Model: The Ugly Business of Beautiful Women (72 page)

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 for
given 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 Andrei 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 “con
trol 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.

Despite their status as officials of an exchange-traded public company, the men behind Elite still inspire allegations of misbehavior, thank goodness. In March 2009, Bertrand Hennet, Bernard’s son, a former rock musician installed as CEO to learn the business from Gérald Marie, was arrested in a big cocaine bust in Paris shortly before Marie left the company, severing its last links to its tawdry glory days. Bertrand left the stage after that,
too. But the latest ruling regime at Elite has had its own tawdry troubles. Behind Pacific Capital is one Silvio Scaglia, an Italian businessman who made billions in cell phones and Internet companies. Implicated in a tax evasion and money-laundering scheme, he was placed under house arrest by Italian authorities in 2010. In February 2011 he was released from house arrest; he continues to deny the charges. Though his situation was unresolved as this latest edition of
Model
went to press, he surely seems to fit right in to the ongoing saga, not just of Elite but of the whole modeling industry.

The Fords took almost as long leaving their agency as Elite’s founders. But they’d been trying to find an exit strategy for years. At the end of 2000, Katie Ford agreed to sell to Magnum Sports and Entertainment, a public company run by former record executive Charles Koppelman, to form an IMG-like mega-agency with interests in sports, fashion, music, and other entertainment. She expected that once the sale closed, she would leave. “I did not want a boss,” she says. “I wanted to be out.”

That did not turn out to be easy. Shortly after agreeing to the deal with Magnum, but before it was concluded, Ford and her then husband, the budding hotel development mogul André Balazs, had hired a money manager to the stars, Dana Giacchetto, and not only gave him money to invest on their behalf but also asked him to peddle some Ford shares to raise money for an expansion. But Giacchetto turned out to be a crook. He caused millions of dollars of his clients’ money to vanish and then tried to skip town, getting arrested with a forged passport and eighty airline tickets. He’d sold shares of the agency to “a bunch of small investors,” Ford says, some of whom sued Giacchetto for fraud and the company for gross negligence and recklessness. “Luckily,” Katie Ford says, the squall passed after Ford ensured that the investors’ stakes in the agency were secure. But she wasn’t out of the woods yet.

In 2003, the sale to Magnum collapsed after Magnum failed to come up with the cash to close the deal and was then delisted by the New York Stock Exchange. Meantime, an ambitious plan to put a model-making competition on television was trumped by former model Tyra Banks and
her
America’s Next Top Model
. That show proved to be a juggernaut, even if it had little to do with real-world modeling. Katie Ford threatened, but never pursued, legal action to stop it.

Finally, late in 2007, Katie Ford got her wish, selling a 93 percent stake in the agency to Stone Tower Equity Partners, a branch of a big investment firm, for about $60 million, according to an insider. At the time, Ford turned her CEO title over to Jon Caplan, the former head of marketing at About.com, whom she’d hired as the firm’s chief operating officer after the Magnum deal blew up. Together, they claimed to have quadrupled the agency’s revenues in the preceding five years. But early in 2009, Stone Tower pushed Caplan out, replacing him with Jon Diamond, a talent, marketing, and media entrepreneur and adviser to Stone Tower who’d been Ford’s chairman and head of its digital operations since the change in ownership. Eighteen months later, Diamond was out, too—and Russians were the reason.

Mikhail Prokhorov’s partner Vladimir Potanin was born the son of a Communist Central Committee member in Moscow in 1961. He attended the Moscow State Institute of International Relations and went to work for the Soviet Ministry of Foreign Affairs in 1983. In 1991, as the Soviet Union was collapsing, he and Prokhorov cofounded a private investment company, Interros, established two private banks, and made a fortune. And that was before they took control of Norilsk Nickel and the Siberian Far Eastern Oil Company.

In 1996, Potanin and other oligarchs bankrolled the reelection campaign of Boris Yeltsin, the first president of the Russian Federation. Yeltsin in turn named Potanin first deputy prime minister. The next year, Potanin left that post when one of his banks took over Norilsk; on his own, he acquired the legendary newspaper
Izvestia
and
Russky Telegraph
, a business daily. Not even the collapse of the ruble in 1998 could stop Potanin; though he and investors in his ventures such as George Soros and BP/Amoco lost huge sums, he managed to hold on to a lot, too, and celebrated with a party for about a hundred friends at a nightclub in Courchevel, the French skiing town. His bank’s creditors eventually recovered about a third of their money.

Meantime, Potanin spread his wings, joining the Solomon R. Gug
genheim Foundation’s Board of Trustees in 2001 and two years later becoming chairman of the board of Russia’s great State Hermitage museum. In 2005, he hosted the Russian version of
The Apprentice
, called
Kandidat
, and two years after that, France named him an officer of the Order of Arts and Literature. But in January 2007, Prokhorov was arrested and held for four days on suspicion of supplying prostitutes to guests on a ski trip to Courchevel. Although he denied the charges, which were later dropped, and launched a retaliatory lawsuit against French authorities, the scandal widened a strategic breach that had grown between Prokhorov and Potanin and led the two oligarchs to dissolve their partnership; Potanin kept Interros.

The separation did not go smoothly, drawing unwanted attention to both of them. The
Sunday Times
of London called their breakup “the biggest divorce in Russian business history.” Curiously enough, it is Potanin, a family man with three children, and not the notorious bachelor Prokhorov, who ended up owning a model agency. Stone Tower Equity Partners was mostly powered by Interros money, says a former Ford executive. Separately, Stone Tower put Interros into the very sort of debt—credit instruments and default swaps—that would shortly bring down the world economy.

After the implosion of Lehman Brothers in September 2009, Potanin and Stone Tower came to a parting of the ways. Interros had the right to take over the private equity investments if Stone Tower’s bets didn’t do well. “Stone Tower lost a lot of their money—billions,” thinks a Ford insider. Potanin took over the fund, which he renamed Altpoint Capital Partners, and all of its investments. Tucked in among veterinary supplies, crane rentals, and cell phone towers was Ford. A former banker and Interros vice president named Guerman Aliev was made Altpoint’s Chairman and CEO and promptly shook up the agency, forcing out Jon Diamond and taking over himself. “They were looking for a scapegoat,” says the insider. “And then, any remnant of the past had to be gotten rid of.” A purge of most of Ford’s remaining longtime employees followed. “I don’t even know who’s running it,” says Eileen Ford. “They fired everyone I knew.”

A native of St. Petersburg educated in the U.S., Japan, and England,
Aliev stepped into the public eye when he opened fordPROJECT, an art gallery with no discernable relationship to the modeling business, in a duplex penthouse on New York’s 57th Street, part of an effort, the
Wall Street Journal
reported, to diversify. “I could go around and brand gas stations,” Aliev told the
Journal
, “but that would cheapen the brand.” Oddly, he added, “I think the biggest hurdle I have to overcome is that people affiliate this with a modeling agency.”

Another hurdle was a lawsuit filed against Ford, Aliev, a booker, and several models that same month by Next Models, another of the remaining powerhouse New York agencies. It alleged, among other things, that a nineteen-year-old Russian-born model with a three-year contract with Next, Inna Pilipenko, followed her booker to Ford in July 2010, not only breaching her contract but entering into “an intimate personal relationship” with Guerman Aliev. Ford’s lawyers responded with a motion to dismiss the whole case, which ends by arguing that the last allegation—“plainly included for the sole purpose of casting the defendants in a negative light and aimed solely as fodder for the press”—was scandalous and should be stricken.

The more things change, the more they remain the same. Today’s models are “much better behaved” than the Supes, says one agency owner. “Nobody will say she wouldn’t get out of bed for less than ten thousand dollars today. They come from more humble roots, from little countries, little cities. And there are all these new players in the agencies who don’t have a clue. In the old days, if there was a problem, you could work it out. These Russians—they don’t play.” Yet hope springs eternal in the muck. “There’s still a mafia,” says Barbara Pilling, a model who owns her own boutique agency, Edge, in Canada and California. “There are still scuzzy agents and playboys and money made from illicit means. But very slowly, the glamour will come back. The desire is still there.”

Beauty is ephemeral. Those who possess it come and go. The thirst for it, however, is eternal.

—Michael Gross
New York City, March 2011

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