to Ted’s money until the conclusion of the murder investigation. When Sandi asked to see Alexa and Grego, Generosa refused, snapping: “You can’t just have lunch with the children like nothing’s happened.”

“Believe me, Generosa,” Sandi replied. “I know something’s happened.”

The judge ordered the children to have cell phones so they could speak with their father, but Generosa convinced them that the phones would cause cancer.

Sandi had no way to reach them; even their e-mail accounts had been changed. She searched for a means to sue for custody and found herself in a Catch-22: Because police had not named Generosa and Dan as suspects, Sandi would have to prove in court that Generosa was an unfit parent without saying what so many were whispering—that Generosa was involved in their father’s murder. This spring, when her lawyers learned that Generosa appointed the nanny guardian, Sandi found the opening she needed.

Now Generosa’s lawyers are gearing up for a court battle. “Ms. Williams was not close to the children,” claims Dowd. “Gee, she’s saying their mother might have been involved in their father’s death? If you were the mother, would you expose the kids to this woman?”

Sandi is a 55-year-old grandmother who has raised three children in Huntsville. She’d like to raise two more. Of course, she knows that when their mother dies, the children stand to inherit millions, but Sandi is focused on re-creating Ted’s suburban childhood for Alexa and Grego. She and her husband Bob, 56, a doctor who also dabbles in real estate, have the kids’ teenage years plotted out, right down to spots in a local private school, the Alabama youth tennis league, and the youth group of the Presbyterian church where Sandi teaches Sunday school. “I think they’ve been uprooted so many times they don’t have roots anywhere,” Sandi explains, sitting with Bob in their tan-carpeted sunken living room. “I think it might be advantageous for them to live in a place where there are none of these crazy memories. You know, it might be good for them to have a fresh start.”

That’s the carrot. The stick, of course, is what she and her husband are saying—for the first time publicly, and potentially under oath in a custody or murder trial—about Ted’s fears in his final weeks.

“We begged him to get a guard,” says Bob.

“His colleagues did, too,” adds Sandi.

“I had a chat with him on the phone not long before he was murdered, and it was just clear to me she was not stable at all,” Bob remembers. “He was afraid she was gonna kill him. It was obvious he was aware it was a possibility.”

Ted Ammon had the gift of making an extraordinary life seem ordinary. He’d go shooting in Scotland and skiing in the French Alps and stop off for dinner in London in between—“always three and a half to six minutes late,” as his friend Wynton Marsalis puts it. But he also wore only one good belt, which he took with him to each of his homes, and regularly mismatched his clothes. On the way to see Bill Clinton to solicit support for Jazz at Lincoln Center, he discovered his tie and shirt had pizza stains. “My sense was he’d been immersed in the business world for so long, he had a little-boy wonder about all the things he could do in his life if he had the time to do it,” says a woman who dated him the last summer of his life.

Brought up in East Aurora, New York, twenty minutes outside Buffalo, Robert Theodore Ammon vaulted from a Beaver Cleaver childhood—dinner at 6:30 p.m., baseball and swim meets, church on Sunday—into the financial big leagues. A much-envied photographic memory was of some use; so was a relentlessly competitive spirit. “Everything always had to be a competition, from the time he was in the third grade,” Sandi says. “Except with me, because I wouldn’t compete with him.”

He entered Bank of America’s executive-training program straight out of Bucknell. There he met Randee Day, another member of the program, and the two married in 1973 and moved to England. “I think he was always about ten steps ahead of everybody,” remembers Day, who says their parting in 1982 was amicable. He studied on his own to become a solicitor while living in England and passed the New York bar the first time without ever taking a law-school class. One friend remembers him being so focused that he kept perfectly composed during a business deal even as he learned that his father had died.

In 1983, after his law firm finished work on a deal with KKR, he jumped ship to the LBO firm. “He came up with a deal a minute,” one colleague from the company remembers. “One we joked about was buying the Postal Service.” Like others at KKR, he became a multimillionaire from the fabled RJR Nabisco deal. He made good use of his toys, but until his final years, some friends say, he wasn’t accustomed to being this rich. On occasion, he’d be imperious; at other times, distant. “He wasn’t a complete person,” says one colleague who considered Ted a friend. “There was a chunk of him missing. He’d sort of disappear on you. You’d be talking with him, and suddenly he’d drop out of sight for a few days.” While jazz had been a lifelong passion of Ted’s, some of his friends remarked that they didn’t even know he liked it until they heard Ted had become chair of Jazz at Lincoln Center.

Ted married Generosa in part because she seemed to fill some of his gaps. “He liked having a wife who handled all the details, down to the last teacup,” a friend says. “And I think her sarcasm and her snarkiness were appealing to him. She didn’t care who you were—you could be a judge or the queen of England. I think he might have thought it was funny and appealing, until it turned on him.”

Like her children, Generosa Rand Ammon Pelosi was an orphan. She told friends that she never knew her father, an Italian soldier who was a one-night stand, and that her mother died of cancer when she was 10. Generosa and an older sister then lived with adoptive parents in California, but she told friends that the sister died in a car crash when Generosa was 17, leaving her alone. One friend remembers Generosa saying she was neglected and abused. “The way she overcame it,” the friend says, “was she became very focused on her art.”

After graduating from the University of California at Irvine in 1981, she moved to New York to be an artist—using found industrial objects—and paid the bills by working as an apartment-rental agent. One of her clients was Ted Ammon. By the time they married in 1986, friends say, her artistic ambitions had fizzled. “She told me she wanted to concentrate on her husband and his business and all the things that Upper East Side wives and mothers had to do,” says one friend. “I found that strange. I know wives and mothers who had enough to do without concentrating on their husband’s jobs.” Generosa’s medium had, in effect, changed—from sculpture to elaborate parties and tastefully decorated homes showcasing an ambitious contemporary-art collection.

Generosa went through several painful years trying to have children, resorting to in vitro fertilization, though some remember her ambivalence on the subject. “She would be quick to tell you she was an orphan and went from orphanage to orphanage and that’s why she didn’t like kids,” says one friend of Ted’s. “It surprised me that she wanted children.” But in Alexa and Gregory, Generosa found two children she could save from her own fate. Generosa and Ted traveled several times to see them in a Ukrainian orphanage before the adoption came through; Sandi and Bob remember them calling in a panic with news that Alexa was in the hospital with what was thought to be hepatitis (it turned out to be tuberculosis). “Oh, bring her home,” Bob said with a laugh. “If you’re gonna have sick kids, you might as well get started now.”

As toddlers, Ted and Generosa’s kids led charmed lives: Alexa attended Chapin, and Grego went to St. David’s. They’d bike around Central Park, racing their jogging father. Grego’s first English word was taxi. “Grego was a lot like Ted—very extroverted, very fun,” remembers Ted’s niece Wendy Simmons, a daughter of Sandi’s who lives in Manhattan and often visited Ted and the kids. “He was a ham. Alexa was maybe more serious. But they were so close to each other. Alexa even played on Grego’s hockey team at St. David’s.” Leaving KKR, Ted named his new business Big Flower Press, a company that published ad inserts for newspapers, after one of the kids spotted a field of sunflowers during a car trip and shouted, “Big flower!”

The company eventually grew to include 32 businesses with revenues of $2 billion; Ted sold it and ran a private-equity venture-capital business called Chancery Lane Capital. Behind him was a wife who became increasingly uncomfortable with her role as homemaker and hostess. Bob Williams remembers being on the back patio with Generosa at the beach house on Middle Lane: “ ‘I’m the one that really made Ted,’ she’d say. ‘I need some credit. He could never have done this without me.’ I thought she was joking, to tell you the truth.”

In fact, Generosa wanted it in writing: She and Ted were drafting their wills in 1995 when, Sandi recalls, “they were arguing. She wanted to be named vice-president of his company, to take over if anything happened to him. He did not want her to be involved in his business at all.”

A pattern emerged: Generosa would explode, Ted would clean up. “He kept losing friends because of Generosa,” one colleague says. “Suddenly they wouldn’t be friends because Generosa would say, ‘Get rid of them.’ ” In 1999, the family moved to the Surrey estate, perhaps to reinvigorate the marriage. Sandi remembers everyone seeming fine during a Memorial Day– weekend visit in 2000. But when the Ammons returned to New York that summer, Generosa was looking for a divorce lawyer.

A source close to Generosa says she discovered Ted had started an affair with his first wife (an accusation that Randee Day denies, although they did have lunch a few times); she also accused Ted of fathering a son with a blonde investment banker he was seeing (though sources close to Ted deny it). Ted’s friends say he couldn’t handle Generosa’s instability. In either case, Generosa clearly felt betrayed. “Part of the electricity there was a woman scorned,” one person who knew her says. “Whether it was in the courtroom or in the Stanhope Hotel or in the street, she would yell at him. She’d claim he didn’t care about the kids and ruined their family life.” When the judge ordered the children to have cell phones so they could reach their father, Generosa convinced them that the phones would cause cancer.

For all his vaunted competitiveness, Ted wouldn’t go toe-to-toe with his wife. Even as the divorce proceeded, Ted continued paying for Generosa’s home-improvement obsession. And when the townhouse renovation blew its completion deadline by a year, he became convinced that she was using the project to drain money from him. Of course, that money was also supporting Dan Pelosi.

With his high-school equivalency diploma and dem-and-dose manner, Pelosi was, if not a rebound guy, something of a fixer-upper. “He looked like a classic low-level mafioso in caricature,” says one observer, “all in black, black silk shirt and jacket, greased-back hair, no socks, and loafers.” The truth about Pelosi is less romantic. Born in 1963 in Flushing (he’s six years younger than Generosa), he started drinking heavily at 13 and perhaps never stopped, according to documents from rehab, often blacking out and hallucinating. He checked himself in to Pilgrim Psychiatric Center in 1984, saying he’d had a case of beer every day for eighteen months. He did coke and heroin, spent some time as a dealer, and, at 20, married his pregnant girlfriend, Tammy; they had three children. He had worked in construction until a 1982 injury; then he’d worked off the books while pursuing a personal-injury suit, depending heavily on Valium and booze and spending more than a decade on and off welfare.

In 1995, during a psychological exam for the lawsuit, Pelosi managed to convince the psychiatrist, according to a detailed eleven-page report, that he was an “immature, paranoid, insecure, and antisocial personality.” Pelosi bragged with “zest and enthusiasm” about his past drug dealing and credit-card fraud. The psychiatrist doubted that the injury could have caused Pelosi’s various psychological problems. He also predicted Pelosi wouldn’t stay on the wagon. As recently as days before he married Generosa, Pelosi got punched out at the Mustang Grill on the Upper East Side after buying hundreds of dollars in rounds of drinks.

He couldn’t have been more different from Ted—and some say that was part of the attraction. “Part of it was romance,” says one friend. “Part of it was alcohol. Part of it was rebellion! She was gonna throw him into her society, and Danny and her society were not an easy mix.”

As the divorce started getting nasty, the judge in the case, Marilyn Diamond (who is now making her own headlines in a conflict-of-interest case), ordered a full psychological evaluation of the children as well as the parents. Psychologist April Kuchuk spent fifteen hours over a two-year period interviewing Generosa. In her report, excerpts of which were obtained by New York, she wrote that “the pattern and magnitude of her symptom profile is considered in the clinical range of psychopathology.” Generosa displayed signs of borderline personality disorder, narcissistic personality disorder, and paranoid personality disorder—and her behavior, Kuchuk found, affected her children as well as Ted. “She would not permit her children to express any positive feelings toward their father,” she wrote, and even “rejected them for going on court-ordered vacations with their father. Upon their return from one trip, she refused to talk with them for several days.”

Generosa’s arm’s-length parenting style clearly alarmed the psychologist: “She kept her 11-year-old son in Pullups rather than address his nighttime bed-wetting.” Kuchuk thought the children were in desperate need of psychotherapy, but “Ms. Ammon stated that she was too busy to interview therapists.”

But it’s how Generosa handled Ted’s death that most damned her in Kuchuk’s eyes. “Ms. Ammon told Alexa and Gregory that their father had committed suicide by taking alcohol and pills instead of the truth that he was murdered.” While Dowd denies it, another source confirms that Generosa told her children this, even though, at the same time, she released a press statement saying, “I believe the most important consideration now is that our children be protected from things said about their parents that can only bring them further pain.”

Kuchuk’s report is a key weapon in Sandi’s custody battle—so it’s no surprise that Dowd is arguing that it shouldn’t be admitted as evidence. He claims the confidential report was leaked to Sandi, which Sandi denies. The report itself is actually dated November 9, 2001—two weeks after Ted’s death had effectively ended the divorce proceedings—suggesting, at least to Dowd, that it was completed only to build a case against his client. “You’ve just got to ask yourself, is this a way of showing concern for the children?” he says. “It seemed to me the last thing I would do is expose this to a child.” (Kuchuk declined to comment.)

Ted’s body was discovered by his business partner, Mark Angelson, after Ted not only missed a meeting but failed to pick up his kids. Angelson was sufficiently alarmed to take a helicopter to the Hamptons; when he got to the house on Middle Lane, a trail of blood led up the stairs to Ted’s bedroom, where he was lying naked.

No sooner did news break about the murder than several rumors percolated: Ted had shady business dealings. Ted had enemies and was being sued left and right. Ted was gay and had been killed by a piece of rough trade. Ted’s penis had been severed by the killer. Most of these rumors were encouraged by people close to Generosa. The gay slaying, for instance: “Our investigators developed this,” admits a source close to Generosa’s legal team, who adds that he was responsible for planting the rumor in Cindy Adams’s column. A source with knowledge of the crime scene says the penis rumor is false. Despite thousands of pages of accounting records from the divorce, no reports of improprieties have surfaced.

As for enemies: The lawsuits against Ted included one for back pay by Generosa’s assistants, Steven Guderian and Bruce Riedner (neither of whom could be reached for comment), settled by Ted’s estate last year, and a tussle with his Fifth Avenue building over the sale of his co-op, which ended amicably.

Generosa provoked curiosity by hiring Dowd, a trial attorney who has made his name in accused-husband-killer cases (and who was also the whistle-blower in New York City’s parking-violations scandal that brought down Queens borough president Donald Manes in the eighties). In his 1989 defense of socialite LouAnn Fratt, Dowd had argued that she stabbed her husband of 30 years in self-defense. Fratt was acquitted. Dowd’s associate Mike Shaw has also defended his share of accused husband killers; now he is representing Pelosi’s friends in a related case against the Suffolk County police. Dowd, Shaw, and at least two other lawyers have been subpoenaed by the Ammon-murder grand jury.

Pelosi’s lawyers told detectives that he was at a wedding and birthday party that weekend; police haven’t released the presumed time of death, so it’s unclear if his alibi holds water. Attorneys for Pelosi also revealed that Generosa and Dan had installed a nine-camera surveillance system at the house (supposedly to catch Ted with girlfriends); police haven’t said what, if anything, it recorded, or even whether it was working that night. Pelosi and Generosa both supplied cotton-swab DNA samples from inside their cheeks, but they were never interrogated. Dowd says he offered to speak to police on Generosa’s behalf, but was rebuffed. “We’re suspicious about the quality of the investigation,” he says, “and the lack of openness with us about it.”

Instead, police steadily went after Pelosi for other offenses—parole violations (he’s skipped meetings with parole officers more than a dozen times) and a DWI stemming from a month before the murder, when he failed several roadside sobriety tests and even admitted he’d “had a few beers.” A friend of Pelosi’s named Chris Parrino told police that he was driving the car—and that Pelosi had drunk nothing but ginger ale that night. Police later arrested Parrino for making a false statement.

In May 2002, Generosa reportedly began suffering from fainting spells. Pelosi took her to a hospital in Suffolk County, where she was advised to see an oncologist. By June, Generosa had been diagnosed with cancer and started chemo. Dowd confirms that at the time she blamed the cancer on Ted, saying that during the late nineties, her family doctor had told Ted—but not her—that she should get a lump in her breast checked out. But a source close to the doctor says he’d pleaded with Generosa to come in for tests at the time, and she didn’t. “I think it was just a hard time for her,” the source says. “I mean, they were going through the worst divorce in the world.”

When Pelosi was jailed for the DWI this past February, the police started working over his friends. On the morning of April 4, 2003, Tammy Pelosi, Dan’s first wife, was pulled over by police on the Long Island Expressway and taken in for questioning about the Ammon murder. Within a day, police also interrogated Pelosi’s cousin Frank Perrone and three others described in court papers as “acquaintances”: Alexander Mawyer, Arnold Cherubino, and Chris Parrino, the friend who tried to take the rap for Pelosi’s DWI. All five now are suing the police for harassment. Their 28-page complaint includes accusations of some ham-fisted police work (“You aren’t going to be talking to a lawyer,” one cop allegedly said. “This isn’t like Law & Order”), and from the questions police asked, the rough outlines of a theory of the Ammon murder emerge. Police allegedly accused Cherubino of hiding bloody clothes for Pelosi on the weekend Ammon was killed.

Last month—Friday, June 13—Pelosi completed his DWI sentence and police promptly rearrested him on an old larceny charge, saying that he had rewired his house to steal power from the electric company. Pelosi made bail, but the Suffolk County court now gets to keep his passport while the Ammon grand jury does its work.

With the couple no longer living together, Generosa is determined the children, and presumably most of Ted’s money, won’t be left with Pelosi. “Generosa’s lawyers apparently argued successfully to her that she should not have a convict taking care of the children,” a source close to Pelosi says. “And he did some things that bothered her.” Dan asked for money, buying at least two cars for members of his family. And he gambled. “Last fall, he took off to Las Vegas for a long weekend, and she got mad. I think somebody called her and said, ‘I’ve seen Danny with another woman.’ ”

Kathryn Mayne, the nanny (who refused to comment for this story) to whom Generosa has entrusted her children, is a polite, bespectacled 57-year-old woman who wears her dark hair in a ponytail and speaks with a soft English accent. In 1999, she was hired as housekeeper at Coverwood. Generosa brought her over last July to care for the kids, not long after she learned of the extent of her cancer. “She struck me as very caring, very concerned, very warm, very loving toward the children,” says Donald Wall, the children’s law guardian during the divorce, who has spoken to her on the phone.

Sandi Williams asked a judge to order that the twins’ passports be deposited with the court—so, should Generosa die, the nanny won’t be able to take them home.

Generosa, it appears, is still having some difficulty getting control of all of Ted’s money. J.P. Morgan and Generosa are technically co-executors of the estate, but, according to a source close to Generosa, “J.P. Morgan has put restraints on transfers of assets to Ted’s wife during this criminal investigation.”

There may be less there than she thought. A month after the murder, surrogate-court estimates put Ted’s estate at about $80 million—far less than the $300 million or more Generosa claimed Ted was hiding during the divorce proceedings. Of that $80 million, $26.5 million was paid last year to J.P. Morgan Chase to satisfy a line of credit in Ted’s name that had funded his venture-capital business. A $5 million home-equity line of credit also was repaid. With all debts factored in, the estate’s official net worth is now $54 million.

A source close to J.P. Morgan does not directly dispute restricting access to the estate, but emphasizes that by no means has Generosa been “left out in the cold financially.” The jointly owned real estate alone represents a huge inheritance—probably more than the $25 million divorce settlement on the table before Ted died. Generosa sold more than $30 million worth in the past year, though what she took and what the estate took remains in question: Ted’s co-op at 1125 Fifth Avenue went for $9.5 million; the townhouse Generosa was renovating at 10 East 87th Street, $8.2 million; the Surrey estate, $7.5 million; a commercial property Generosa had designs on developing in East Hampton, $3.7 million; and an Upper West Side condo, $950,000.

Her kids are having some trouble, too. In a brief phone conversation, Pelosi wouldn’t comment on either court case but did claim they were being teased at school. Says Dowd: “They’ve been confronted at school by what’s in the paper and they can’t understand it.” Back at Middle Lane, Generosa has erected a large security gate. Asked if the children are uncomfortable living in the house where their father was killed, Dowd, her attorney, pauses.

“I think that’s a bad way to put it. The children love their mother a great deal and want to be with their mother in a safe, secure environment.”

If, in the next year or so, Grego and Alexa should find themselves living in Huntsville, Alabama, they’ll no doubt have friends whose parents work for NASA or Boeing or Lockheed Martin. The city of 168,000 is a high-tech, high-income mecca. The Williamses’ house is in a pleasantly wooded neighborhood nicknamed Pill Hill for the doctors who live there. Bob is a nephrologist who not only donates money to a charity he created for dialysis patients but also owns two strip malls, a tree nursery, and a health club that Sandi co-manages. His green Ford pickup has a vanity plate that reads NEPHRO; Sandi drives a Subaru Outback.

In their living room, in front of their stone fireplace, Sandi talks about her brother’s final weeks. While Bob believes Ted genuinely feared for his life, Sandi has trouble thinking of her brother as so vulnerable. “I don’t think Ted really expected it,” she says. “I mean, obviously he didn’t. I think he just expected it to be a lifetime conflict over the children.”

I ask Sandi and Bob if they believe anyone thinks they’re out for a share of Ted’s money.

“Oh, it doesn’t bother us a bit,” Sandi says. “We want the children because we love the children.”

“We don’t need it—it’s brought nothing but heartache,” Bob insists, noting that they live well within their income of at least $500,000 a year. “If they’ve got 50-gazillion dollars, that’s not gonna change anything. It’d be better if nobody knew what they were worth, including them.”

“Ted thought money would be a burden to his kids, too,” Sandi says. “He started giving it away. After they moved to England, Grego came up to his dad and said, ‘Are we rich?’ Ted laughed and said, ‘No. I’m rich. Maybe you’ll be rich someday.’ It just skews their vision of the future—and how much they’re capable of. You’re worth something because God loves you.”

She looks across at her husband. “The point is, we can provide the most loving, stable—emotionally stable, physically stable—home for them, no question,” she says. “They have never been part of a faith community, and I think that’s a huge part of rearing children.

“And,” she is quick to add, “it’s absolutely what their father would have wanted.”

The War for Ted Ammon’s Children