[Pure gossip, but rich gossip, in every sense of the term]
New York Times August 17, 2002
Ex-Adviser Sues Denise Rich, Claiming Breach of Contract
By ALISON LEIGH COWAN
D enise Rich, the sequined socialite and Democratic donor who helped
her ex-husband win a presidential pardon that is still under criminal
investigation, found herself headed for court this week after a former
associate sued her for breach of contract.
On Thursday, the former associate, Herbert Black, the Montreal-based
metals trader and art collector, accused Ms. Rich and her company,
Denise Joy Inc., of breach of contract in a little-noticed lawsuit in
United States District Court for the Southern District.
The lawsuit, brimming with tantalizing details of Ms. Rich's life at
the top, claims that she had agreed to give Mr. Black four months to
produce a buyer for her music business and had asked him for help in
managing her fortune, which was as large as $200 million when her
divorce from Marc Rich became final.
According to the lawsuit, that fortune is now no larger than $125
million because Ms. Rich has not been "watching her personal and other
expenditures carefully."
The lawsuit goes on to describe various ways in which Mr. Black pared
Ms. Rich's annual budget by $8 million.
Cost-saving measures mentioned in the lawsuit include $52,000 in
savings on "dog maintenance" that Mr. Black explained in a telephone
interview had been achieved by giving away two dogs that were too old
to walk and that a hired hand pushed around Central Park in an $8,000
baby carriage.
According to the lawsuit, there was also $200,000 in savings from
reduced outlays to her personal chefs; $210,000 in savings by reducing
the number of her chauffeurs from three to one; $30,000 resulting from
switching her yoga instruction to a "fee for service" arrangement;
$125,000 in savings on flowers for her New York apartment by cutting
down on the number of deliveries when she was not there; and $517,000
in savings that came at the expense of three public relations firms.
One line item on her household budget yielded $250,000 in annual
savings, the lawsuit noted: removing Brad Bowles, Ms. Rich's personal
shopper and party organizer, from her payroll.
Marcia Horowitz, Ms. Rich's spokeswoman at the public relations firm
Rubenstein Associates, said yesterday that Ms. Rich had not seen the
lawsuit and would therefore have no comment. "She has not done
anything wrong and will respond in the appropriate forum in the
courts," Ms. Horowitz said. "It was surprising to her that the media
knew before she did."
Mr. Black, who says that his deal with Ms. Rich guaranteed him
millions in management fees and finder's fees, claims that Ms. Rich
has refused to take his calls or pay him, even though he found two
satisfactory buyers for her half-share of the business. According to
the lawsuit, she had initially told Mr. Black that she would be
thrilled to simply extract the $15 million in capital she had invested
in the business.
"Denise shouldn't take advantage of people," Mr. Black said by
telephone from a yacht off the coast of Italy, recalling how only a
few months ago he and Ms. Rich had celebrated their deal at the Fifth
Avenue restaurant Harry Cipriani. "It's not right."
Ms. Rich and Mr. Black last made news in early 2001 when Ms. Rich
invited Mr. Black to be her escort at a White House gala where she
buttonholed President Bill Clinton about her husband's pending pardon.
According to Mr. Black's lawsuit, however, Ms. Rich had soured on the
relationship. "At one point defendant Rich invited Mr. Black to engage
in a more intimate relationship," the lawsuit states. "However, Mr.
Black declined defendant Rich's invitation. Jaded by Mr. Black's
rebuke, defendant Rich has refused to honor the Finder's Fee
Agreement," and their other financial arrangements, the lawsuit says.
Mr. Black has already turned to the American courts with great
success. He was the lead plaintiff in the civil suit against Sotheby's
and Christie's that netted art collectors a $512 million settlement
because of allegations that the auction houses colluded on commission
rates.
Copyright 2002 The New York Times Company