The House of Gucci

by Sara G Forden

  “As a result of the cancellation of the PPR transaction and LVMH’s undertakings, Gucci will once again be an independent company, whereas today, with PPR holding 44 percent, it is controlled,” said LVMH’s James Lieber. “As such, the company could be the object of a full bid by a third party, at a price that would include a control premium, which would benefit all Gucci shareholders, including LVMH.”

  The court decision to investigate for Gucci mismanagement reversed an earlier decision in May 1999, when the court had upheld the Gucci-PPR alliance, ruling that Gucci had the right to defend itself. LVMH had succeeded in having that ruling annulled by the Supreme Court of the Netherlands in June 2000. In September, the Supreme Court ordered the Enterprise Chamber to reexamine the Gucci-PPR case and strongly suggested that the Enterprise Chamber conduct a formal investigation before drawing its conclusions. Gucci announced its intention to cooperate with the investigation, but by late March 2001, the company announced it would appeal the decision, as did PPR.

  In pressing their case, LVMH’s lawyers charged that a secret stock option deal for Tom Ford and Domenico De Sole had secured their support for the Gucci deal with PPR. Gucci denied the allegation, saying there was “no relation” between the PPR deal and the granting of options, which Gucci maintained were proposed in June 1999, well after the Enterprise Chamber’s ruling upholding the PPR alliance. LVMH cited a confidential document that somehow had been spirited from the files of Gucci’s legal counsel Allan Tuttle (Gucci charged that the document had been stolen), alleging that the Tuttle memorandum proved there had been a secret pact in the granting of the options—a supposition Gucci reiterated was not true. By mid-May 2001, Gucci was cooperating with the initial requests of investigators while its legal team was combing through datebooks and documents in preparing a defense. The outcome of the investigation wasn’t expected before September. Gucci’s lawyers and spokespeople presented a confident, unruffled stance to the press when asked about the investigation, and De Sole announced he was confident the PPR alliance would be upheld; but LVMH’s continued courtroom assaults had exasperated him.

  “Can I tell you something?” De Sole asked a small group of journalists in early May during the Trofeo Zegna regatta in Portofino, an annual appointment sponsored by Ermenegildo Zegna, the Italian manufacturer of quality men’s wear, including Gucci’s men’s line. De Sole, a passionate sailor and a regular participant, had sold his own boat, Slingshot, the year before. De Sole, who crewed on Carrera, which was owned by De Sole’s friend and luxury yacht builder Luca Bassani, wanted to make a point to the journalists attending the regatta’s gala dinner at the elegant Villa Beatrice, perched high over the Portofino Bay.

  “Bernard Arnault is a pathological liar, and this time you can write it!” De Sole said.

  At the beginning of 2001, the Amsterdam Enterprise Chamber was not the only high-profile European court reviewing Gucci matters. On February 19, after three hours of deliberations, Rome’s Corte di Cassazione, Italy’s highest court, upheld the conviction of Patrizia Reggiani and her four accomplices for the murder of Maurizio Gucci in March 1995. Shortly before, the court had rejected Patrizia’s pleas to be released from jail for health reasons. The Gucci murder case had been appealed both by the prosecutor, Carlo Nocerino, and by Patrizia through her new, Rome-based lawyers, Francesco Caroleo Grimaldi and Mario Giraldi. Patrizia, with the support of her mother and daughters, had challenged her conviction incessantly since Judge Samek had announced the court’s decision back in November 1998. Incensed by the failure of her Milan lawyers to win her first appeal in March 2000, she had fired Gianni Dedola and Gaetano Pecorella and hired the Roman lawyers to work on the final appeal to the Corte di Cassazione. Patrizia had hoped to overturn her conviction altogether on the grounds that her mental state was not compatible with a conviction. Nocerino had also appealed, asking the high court to reject the mitigating factors that had moved Judge Samek to give Patrizia twenty-six years in jail and the trigger man, Ceraulo, nearly twenty-nine, arguing that it was unheard of for the person who commissioned a murder to be treated more leniently than the one who carried it out. In confirming the conviction, the court rejected both appeals.

  Although the court’s decision effectively dashed any hopes Patrizia may have nurtured that her sentence could be revoked, her new Roman lawyers promptly announced they would file to have the entire case rescinded on the grounds that the underlying verdict had not been justified by the facts—an unlikely scenario by all accounts.

  Meanwhile Patrizia’s experiences in jail went from bad to worse. She fought with her fellow inmates and accused them of hitting and mistreating her—protests interpreted by court authorities as efforts to support her continuing requests to be released from jail. In one instance, Patrizia formally charged another inmate—ostensibly a medium—with accepting nearly four million lire (around $2,000) for a gold amulet designed to protect her from envy. Patrizia accused the other inmate of never delivering the amulet, even after she had been released. The exasperated director of San Vittore, describing the continuing conflicts as harmless, though disruptive, punished Patrizia by transferring her suddenly to another facility outside Milan, in the suburb of Opera. That move provoked a suicide attempt; jail authorities reportedly found Patrizia in her new cell with a sheet knotted around her neck.

  “I wanted to leave once and for all,” she reportedly told her mother, but the prison authorities dismissed the episode as an attention-getting measure. After the publicity died down, the director of San Vittore agreed to take Patrizia back.

  “After all that had happened between Patrizia Reggiani and Pina Auriemma, ultimately she and Pina couldn’t stand to be separated,” said Auriemma’s lawyer, Paolo Traini. “Pina was pining away without Patrizia there.”

  Patrizia’s condition varied. On some days she could walk only with the help of crutches—at least once she felt so feeble she was unable to meet the hairdresser who had arrived for his regular appointment to treat her hair implant. Silvana continued to visit Patrizia faithfully every Friday, bringing her daughter’s favorite home-cooked delicacies, such as tuna loaf, veal roast, and meatballs; the latest-fashion lingerie; and about a hundred dollars’ worth of glossy gossip magazines each time. Silvana also brought home Patrizia’s dirty laundry. Patrizia’s oldest daughter, Alessandra, continued her studies at the Bocconi business school’s Lugano campus, while Allegra enrolled in her first year of law school in Milan, following in her father’s footsteps. Both girls visited their mother as often as they could. The family continued to keep the Creole and to race it in Europe’s prestigious historic regattas.

  Meanwhile, Maurizio Gucci’s former girlfriend of six years, Sheree McLaughlin, had returned to the United States to start a new life after her love affair with Maurizio ended in 1990. After years of commuting back and forth on the Concord or on private jets between New York and Milan, often just for weekends, it took some time for her to reestablish herself in her own country. But she did and, after holding a variety of positions, became communications director for Giorgio Armani Le Collezioni. In the summer of 2000, Sheree married a money manager named Rob Loud. Tall, with longish dark-blond hair, Loud was a warm, soft-spoken, and supportive man who bore a striking resemblance to Maurizio Gucci. Their first child, a girl named Livingston Taylor Loud, was born on March 19, 2001.

  The life of Maurizio’s last girlfriend, Paola Franchi, was struck by another tragedy. Early in 2001, while spending the Christmas holidays with his father, Paola’s teenage son Charly unexpectedly took his own life.

  “Sometimes it is difficult to understand why life deals us what it does,” said Paola, who had started work on a fashion-related Internet project to distract herself from her grief.

  As for the Guccis themselves, Roberto Gucci remained in Florence, where he continued to operate his House of Florence business, while his brother Giorgio took to spending more and more time in Cuba, where he had accumulated property near Havana and opened a fashion bouti
que in the city’s emerging commercial center. He had also developed an apparel collection manufactured in Spain, which was also sold in the boutique. In June 2001, he launched a new collection of leather accessories under the name “Giorgio G” in the family house along the Via della Camillucia, where he still lived with Maria Pia when he wasn’t traveling. Giorgio had suffered an intestinal malaise in the fall of 2000 while visiting Panama and had been rushed back to Italy close to death for an operation, which was successful. His son Guccio continued to work with the Florence-based leather goods firm, Limberti, which his father had acquired, and which produced high quality leather accessories for a range of top designer names.

  For the anniversary of Maurizio’s death on March 25, 2001, Giuseppe Onorato, still the doorman of the building in Via Palestro 20, wrote a letter to the Milan daily Corriere della Sera in memory of the exuberant, forty-seven-year-old man who had died in a pool of blood before his eyes six years earlier.

  “For me, today is a sad anniversary,” Onorato wrote. “Only Maurizio can’t remember this day, because he is no longer with the living, and I am sure if he could choose, he would want to still be on this earth, happier and more joyous than ever, as was his nature. I, that am still here, I will remember him with a prayer, hoping that it will illuminate who sent him to his death, who paid to eliminate him from the world that he loved so much. And he had every reason to love life: he was handsome, rich, famous, and loved by some. Unfortunately, he was hated by others. Perhaps he never fathomed the extent of the hate that surrounded him.”

  Onorato also wrote that, for him, every day since the fateful day of March 27, 1995, had been a negative one. Even though the court ordered Patrizia Reggiani to pay 200 billion lire (about $100 million) in damages to Onorato for his suffering, he had yet to see a lira.

  “And still today, I am immersed in negative things—civil court procedures, lawyers, physical therapy, medical appointments, and acute pains shooting through my left hand. Pains that always take me back to that awful day…. And when people say, ‘Imagine how much money you are rolling in now’ or ‘What do you mean they haven’t paid damages yet?’ it just makes me feel worse.

  A sensitive, moral person, Onorato rationalized his plight by thinking there are those who are worse off than he. “For me it is a consolation to know that I am still alive, after all,” he wrote.

  Onorato continued, speculating, “There is one question that has been torturing me for some time: if one of the wealthy residents of my building were shot in the arm that morning instead of me, would he have resolved all his problems by now? Is the law equal for everybody or not?”

  Bibliographical Notes

  : HISTORICAL RECONSTRUCTIONS :

  I reconstructed some of the historical conversations and events surrounding the Gucci family by checking published accounts with first-person sources with either direct memory of the episode or a recollection of what others had said at the time. References to what a person was thinking are based on extensive research into the situation and the person’s frame of mind at the time according to people close to him or her or other reliable accounts. In dramatizing contemporary conversations, I have based dialogue on conversations with one or more of the participants.

  : HISTORICAL BACKGROUND :

  For the historical reconstruction of the Gucci family and business, I worked from two existing books and numerous news articles, checking information with family members, current and former employees, and specialized historians. The fullest account of Guccio Gucci’s early years appears in Gerald McNight, Gucci: A House Divided, London, Sidgwick & Jackson, 1987, and New York, Donald I. Fine, Inc., 1987. An Italian work by Angelo Pergolini and Maurizio Tortorella, L’Ultimo dei Gucci, Milan, Marco Tropea Editore, 1997, was also a helpful resource. Another valuable document about the Gucci family and history is Rodolfo Gucci’s own documentary film: Il Cinema nella Mia Vita, directed and produced by Rodolfo Gucci and currently held in the archives of Cinecittà in Rome.

  Fashion historian Aurora Fiorentini has done invaluable work to help reconstruct the Gucci Archive. Fiorentini has located some key documents, including one held in the Florence Chamber of Commerce that attests to the founding of the first Gucci company. Previous corporate biographies and press reports had dated the start of the Gucci business much earlier, in or around 1908. As the Gucci company evolved over the years, it became Azienda Individuale Guccio Gucci, a sole proprietorship, which was transformed into a Società Anonima in 1939, a family proprietorship, when for the first time Aldo, Ugo, and Vasco became co-owners. Ugo would later sell his shares at Guccio’s insistence and Rodolfo would be invited into the company ownership. After the war, the company became a Società di Responsabilità Limitata, or S.r.l., a small corporation that has lighter capitalization requirements and more reporting flexibility than a Società per Azioni, or SpA, which is equivalent to a C-class corporation in the United States. Guccio Gucci didn’t become an SpA until 1982. Information on establishments operating in historic Florence is available in the volume Confcommercio di Firenze, I Negozi Storici a Firenze, Firenze, Edizioni Demomedia, Nuova Grafica Fiorentina, November 1995.

  Precise documentation about the exact dates, order of openings, and locations of the Gucci stores opened in Florence on Via del Parione and Via della Vigna Nuova is no longer available. Roberto Gucci recalls that the first shop was on Via del Parione, followed a few years later by a shop at Via della Vigna Nuova. However, according to Fiorentini, the first important Gucci shop was probably at Via della Vigna Nuova 7, where it held various locations over the years before moving to its final location at number 47–49, where the Valentino and Armani boutiques are currently located. Fiorentini believes the Via del Parione location identified at number 11 or 11-A, was probably a small workshop that the Gucci family opened briefly in the early period and later closed. Gucci’s Via Condotti store in Rome was moved to its current location at number 8 in 1961.

  : PATRIZIA REGGIANI MARTINELLI :

  Patrizia’s story is based in part on the author’s personal correspondence with Patrizia Reggiani, as well as author interviews with her mother, Silvana Reggiani, friends of Patrizia and Maurizio’s, and Liliana Colombo, Maurizio’s former secretary who went to work as Patrizia’s personal assistant after he died. The psychiatric report ordered by the Judge Renato Samek during Patrizia’s trial, Corte Di Assise Di Milano, Relazione di Perizia Collegiale Sullo Stato di Mente di Patrizia Reggiani Martinelli, also provided rich insight into her childhood as she recounted it to the panel of psychiatrists. Excerpts from Patrizia’s manuscript, Gucci vs. Gucci, were published in the Italian daily Corriere della Sera between March 25 and 28, 1998, describing her experiences with the Gucci family. The manuscript was widely circulated among Italian publishers but was never published.

  : THE PAOLO CASES :

  The numerous “Paolo Cases” were nicely summed up with an internal brief by Patton, Boggs & Blow in Washington, D.C., where George Borababy was very helpful in locating material and providing information on the key issues of each case. Rich material on the conflict with Paolo can be found in published court opinions, including: Paolo Gucci, Plaintiff, v. Gucci Shops Inc., Defendant, No. 83, Civ. 4453 (WCC) United States District Court, S.D. New York, June 17, 1988 in Federal Supplement 688, pp. 916–928, and Paolo Gucci, Plaintiff, v. Gucci Shops Inc., Guccio Gucci SpA, Maurizio Gucci, and Domenico De Sole, Defendants, No. 86, Civ. 6374 (WCC) United States District Court, S.D. New York, Dec. 1986, in Federal Supplement 651, pp. 194–198.

  : FINANCIAL AND CORPORATE HISTORY :

  Investcorp published its own “Detailed Information Memorandum” on Gucci in 1991, complete with historical background, schedules, and charts. The most complete sources of financial and business information about Gucci from 1991 to 1995 are the financial prospectuses prepared for Gucci’s initial public offering in 1995 and the secondary issue in 1996.

  : SELECTED ARTICLES :

  Lisa Anderson, “Born-again Status: Dawn Mello
Brings Back Passion and Prestige to the Crumbling House of Gucci,” Chicago Tribune, January 15, 1992, 7:5.

  Lisa Armstrong, “The High-Class Match-Maker,” The Times, April 12, 1999.

  Judy Bachrach, “A Gucci Knockoff,” Vanity Fair, July 1995, pp. 78–128.

  Isadore Barmash, “Gucci Shops Spread Amid a Family Image,” The New York Times, April 19, 1971, 57:4, p. 59.

  Amy Barrett, “Fashion Model: Gucci Revival Sets Standard in Managing Trend-Heavy Sector,” The Wall Street Journal, August 25, 1997, p. 1.

  Logan Bentley, “Aldo Gucci: The Mark That Made Gucci Millions,” Signature, February 1971, p. 50.

  Nancy Marx Better, “A New Dawn for Gucci,” Manhattan Inc., March 1990, pp. 76–83.

  Katherine Betts, “Ford in Gear,” Vogue, March 1999.

  Nan Birmingham, “The Gift Bearers: Merchant Aldo Gucci,” Town & Country, December 1977.

  Carlo Bonini, “I Segreti dei Gucci,” Sette, no. 45, 1998, p. 22.

  “Brand Builder: How Domenico De Sole Turned Gucci into a Takeover Play,” Forbes Global, February 8, 1999.

  Holly Brandon, “G Force,” GQ, February, 2000, p. 138.

  Holly Brubach, “And Luxury for All,” The New York Times Magazine, July 12, 1998.

  Brian Burroughs, “Gucci and Goliath,” Vanity Fair, July 1999.

  Marian Christy, “The Guru of Gucci,” The Boston Globe, May 19, 1984, “Living,” p. 7.

  Ron Cohen, “Retailing Is an Art at New Gucci 5th Ave. Unit,” Women’s Wear Daily, June 2, 1980, p. 23.

  Glynis Costin, “Dawn Mello: Revamping Gucci,” Women’s Wear Daily, May 29, 1992, p. 2.

  Ann Crittenden, “Knock-Offs Aside, Gucci’s Blooming,” The New York Times, June 25, 1978, III, 1:5.