In the summertime of 2016, Rafaelian’s Sakonnet Vineyard hosted a fundraising event on behalf of Armenian orphans. Amongst the guests was lawyer Mark Geragos, the Los Angeles-based criminal defense attorney best understood for his representation of stars. Like Rafaelian, Geragos is Armenian American. The 2 struck it off, and in subsequent years, they started interacting carefully.
In addition to representing Rafaelian personally on some matters, Geragos ended up being an outdoors counsel to Alex and Ani, with an approximated $75,000 monthly retainer, according to a previous board member. Inquired about the numerous legal claims versus the business in a 2017 interview, he responded, “We’ve got a number of, for absence of a much better term, knuckleheads, who believe they’re going to do this, that, or the other. We’ll handle them.” (Geragos validated he was employed as outdoors counsel however decreased to discuss his cost.)
Geragos, who has actually represented Michael Jackson, Chris Brown, and Colin Kaepernick (a member of Medium’s board of directors), likewise started representing Rafaelian’s vineyard and presented her to Ice, whose basketball league, Big3, was another Geragos customer. Rafaelian later on signed up with Geragos as a financier in the league and coordinated with Ice to set up $10 billion for 21 local sports networks. (The quote stopped working.)
Geragos ended up being a routine existence around the Alex and Ani head office, previous team member state, and functioned as a casual member of the management group. According to a sworn statement in a claim submitted with the Superior Court of California by Alex and Ani versus their previous outdoors work counsel, Tracy Warren, and her law office Ogletree Deakins, Geragos ruffled plumes by supposedly “trying to run Geragos and Geragos expenditures through AA” and licensing a $500,000 payment to Big3 for “marketing,” amongst numerous other offenses. The statement was submitted in reaction to a civil claim by the fashion jewelry business implicating Warren — and by extension Ogletree — of legal malpractice. Warren insisted she’d acted correctly. Geragos decreased to discuss the suit, stating he didn’t have the authority to be estimated. The match is continuous.
According to Warren’s court filing, on December 18, 2017, acting upon Rafaelian’s behalf, Geragos sent out an e-mail shooting Alex and Ani president and COO Cindy DiPietrantonio and CFO Bob Woodruff. Under the subject line “Nope,” he thanked them for their “absence of service and disloyalty” and included, “You are right away eased of your at will place and just due to the fact that Carolyn is so excellent hearted that I haven’t personally perp strolled you out of HQ. … Embarassment on you both and excellent riddance.” Woodruff and DiPietrantonio decreased to comment.
Geragos openly associated the departures to the end of the executives’ 1 year agreements and informed National Jewelry Expert publication that the business anticipated to fill the positions internally. While no hire was revealed for the function of president, the CFO task was without delay filled by Geragos and Geragos’s own CFO, Andrea Ruda. Landing the task was a remarkable accomplishment for the 26-year-old executive. Having actually acquired her bachelor’s degree from NYU’s Stern School of Organisation in 2013, she’d worked for 3 and a half years as an expert and specialist at Accenture prior to coming aboard at the Los Angeles law office. She’d held the post there for 10 months when she was tapped to manage the financial resources of a billion-dollar business. (Ruda decreased to comment.)
Ruda’s function ended up being a point of contention on July 25, 2019, when Alex and Ani submitted a $1.1 billion gender discrimination suit versus its financial institution, Bank of America, declaring breach of agreement, tortious disturbance, and offense of the Equal Credit Chance Act. The problem, led by conservative legal crusader and often Geragos co-counsel Harmeet Dhillon, laid bare the business’s precarious monetary circumstance, declaring the bank’s actions had actually “driven Alex and Ani to the precipice.”
However handling a lot financial obligation brought substantial threats. According to a source who has actually analyzed the business’s financial resources, it was this relocation, coming at a time when the upward trajectory was currently flattening, that precipitated Alex and Ani’s failure.
The business’s relationship with Bank of America had actually started well. In 2014, the bank even included the brand name in a nationwide industrial promoting its assistance of women-owned business. Bank of America “assisted Carolyn Rafaelian’s company grow from a Rhode Island store into a worldwide feeling,” the area kept in mind.
In 2016, Alex and Ani obtained $170 million from Bank of America and 6 other banks, in part to buy the Cinerama factory. On the other hand, it likewise worked out a $50 million turning credit line. At the time, the Cinerama acquisition appeared to make great company sense — a clever play for vertical combination, considered as a rational precursor to a prepared IPO. It was likewise an obvious windfall for the factory’s co-owners, Carolyn and Rebecca Rafaelian.
However handling a lot financial obligation brought substantial threats. According to a source who has actually analyzed the business’s financial resources, it was this relocation, coming at a time when the upward trajectory was currently flattening, that precipitated Alex and Ani’s failure. At the time of its $1.2 billion evaluation in 2014, according to this individual, EBITDA was roughly $80 million annually and growing at a 30% clip. By the end of 2018, that number had actually been up to less than $10 million. In December of that year, the banks, obviously remembering of the business’s precarious circumstance, supposedly held Alex and Ani in default. The quantity then owed to the lending institutions, according to the source with direct understanding, was approximately $100 million, though the supposed default appears to have actually been set off by a narrower problem, an arrangement of the agreement called an “add-back” that enabled an extra $8.7 million payment to Cinerama’s owners. According to Alex and Ani’s problem, the bank declared the payment was improper; Alex and Ani disagreed, firmly insisting that the financial institution had “fabricated” the accusation in order to perform “an organized takeover by Bank of America’s group of outsiders.”
As an outcome of the supposed default, the banks moved rapidly to secure their possessions. In addition to raising rates of interest on the main loan and freezing the credit limit, Bank of America took actions to liquidate the business, approximating its worth at roughly $20 million, a portion of its 2014 peak, according to the source. Dealing with the possible death of her business, Rafaelian accepted an offer that left Lion Capital with a bulk stake. On the other hand, at the banks’ persistence, outside specialists were generated to reorganize the business.
For a legal file concentrated on the complexities of business banking, Alex and Ani’s problem versus the loan provider produces extremely significant reading. Not just did it take the bank to job for its function in the 2008 monetary crisis, which perhaps has no bearing on the case, however it knocked the banks’s supposed betrayal of its own “woke marketing.”
More seriously, it implicated the bank of gender discrimination. Throughout the period of CFO Bob Woodruff, the problem declared, the bank had “robbed the Alex and Ani business cat, gathering countless dollars from the business through puffed up costs, ridiculous consulting plans, and gold-plated repayments.” When Woodruff was changed by Ruda, a “brand-new constable,” as the problem put it, the bank struck back.
“Ruda is a female,” the problem kept in mind “which (in spite of its market-facing messaging) Bank of America thinks about to be an issue.” The problem even consisted of a picture of Ruda to highlight its point. The factor for the bank’s actions, it declared, boiled down to what it stated were “2 reliable BofA worths: greed and sexism.”
To some legal observers, the match appeared over the top — “more of a closing argument masquerading as a grievance,” in the view of Joe Patrice, senior editor of the legal blog site Above the Law. “They’ve put it in front of the opposite to let them envision how that would play to a jury,” he thinks. Another objective may be “setting out a closing argument to journalism and hoping it gets enough play to get a settlement,” he states, including that the addition of visual help developed to contrast Alex and Ani’s female management group with the male bank executives and Woodruff was “certainly unusual.”
The match was inexplicably withdrawn on August 19 of in 2015, less than a month after it was submitted. Neither side confessed misdeed, and to all outdoors observers, Rafaelian stayed the CEO of Alex and Ani.
The lead lawyer on the match, Harmeet Dhillon, is popular for her combative technique, having actually pertained to nationwide prominence with a not successful match versus the University of California, Berkeley, for declining to permit reactionary firebrands Ann Coulter and Milo Yianoappolus to speak on school, and with her dogged representation of fired Google engineer and males’s rights trigger celebre James Damore. (Dhillon did not react to an ask for remark.) According to one well-placed source who talked to Marker, the match was submitted without the board’s approval, in offense of the law. “The entire thing was outrageous,” the source states. “It was a sham. Carolyn had no legal right to submit that match. We checked out it in the documents the exact same time as everybody else.”
When Rafaelian was challenged about the relocation, the source remembers, she stated the board would simply need to “handle it” and associated the aggressive position to maternal impulse. “You can’t separate a mother from her child,” she stated.