“You are crazy!” Aldo screamed, red-faced, the veins on the sides of his neck bulging. “Why don’t you do what I tell you?”
The incident shattered any hopes Paolo had of striking an agreement with his family, and from that moment on, he determined to bring the house of Gucci down. He knew his family was staunchly against him; it was up to him to show them they had made a grave mistake.
But Aldo was unhappy about the conflict. On the business side, it was draining precious resources and energy from the company and generating negative publicity. On the personal side, it pained him to fight his own son. He believed in the strength of the family and wanted more than anything to be reunited with Paolo. Aldo decided to try an armistice. He invited Paolo and Jenny to join him and Bruna in his Palm Beach home between Christmas 1981 and New Year’s 1982. Father and son greeted each other warmly, in typical Gucci style, as though nothing had ever come between them. Aldo called Rodolfo, in Milan, wishing him holiday greetings. Then he came right to the point.
“Foffo, I’ve had a long talk with Paolo. I think he’s willing to come back into the fold. We need to put an end to this war.” They agreed to make an offer to Paolo, which they did that January. They made sweeping changes to the structure of the Gucci empire: the Guccio Gucci parent company and all of the sister companies, including Gucci Parfums, would be consolidated into one master company, Guccio Gucci SpA, to be quoted on the Milan stock market. Aldo’s three sons would receive 11 percent each of the whole business, Aldo would retain 17 percent, and Paolo would be named vice chairman of Guccio Gucci SpA. In addition, a new division would be established under Gucci Parfums to be called Gucci Plus, which would have licensing authority. Paolo would become the director of that business and would be able to bring the licensing agreements he had already signed into the company under the Gucci name. In addition, he would be paid his severance money with interest and an annual salary of $180,000. It seemed to be everything Paolo had wanted. Under the terms of the agreement, both parties would drop all their charges and Paolo would give up his right to design and promote products under his own name.
Paolo remained suspicious. His doubts were confirmed when he was told all his design proposals would have to be approved by the board, of which Rodolfo was president. Nonetheless, Paolo decided to accept. He finally signed the agreement in the middle of February—but the truce wasn’t destined to last.
The Gucci board summoned Paolo in March 1982, telling him to bring a detailed list of the product lines he had already contracted as well as his new ideas for the Gucci Plus line. Paolo worked hard to prepare all the materials, but the meeting did not go as he expected. The board voted down all of his proposals, explaining that the whole concept of the cheaper product lines was “contrary to the interests of the company.” Paolo, more bitter than ever, felt he had been tricked. De Sole later denied Paolo had been misled, recalling how detrimental his actions had been to the company.
In no time, the board suspended Paolo’s right to sign for the company. He was a board member, but without power to operate or execute his own designs. After having received his severance money in February, three months later he was fired again. “I felt like a fool,” Paolo said. “All those agreements and assurances given me by my uncle were worthless.”
By the time the famous board meeting of July 16, 1982, took place in Florence in the offices in Via Tornabuoni above the Gucci shop, tensions had surged to the boiling point. Paolo no longer had an operative role in the company, but was using his position as a shareholder to create leverage over business decisions. As Aldo, Giorgio, Paolo, Roberto, Rodolfo, Maurizio, and the other company directors took their places around the walnut table, the summer heat was no less oppressive than the atmosphere in the room. Aldo settled into his chair at the head of the long conference table, with his son Roberto to his right and his brother Rodolfo to his left. Paolo sat at the other end of the table with Giorgio on one hand and Maurizio on the other.
Aldo opened the meeting and asked the secretary to read the minutes of the previous meeting, which were approved. Then Paolo asked if he could make a statement, which immediately provoked mutterings and glances.
“Why? What do you have to say?” asked Aldo, irritated.
“I want to say that as a director of this company, I have been denied any opportunity to see or go through any of the company’s books or documents,” Paolo said. “I want my position clarified before we go any further.”
He was interrupted by shouts of disapproval.
“Who are the two mysterious shareholders in Hong Kong who are receiving money from the company?” Paolo blurted out. More shouts.
Paolo noticed that the secretary—Domenico De Sole—wasn’t taking the minutes.
“Why aren’t you writing down my questions? I demand to have a record of this meeting!” Paolo exclaimed. De Sole glanced around the room, saw that no one else was in agreement, and remained motionless. At that, Paolo pulled a tape recorder out of his briefcase, turned it on, and began reciting his grievances. Then he threw his list of questions down on the table. “And I want these introduced into the minutes,” he shouted.
“Turn that thing off,” Aldo yelled at him as Giorgio reached across the table and grabbed the tape recorder from Paolo, inadvertently breaking it.
“Are you crazy?” Paolo yelled at him.
Aldo ran around the table toward Paolo. Maurizio jumped up, thinking that Paolo was going to lunge at Giorgio and Aldo, and gripped his cousin in a headlock from behind. Aldo reached Paolo and tried to wrestle the tape recorder away from him. In the scuffle, Paolo’s face was badly scratched along one cheek and he began to bleed. When they saw the blood, which was minimal, the group hushed nevertheless. Maurizio and Giorgio loosened their hold on Paolo, who grabbed his briefcase and ran from the room, shouting at the astonished office workers, “Call the police, call the police!”
He grabbed the phone from the switchboard operator and called his doctor and his lawyer, then took the elevator downstairs, where it opened directly into the Gucci shop. Paolo ran through the store on his way out the door, shouting at startled clerks and customers. “Just look! This is what happens at a Gucci board meeting! They tried to kill me!” Then he rushed off to meet his doctor at a local clinic, where he was treated, and ordered that his wounds be photographed. At the time, Paolo was fifty-one years old; Giorgio, fifty-three; Aldo, seventy-seven; Rodolfo, seventy; and Maurizio, thirty-four.
When Paolo came home that night, pale and bandaged, Jenny was shocked. “I couldn’t believe it. All of them, grown men, fighting like hooligans!” she said.
“Paolo’s face was not badly scratched,” said De Sole years later. “It was just a little scratch, but the incident was blown into a fiasco.”
Just a few days later in New York, Paolo’s lawyer, Stuart Speiser, filed the next round of lawsuits against Gucci. This time, the charges included assault and battery, as well as breach of contract, for being refused his right as a company director to investigate company finances.
He asked for a total of $15 million for the abuses he had suffered: $13 million for breach of contract, calling the so-called peace proposal a trap to neutralize him; and $2 million for assault and battery. To Aldo’s dismay, the press gleefully covered the ruckus.
“Move over, Dallas: Behind the Glittering Facade, a Family Feud Rocks the House of Gucci,” wrote People magazine; “Violent Fight in the House of Gucci,” added Rome’s Il Messaggero; “Gucci Brothers Fight,” said Corriere della Sera. The New York court ultimately refused to hear the case on the grounds that the episode occurred in Italy, but the story riveted the court of public opinion on both sides of the Atlantic. Some of Gucci’s most important clients were mystified and disturbed. Jackie Onassis’s one-word cable to Aldo: “Why?” has become part of company legend. Prince Rainier of Monaco also called the family to ask if he could help.
The day after the stories broke, buyers from all over the world had already gathered at Gucci headq
uarters in Scandicci, where the sales presentation of the fall collections were under way. When Aldo learned that not only was Paolo suing him but the news was in all the papers, everybody in the plant that day heard his enraged bellows.
“If he is going to file suit against me, then by God, I’m going to file suit against him!” Aldo thundered into the telephone to whoever had given him the news. Aldo, swallowing his displeasure over Rodolfo’s successful bid to increase his control of Gucci Parfums, which was incorporated into Guccio Gucci in 1982, hired De Sole to defend him and the Gucci company against Paolo’s assaults. The next day, Aldo gave an interview to Women’s Wear Daily, minimizing the conflict. “What father has never given an unruly son a slap?” Aldo said, reinforcing his image as the firm’s patriarch. Aldo added that the family was close to an agreement with Paolo. But he didn’t realize the lengths to which Paolo was willing to go in order to have his way; Paolo had only just rolled out the heavy artillery.
During his years working at Gucci, Paolo had been quietly collecting and analyzing all the financial documents he could get his hands on. He wanted to know about the inner workings of the company and draw his own conclusions about how things were being handled. Discovering that millions of dollars in taxable revenues were being siphoned to offshore companies under a system of false invoicing, he decided to use the evidence as a weapon in his battle for the freedom to use his own name. The first time, Gucci’s lawyers succeeded in having the case dismissed and the papers sealed. Undeterred, in October 1982, using his severance money from Gucci to pay his lawyers in part, Paolo filed the damning documents in New York’s federal court in support of his claim of wrongful discharge. He hoped the evidence would force Aldo to change his tune and either invite him back into the family company or give him the green light to launch his own line.
“The papers were only intended to force his hand,” Paolo said later.
The Paolo battles divided not only the family but those who were close to them. While some condemned Paolo for turning his father over to the authorities, others felt he had been pushed to the limit.
“Paolo was castrated,” said Enrica Pirri, who admitted having a special affection for Aldo’s middle son. “If he wasn’t the genius of the family, he was the one who gave the most. If he turned in his father, it was because his father had given him the reasons to do it.”
“Paolo wasn’t bamboozled,” countered De Sole. “He was making deals behind the family’s back and they had to make sure he wasn’t giving the company away. He was not dealing in good faith.”
The papers Paolo filed showed explicitly how Gucci was masking profits. Panamanian companies based in Hong Kong were posing as creative design suppliers to Gucci Shops Inc. A damning letter to Gucci from Gucci’s chief accountant in New York, Edward Stern, pulled away the window dressing covering up the scheme: “In order to substantiate the services for which such invoices were rendered, and to document the underlying need for the company, it will be necessary to send a variety of fashion designs and sketches to Gucci Shops for approval or rejection. This is only to build up some sort of record [italics added],” Stern wrote.
In 1983, as Rodolfo’s health took a turn for the worse, the IRS and the U.S. attorney’s office started looking into Aldo Gucci’s personal and professional tax liabilities. Edward Stern died well before the case was closed, but investigators found enough evidence to turn the matter over to a grand jury.
Of all the lawsuits Paolo brought against his family company, only one of them ever made it to trial. It wasn’t until 1988 that New York District Court Judge William C. Conner ruled on the case. Judge Conner found an evenhanded solution to the family feud that had dragged on for nearly a decade: he prohibited Paolo Gucci from using his name as a trademark or trade name because of the confusion it would cause among consumers over the Gucci trademark. On the other hand, he allowed Paolo Gucci to use his own name to identify himself as a designer of products sold under a separate trademark that did not include the Gucci name.
“Since the time of Cain and Abel, family disputes have been marked by the irrational and impulsive decision of those involved, the fierce battles which ensue, and the senseless destruction they cause,” Conner wrote in his opinion.
“This case is but a skirmish in one of the most publicized family disputes of our time,” he continued, noting that the Gucci family at that time had “legal issues being litigated before judges and arbitration panels around the world at enormous cost to members of the family and the businesses they control.”
Conner’s decision authorized Paolo to produce and distribute goods under the name Designs by Paolo Gucci. Ever creative, Paolo took out a paid advertisement in Women’s Wear Daily on November 30, 1988, in which he published a poem dedicated “To the Retail Community,” announcing his debut as an independent designer.
On Wednesday August tenth
nineteen hundred and eighty-eight
in an open letter “Gucci America”
announced its present status and future fate.
They have claimed victory
in a lawsuit mandate
stating clearly, Paolo Gucci, family member,
former shareholder, had been given the gait [sic].
I am pleased with the outcome
to use my rightful name
to create fashion and home accessories
is my goal and my aim.
The Federal Court in New York
affirmed this decision
leaving me a free man
to continue my vision.
My association of trademark and name Gucci
ends after twenty-five years
as an independent designer I’ll continue
to work hard, thank you my patrons
for your praise and kind cheers.
In agreement with “Gucci America” regarding
sacrosanctity of trademark and name,
hopefully my continued efforts will now
draw individualized acclaim.
The Paolo Gucci name now found
on a label will certainly combine
outstanding quality, continued
perfection and excellence in design.
Aside from the trade, this non-conventional
response letter directed to the refined,
informed consumer,
is my public introduction to say hello,
welcome and do it with some humor.
With great pleasure and pride
in my traditional view
I present “Designs by Paolo Gucci”
everything more than that “other”
company could ever strive to do.
In closing, it is funny how things
may happen, life can be such a game,
I know in my heart one day “Gucci
America,” you will buy my name.
Paolo’s prophecy that Gucci America would buy out his name came true just eight years later. After the court ruling, Paolo had revved into overdrive with preparations to launch his own business, even renting premium retail space on New York’s Madison Avenue, where he paid rent for some three years, but never managed to open the store. Professionally, his business venture stalled, then failed; personally, his marriage with Jenny disintegrated. Paolo took up with another Englishwoman called Penny Armstrong, a fresh-faced, redheaded young stable girl he had hired to look after the purebred stallions on his eighty-acre Sussex estate, Rusper. Paolo and Penny had a little girl, Alyssa. Paolo moved Penny into the manor house and moved Jenny out, dumping her belongings into boxes he left to stand out on the grounds in the rain. Jenny, protesting indignantly, sent her sister to recover the boxes while she camped out with their by then ten-year-old daughter, Gemma, in an unfinished $3 million luxury apartment they had bought in 1990 in New York’s Metropolitan Tower. The apartment offered breathtaking views of Central Park—and exposed wiring and pipes that Jenny tried to cover with yards of borrowed gold lamé fabric. After she served Paolo wit
h divorce papers in 1991, he stopped paying the bills. In March 1993, she had Paolo jailed briefly for failing to pay some $350,000 in alimony and child support. That November, authorities raided Paolo’s New York estate, Millfield Stables in Yorktown Heights, to discover more than a hundred emaciated and unkempt prize Arabian horses Paolo had neglected in order to prove to Jenny he didn’t have the funds she claimed. Some fifteen of the horses hadn’t even been entirely paid for. Paolo filed for Chapter 11 bankruptcy protection.
“What you have to understand about the Guccis,” Jenny told a journalist in 1994, “is that they are all completely mad, incredibly manipulative, and not very clever. They have to be in control, but as soon as they get what they want, they crush it! They are destroyers, it’s as simple as that!”
Paolo, plagued with debts and liver problems, retreated into the dark rooms of Rusper, where, according to Penny Armstrong, he no longer had the money to pay the electric and telephone bills. Authorities sequestered starving and uncared-for horses, some of which had to be put down, at Rusper as well.
“I spent my last thirty pence to buy milk and I don’t know what is going to happen tomorrow,” Penny told an Italian newspaper in 1995.
Paolo’s lawyer, Enzo Stancato, ruefully remarked later that when he had first started working for Paolo, he thought he had struck gold. “Just a year before I was the most exciting guy in the world, I was working for Gucci! And all of a sudden I was practically supporting this guy—I gave him clothes, ties, shirts, and suits. When he came to New York, he had nothing, I dressed him up. He came to me and said, ‘I’m sick, I have a liver problem. I need a transplant. That is the only way I will be able to survive.’”
The transplant didn’t come in time and Paolo died of chronic hepatitis on October 10, 1995, in a London hospital. He was sixty-four. His funeral was held in Florence and he was buried in the small cemetery of Porto Santo Stefano along the Tuscan coast, next to his mother, Olwen, who had died just two months before. In November 1996, the bankruptcy court approved the sale of all rights in the Paolo Gucci name to Guccio Gucci SpA for $3.7 million, a price the company willingly paid to end the Paolo battles once and for all. There were several competing bidders, none of them well-known names, including Stancato and former licensees to whom Paolo had promised the right to use the name. One of them challenged the sale all the way up to the Supreme Court, but ultimately lost.
The House of Gucci Page 12