Model: The Ugly Business of Beautiful Women

by Gross, Michael

—Michael Gross

  New York City, October 2002

  THE LAST WORD

  It is March 2011 and I am leafing through my wife’s stack of the latest fashion magazines. Natalie Portman, Vanessa Paradis, and Demi Moore are on three recent covers of French Elle, Mila Kunis on W, Katy Perry on American Elle, Salma Hayek on T, and reality TV’s Kim Kardashian on the cover of Harper’s Bazaar. Whatever happened to models? Thank God for British Vogue. It still believes; it has Rosie Huntington-Whiteley on its cover this month. Of course, she’s now a model-turned-actress promoting the movie Transformers 3. The supermodel is a fashion relic, consigned to the dustbin, “yesterday’s papers,” as the Rolling Stones once sang, “yesterday’s girl.”

  Okay, it’s not entirely true. In men’s locker rooms at Indiana University, they know who Gisele Bündchen is. A few of the guys might even know Chanel Iman, Doutzen Kroes, and Karolina Kurkova from their Victoria’s Secret ads. Heidi Klum and Tyra Banks are reality TV superstars. At Topshop, Kate Moss’s clothing collection is a top seller. There’s Naomi Campbell on Page Six—again. Isn’t that Cindy Crawford selling bedding at JCPenney? And, of course, there are the Sports Illustrated swimsuit superstars: Brooklyn Decker, Irina Shayk, and Damaris Lewis.

  Brooklyn, Irina, and Damaris? Chanel and Doutzen? Somehow they don’t stir the blood the way Christy, Linda, and Naomi did back in 1995 when the first edition of Model was published and supermodels only needed one name. It sure seems as if fashion modeling peaked that year. “The new girls are no names!” says Paolo Zampolli, the founder of ID Models; he left the modeling industry “to move to a real business”—real estate.

  Though now and then fashion magazines proclaim the return of the model, only British Vogue regularly practices what it preaches. But even it, in a February 2011 article claiming “models today are enjoying a popularity not seen since the Supers,” had to admit that the new model fever (personified by not-quite-household-names Freja Beha Erichsen, Lara Stone, Agyness Deyn, Coco Rocha, and Erin Wasson) infects only a “cult,” not the whole culture the way the Supes did. While there may well be, as that article said, a “subtle shift back to basics in fashion,” with “name” models once again starring in ads and on influential catwalks, only those ’90s girls (plus the great and only slightly later Kate and Gisele, now Mrs. Tom Brady) boast the sort of name recognition that once, briefly, made models world-class celebrities. This isn’t a good thing for gossip columnists or authors of books like this one, but it probably is good for both fashion and modeling. Back in the ’90s when the tail of modeling was wagging fashion’s dog, the clothing business was swooning and modeling was set to suffer the same fate.

  When I last updated this book in 2000, John Casablancas had just retired with a blast at the business he’d helped create. In the years since, things have changed. “It’s become more of a business than a love affair,” says the also-retired Eileen Ford.

  The business still has ugly moments. In 2002, a batch of models brought a federal class action suit against about a dozen top agencies, alleging that they colluded in, among other things, a price-fixing conspiracy to charge extortionate commissions and fees, thereby cheating models out of a huge share of their earnings. Because antitrust lawsuits can trigger triple-damage awards, the suits threatened the financial health of the American modeling industry—already reeling from the supermodel backlash. After the judge in the case denied a motion to dismiss the suit, “they all came running” to settle, says one of the lawyers behind the suit. First IMG, whose modeling branch was only part of its huge sports management business, broke ranks; it had few friends, having cleverly undercut its competitors on commissions. Finally, all the others settled, too, just as the case came to trial in spring 2004; they created a fund of $22 million plus interest for the plaintiffs and agreed to become more transparent in their dealings with models, especially when it came to making it clear that commissions were negotiable. “We didn’t transform the business,” says lawyer Andrew Hayes, “but we made an impact.”

  The suit proved to be a watershed event. After the settlement, “all the original members of what had been a small family for a very long time disappeared, died, retired, sold,” says David Bonnouvrier, now the head of DNA Models. That boutique agency, still one of the top agencies in New York, was founded by his father, the late Jérôme Bonnouvrier, nephew of the French modeling pioneer Catherine Harlé. Coming on the heels of the grunge-fashion fiasco of the late 1990s, when “an industry of aesthetics and beauty became one of midgets and anorexics,” David Bonnouvrier continues, the departure of modeling’s founding generation caused “an identity crisis, and slowly but surely, the pie shrank. Now there are too many players, too many people without knowledge of the culture of the industry who get in for reasons that, I suspect, are not very fashion oriented.”

  The main characters of this book are the Ford and Elite agencies, one all-American, one quite European. Their present condition is captured by the title of a 1966 film: The Russians Are Coming, the Russians Are Coming. Although models from the former Soviet Union and its East Bloc allies have been on the scene since Model was first published—and briefly, in the years since, former Soviet bloc models seemed to dominate the business, with only Brazilians giving them serious national competition—now, Russians are doing more than modeling. Ford and Elite have both attracted Russian investors; the former is owned by one of Russia’s so-called oligarchs.

  John Casablancas’s departure from Elite in 2000 was facilitated when Christian Larpin, then forty-nine, a Swiss businessman who’d previously been in the waste management business, bought John’s one-third share in the agency for a sum variously reported as $5 million, $15 million, and $40 million. Larpin soon had issues with his new partners, Alain Kittler and Gérald Marie, and in 2003 their disagreements led the pair to go to court to try and rid themselves of Larpin, who’d accused them of mismanagement after the agency began hemorrhaging top models. They sued in Malta, an archipelago republic in the middle of the Mediterranean, where Larpin was a principal in an entity called Osiris. He would later claim he had partners in it but didn’t know who they were. Malta is famous not only as a corporate tax haven but for allowing shareholders to remain anonymous.

  “It’s a joke,” Larpin said of the suit, “and they are going to lose.” Though he still considered Elite “a fantastic brand” and wanted to retain his stake, he admitted that he was no longer speaking to Kittler and Marie. Marie, in a classic case of business as usual, was back at the helm of Elite Paris after his brief BBC-inspired hiatus, and had recently married yet another model, this time a Russian named Irina Bondarenko. At sixteen, Bondarenko had placed second in the 1995 Elite Look contest.

  The causes of Larpin’s troubles with his partners isn’t clear, but that class action suit was likely one of them, as it brought unwanted attention to Elite’s financial and ownership structure, a complex web of companies. Lawyers for the aggrieved models were trying to figure out who owned Elite’s European operations, asking about its Swiss bank accounts, and accusing its executives of withholding information. At the same time, a former Elite model sued the agency and Casablancas, charging him with seducing her fifteen years earlier when she was fifteen, impregnating her, and forcing her to have an abortion. Casablancas stated that the allegations were fabricated and driven by greed. In any event, the case settled out of court.

  Meantime, another lawsuit against Elite was wending its way through the courts—and would end in the spring of 2003 with a judgment that, combined with the agency’s other troubles, nearly put it out of business. Casablancas hired Victoria Gallegos, a star saleswoman at a Prada boutique, as a new Elite executive. But Gallegos, an asthmatic, grew unhappy when her requests that the agency comply with existing law and ban smoking were ignored by both models and bookers. When she grew ill and complained, she was mocked and told she ought to leave. When she saw an attorney instead, she was fired. Gallegos sued the agency, Casablancas, Marie, and other executives for wrongf
ul termination—and a jury awarded her $5.2 million in compensatory and punitive damages.

  Casablancas negotiated a settlement, but Elite and several of its executives remained on the hook. Eventually, an appeals court would uphold Elite’s liability but strike down the financial award, ordering a new trial. In the process, Elite’s bookkeeping and corporate structure came under intense scrutiny, with the court describing itself as “puzzled and frustrated by the gaps and inconsistencies that surfaced” when Gallegos tried to determine Gérald Marie’s role in Elite. “As a result of defendants’ evasiveness and an apparent willingness to lead this court to erroneous conclusions, it appears this confusion is designed to prevent the financials of Elite S.A. from being disclosed in this litigation,” the court wrote when it ordered the Elite executives to submit to further questioning and restrained them from disposing of any assets to avoid paying damages. “The cloud of possible improprieties has not been lifted.”

  In the spring of 2011, the new trial on damages had still not been held, but in the meantime, the Gallegos case had compounded Elite’s already significant legal problems. The class action lawyers wanted to investigate the parent company’s subsidiaries and bank accounts. Afraid they’d conspire with Gallegos’s attorneys to have the court appoint a receiver to oversee Elite’s finances, both Elite Model Management, the company’s American wing, and Monique Pillard, its cofounder and president, declared bankruptcy in February 2004. With the court’s approval, Elite eventually negotiated a settlement of its own: $1 million, according to an insider. But in the meantime, the American company, owner of Elite offices in New York, Miami, and Los Angeles, and half shares in several other cities, was separated from its European parent and sold.

  A diverse cast reportedly bid at the bankruptcy auction in August 2004, including the private equity investors who’d guaranteed Elite’s debtor-in-possession financing for the bankruptcy; an investment management firm with ties to accused securities swindlers; Paolo Zampolli, owner of ID Models, who says he’d teamed up with the William Morris Agency in hopes of creating a mega-agency that would ease the passage of models into lucrative celebrity careers; and Jeffrey Epstein, a socially connected money manager. (Epstein would later be revealed as a sex offender who’d made a habit of paying for sexually charged “massages” from underage girls; he was eventually jailed in Florida for solicitation of prostitution.)

  Several people close to the sale believe Epstein was either secretly in partnership with Gérald Marie or bidding as a stalking horse on behalf of Elite’s European parent. If the Europeans were behind him, they were hedging their bet, as one person involved in the bankruptcy sale is sure they believed no one would try to buy the agency and they’d get it back. “They should have known that owning an agency is the dream of every middle-aged playboy,” that person says.

  Ultimately, the bidding came down to two parties. One was Eddie Trump, a secretive Florida-based property developer (and no relation to Donald Trump, another rumored bidder and another rich man who decided late in life to open a modeling agency). The other bidder was even less-known; most of those in the modeling business who’d heard about him at all referred to him only as “the Russian.” “The Russian”—Oleg Baibakov—showed up after Trump had won the auction and offered to top his bid, only to discover that neither a promise of payment nor a personal check would be sufficient to take home the prize. Nonetheless, he was a harbinger of things to come.

  A bachelor with a grown daughter, best known today as a contemporary art collector with a multimillion-dollar apartment in New York’s Time Warner Center, Baibakov was a former managing director of Norilsk Nickel, a Siberian mining giant. Built in part on the labor of prisoners from the Soviet Union’s notorious gulags, it was the world’s largest producer of nickel and palladium and a major producer of platinum, cobalt, and copper. In the mid-1990s, after the fall of the Soviets, Russian bankers lent their new government money in exchange for shares in giant state-run industries at extremely low prices. The bank that took control of the troubled Norilsk for the rock-bottom price of $170 million was itself controlled by two men who would soon rank among the oligarchs, the wealthiest, most powerful members of Russia’s new upper class: Mikhail Prokhorov and Vladimir Potanin.

  Ever since Baibakov’s bid for Elite, a story has circulated in the modeling world that Prokhorov was behind it. A spokeswoman for Prokhorov says she’s has heard it repeatedly and denies it. Baibakov once hinted to a Wall Street Journal reporter that he had ownership stakes in the better-known Prokhorov’s two highest-profile ventures in America, the New Jersey Nets and Snob magazine; that’s another story the Prokhorov camp denies. Perhaps it’s a natural misunderstanding. Prokhorov’s involvement notwithstanding, Baibakov isn’t the only Russian who has shown an interest in Elite, nor is he the only Norilsk-related oligarch who has tried to buy a model agency. One mysterious Russian now sits on the board of Elite’s European parent. And another, less mysterious but still a curiosity, took over Elite’s historic rival, Ford. The Russians, in other words, have come.

  Just before Elite New York was sold, Christian Larpin, still unhappy, demanded Gérald Marie step down from the helm of Elite Europe. Instead, Marie and Alain Kittler got Larpin out—some say forced, some say squeezed, some say with the backing of the controversial Egyptian businessman Mohamed Al Fayed, then the owner of Harrods in London. Then, John Casablancas, restive in retirement, decided he wanted back in.

  Creative World Management, which finally won the right to buy American Elite for $7.8 million, was a newly former subsidiary of the Trump Group, controlled by Eddie Trump. Trump, a sixty-four-year-old bachelor, is “an aging playboy who wanted to play, but not necessarily with underage models,” says an Elite executive who worked for him. Trump and his older, married brother Jules are children of a Lithuanian tailor who moved them from their birthplace in South Africa to the Netherlands and then New York. Eventually, they settled in Florida and became real estate developers specializing in oceanfront condos and resorts. But they invested in everything: men’s clothing, auto supplies, discount retailers, bowling alleys, websites.

  Trump was disinclined to kowtow to Alain Kittler and tangled with Gérald Marie. “They were both stubborn fucks,” says the Elite executive, and a standoff ensued. Trump refused to pay an additional $3.5 million to join the international Elite network and become an exclusive adjunct. He wouldn’t even call the Europeans, wanting them to come to him. Then, in May 2005, Trump lured Casablancas back to Elite. “John had never forgiven Gérald for the BBC thing,” says the executive, “so he was thrilled to rub it in Gérald’s face that he was coming back via Eddie. Eddie didn’t understand the catfight and flew him in.”

  After a four-hour meeting at the luxury hotel where Trump was living, Casablancas moved to New York. His five-year absence hadn’t changed him. “After me, nothing happened,” he boasted to New York magazine on his return. “The business has become extraordinarily dull.” But his return engagement at Elite didn’t last. “He wouldn’t take direction,” Trump says. And he was being chased by process servers in the California forced-abortion lawsuit: “I had to move him three times.”

  By the end of 2005, Casablancas was gone again, but only from Elite. At the end of that year, a French magazine said he was about to return to modeling in an unlikely partnership with Xavier Moreau, the portly photo agent who was Gérald Marie’s wingman on the BBC; Sébastien Tranchant, a son of the founder of a large group of French electronics and casino companies; and one Andrei Krapotkin, a mystery man, unknown in the modeling world.

  The only person with a similar name to make a public mark is an Andrei (a.k.a. Andrew) Krapotkin, the Russian-born head of the Croatian office of the London-based European Bank for Reconstruction and Development, formed in 1991 to invest in the former Soviet bloc, from Eastern Europe to Central Asia. Casablancas’s last vehicle—the partnership with Moreau and company—never gained traction. But just after an Andrei Krapotkin left that bank, an Andre
i Krapotkin came to own a large piece of Elite. It’s unclear whether they are one and the same.

  Early in 2006, Alain Kittler and Gérald Marie sold their non-American operations in a complex deal several claim to have fathered. In 2011, an investment group known as GEM, or Global Emerging Markets, said on its website that via an involvement with the bankruptcy filing of Elite in New York, it “cultivated and proprietarily initiated”—whatever that means—an innovative combination of a management buyout and an initial public offering of Elite’s stock on the German exchange in Frankfurt, and continued to own a “control investment,” which it defined as “substantial ownership.” But the financial disclosures of Elite World S.A., as the company is now called, do not show such a continuing investment and people involved with Elite in New York at the time of its bankruptcy say that though GEM was involved in the deal, it was actually put together by the corporate restructuring experts—lawyers and businessmen—who’d helped save and sell American Elite.

  One of those experts had a working relationship with Bernard Hennet, a well-connected French businessman who’d been an executive in the German plastics industry for many years before taking over Fanatic, a windsurfing brand. A licensing expert, Hennet thought Elite might still have a valuable brand that could be exploited. Kittler and Marie wanted €25 million for it; Hennet and his team put up about €6 million and raised the balance from “a variety of institutional and private investors,” says accountant Andrew Gleeson, Elite’s current chief financial officer and a director. Ten percent of that came from the Middle East and most of the rest from America and Europe. In May, the company went public.

  Although he met with Eddie Trump, Hennet was unable to restore relations between the two Elites, and though they sometimes did business, they remained hopelessly estranged. Still, Hennet hung on atop Elite until an “extraordinary” shareholders’ meeting in February 2011 when a new board of directors was elected and a new CEO installed. Krapotkin, who’d joined the board in 2008 after Cyprus-based Luxcor Management bought 28 percent of Elite, was one survivor of what an inside source says was a coup d’état by another shareholding group, Pacific Capital. When asked for information on Luxcor and Krapotkin, CFO Gleeson, another survivor, replied,” I consider this to be a private matter.” Pacific Capital, however, has a much more public profile.