Unlucky Charms: The Rise and Fall of Billion-Dollar Jewelry Empire Alex and Ani

Unlucky Charms: The Rise and Fall of Billion-Dollar Jewelry Empire Alex and Ani

Image for postIllustrations: Glenn Harvey

Astrology, private equity, a $1.1 billion gender discrimination lawsuit, and a precariously built bangle behemoth

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Though Alex and Ani was always aimed at a mass consumer and never found much traction among stylists or fashion editors, it got a critical early boost from a genuine A-lister who?d go on to become the godmother of spiritual consumerism. In 2004, Rafaelian congratulated actress Gwyneth Paltrow on the birth of her daughter, Apple, by sending her a custom-designed necklace bearing the forbidden fruit. Paltrow wore it around for a while, instantly putting the brand on the map and creating what Entertainment Weekly called ?a new style craze.?

In 2009, Alex and Ani opened its first branded storefront in Newport, Rhode Island. The old-money summer resort, once home to assorted Astors, Morgans, and Vanderbilts, might have seemed an odd choice given the brand?s $30 bracelets. But the financial crisis had created a paradigm shift. Conspicuous consumption was out; laid-back authenticity was in. Even the well-to-do sought to accessorize on the cheap.

While Alex and Ani grew steadily, there was little evidence of what would become, a few years later, a beloved brand with a growing international reputation. That changed one day in late 2009, when Cinerama staffers looked up from their workbenches to see the boss squiring around a solidly built guy in a fedora. Shortly thereafter, they met their new CEO: Giovanni Feroce, a hard-charging former Army major Rafaelian had met at a University of Rhode Island alumni homecoming party. Like Rafaelian, he had grown up in the area and had a sharp mind for retail, having spent a few years running a small eyewear company. Though he knew next to nothing about the jewelry business, he was confident, ambitious, and full of ideas.

At the time, the company was still small. The executive suite was a room in the factory?s basement. Everyone punched in and out on an old-fashioned time clock, and supplies were kept in recycled banana boxes.

Feroce came in like a one-man infantry battalion and quickly set about infusing the company?s culture with military discipline and management techniques he?d picked up during a stint at U.S. Central Command. Having served as a liaison officer coordinating crisis responses among a variety of federal agencies and having been deployed multiple times to the Middle East, Feroce was eager to bring the management approach he?d learned in the military to the business world.

He insisted on ?sitreps? (situation reports), during which staff members delivered efficient, highly structured updates on recent developments. Executive meetings were held around a horseshoe-shaped conference table modeled on the one used by CENTCOM; the distribution center became the JOC (joint operations center). Business strategy was developed in accordance with the Military Decision Making Process, with a painstaking analysis of the mission, the operational environment, and the desired end state, followed by the thoughtful consideration of multiple COAs (courses of action).

Rafaelian and Feroce made for an odd pair, the earth mother and the drill instructor, an unorthodox alliance of what Inc. dubbed ?the disciplined and the divine.?

It was an awkward fit, and the regime change didn?t sit well with everyone. Out of 23 employees, 21 left within a year (nearly all of them voluntarily). Meanwhile, Feroce brought in a number of military veterans already schooled in his approach. And before long, with Rafaelian overseeing the creative side and surrendering control of managerial decisions to Feroce, the business started to take off.

Former employees still marvel at the brash confidence Feroce brought to the company?s culture. According to a 2013 Inc. magazine story, Rafaelian had long sought to infuse her creations with ?positive energy,? and Feroce took to boasting, only half-jokingly, that Alex and Ani would one day be ?the largest energy company in the world.? He mused about building a 360-degree lifestyle brand, with home furnishings, apparel, and even a ?signature-series car.? When one staffer briefed him on the Disney Store?s branding requirements, he insisted on playing hardball. ?They?re Disney,? the staffer protested. ?Well, we?re Alex and Ani,? he replied. ?Tell them we said no.? A few months later, the two parties came to terms, with the Mouse House meeting most of the jeweler?s demands, according to Rick Simone, a former VP who oversaw events and partnerships. (Alex and Ani pieces are still featured prominently in the Disney Store.) ?That was a real aha moment,? Simone marvels. ?From then on, all those deals were on our terms.?

Rafaelian and Feroce made for an odd pair, the earth mother and the drill instructor, an unorthodox alliance of what Inc. dubbed ?the disciplined and the divine.? But something just clicked.

?She was the creative force, for sure,? a former executive recalls, ?but he was a catalyst, a change agent.? Before Feroce, according to a former employee, ?there was no structure. That was Giovanni?s biggest contribution: standard operating procedures ? how we made decisions. I had to have three options all the time: best, medium, and last resort.?

Budgets increased as well. Out went the janky old computers, replaced by new laptops and iPhones. ?Everyone had to be on Skype,? recalls a former employee. It was like, ?You?re accessible all the time. If you want to make this a billion-dollar company, get ready.?? That thinking, another former staff member said, ?radiated from him out to everyone in the company.?

The results were apparent almost immediately. ?All of the sudden, blast off,? a former executive remembers. By 2011, the company?s corporate offices had moved out of the Cinerama factory basement to an office space nearby. Alex and Ani gradually ditched private-label work to focus on its own brand, and customers responded. National department stores began carrying the line. The Paper Store, a stationery chain, installed Alex and Ani mini-boutiques in 72 of its locations at a cost of $11 million. Alex and Ani opened a second retail outlet in Palm Beach, greeting the new neighbors with a massive street party featuring an all-white tropical paradise in the courtyard outside. Another store in Boston followed, and within a few years, there were 40 around the country ? then more than a hundred. The headcount grew as well, from fewer than two dozen when Feroce started to upward of 1,000 just a few years later, when the company introduced itself to a national audience with a Super Bowl commercial that doubled as a plug for Belcourt of Newport, Rafaelian?s painstakingly restored 44,000-square-foot mansion that she rented out for weddings and other high-profile events.

By 2012, the company?s skyrocketing growth had caught the attention of San Francisco-based private equity firm JH Partners, which purchased a 40% stake in Alex and Ani for north of $50 million, according to a former executive with knowledge of the deal.

From the start, Feroce instituted a clear chain of command. ?Giovanni just always made it very clear: ?Carolyn is creative, and I am operations, period. End of story,?? one former employee recalls. Rafaelian ?wanted input on everything,? the person adds, but Feroce insisted, ??You don?t go to her because she doesn?t make the decisions.??

Even so, neither Feroce nor Rafaelian were particularly inclined to micromanage, instead creating a culture of accountability under which staff members were given as much autonomy as possible. ?There were no crazy borders to jump over,? a former employee recalls. ?It was, just make decisions and take action.? Employees were encouraged to act like entrepreneurs within the company and were given the authority and budget to do so. ?[Carolyn] has always been a scrappy entrepreneur at heart, and she knew we were in uncharted territory,? a former executive says. ?She had this vision of a big global business, and she knew she had to give us each the freedom to execute.?

The headcount grew as well, from fewer than two dozen when Feroce started to upward of 1,000 just a few years later.

In addition to large chains like Nordstrom and Bloomingdale?s, hundreds of small mom-and-pop stores across the country began carrying the line. Leitzel?s Jewelry, a Pennsylvania-based retailer with two shops, began stocking Alex and Ani in 2014 after multiple inquiries from customers, says Leitzel COO Allison Leitzel-Williams. Though Leitzel?s focus has always been big-ticket pieces like diamond engagement rings, the Alex and Ani bangles attracted new customers. ?It really brought people in the door,? she adds. ?It was more of a marketing product for us than a jewelry product.?

The store eventually devoted an entire wall cabinet entirely to Alex and Ani. ?We?d have every single bracelet on display, and you?d sell multiples of each one,? she recalls. ?It was a bit of a phenomenon. Groups of women would come in and shop together just to get Alex and Ani.? The line was so popular, Leitzel-Williams suspects it changed how women accessorized. ?People did not use to wear multiples of a piece of jewelry,? she points out. ?Now it?s a big fashion statement, and Alex and Ani was a big contributor to that.?

Unencumbered by the long-standing practices of more established competitors, Alex and Ani eagerly experimented with new digital marketing strategies, including analytical user acquisition tools and programmatic ad buying. ?There was a tremendous investment,? a former executive recalls. ?Just a ton of cash to deploy at a time when larger companies were still trying to figure out digital. If we had more experience, we wouldn?t have taken the risks that we did, and we wouldn?t have had the really big wins.?

Well before it became standard industry practice, Alex and Ani began scooping up all the clickstream data it could ? every tap and swipe on the website, every email opened or ignored ? and combining it with whatever social media behavior they could identify to build highly detailed profiles of each customer or prospect. Adding third-party data, including anonymized geolocation signals, provided further insights about a person?s other purchases and interests. A mobile app, offering even more granular detail on some 500,000 diehard fans, was linked to location beacons deployed in each store. (The app was retired in early 2018.)

The resulting mountain of consumer data allowed for highly precise market segmentation and ad targeting. The company knew who liked rose gold versus silver, what time of day a given person was most likely to read an email, and who responded to which call to action due to which prompts. ?You could press buttons and make money in real time,? the exec marvels. What made the approach all the more effective for Alex and Ani was the company?s ability to appeal to consumer preferences by tweaking not only its marketing messages but the products themselves.

Much in the way Netflix read the big-data tea leaves to engineer the success of House of Cards, Alex and Ani could consult its data management platform to learn, for example, that many of its customers were fans of the NFL, how many supported which team, and what styles they favored ? critical information that might suggest a new series of football-themed bangles. Similar insights helped the company make sure it never showed someone an ad for a piece they already owned and determine which of the thousands of different items customers were most likely to pounce on next. It could help determine what pieces would be most popular with the local consumer base or the best music festivals or other cultural events to partner with (Alex and Ani VIP lounges became a fixture at events like SXSW and the South Beach Wine and Food Festival). And it could estimate how much a licensing partnership with Harry Potter might be worth versus one with Star Wars or Game of Thrones or Friends.

Alex and Ani University, a ?professional development center? in the spirit of Disney Institute and McDonald?s Hamburger University opened for business in July of 2012.

In light of the company?s astonishing success, it seemed only natural to share its lessons with the world. Alex and Ani University (AAU), a ?professional development center? in the spirit of Disney Institute and McDonald?s Hamburger University opened for business in July of 2012, offering ?courses, programs, and other learning opportunities birthed to awaken, nurture, and inspire human development through self-understanding and systems thinking,? as the website put it. Among the course offerings were Reality Management, which explained ?how to fuel an operational tempo to create new organizational norms,? and Rethinking Retail?, which taught students how to produce ?a generative dialogical way to story while meeting with a client? and to ?[differentiate] the client experience in an unsuspecting way that is uniquely human.?

Buzzwords aside, the curriculum mostly aimed to impart an essential truth behind Alex and Ani?s appeal: Its products were not just glittery trinkets but spiritual armor designed to protect, inspire, and ennoble the bearer as she made her way through the world. Retail employees at the company?s ?bangle bars? were known internally as ?bar tenders? for their patience and empathy. They?d draw out customers? personal stories ? what AAU president Dennis Rebelo called ?story birthing? ? prescribing just the right stones and talismans (the Eye of Horus for protection, light, and reason; the dragonfly for grace, change, and power) for each unique journey. Meanwhile, every piece came with a small card explaining the significance behind it. ?The key to the brand, which they have always done extremely well, is infuse it with meaning,? notes Robert Bates, news director of JCK, a jewelry industry trade magazine, who has covered the company for years. ?It?s kind of low-end stuff, but with the cards and poems, it manages to convey something bigger.?

One day in April 2013, the Alex and Ani staff climbed into an armada of luxury motorcoaches and headed to the Mohegan Sun: Casino & Resort for a corporate retreat and pep rally. Clad in a simple pink cardigan over a T-shirt, Rafaelian stood at the lectern in a hotel conference room, her gum-snapping accent lending a common, relatable touch to what might otherwise have seemed a dubiously lofty message. ?Every single person in this room is divinely put here by God,? she said, explaining that she knew this because He told her so. ?He basically said, here?s your warriors, Carolyn,? she recounted ? pronouncing it yuh wuh-ree-ehs ? ?Here?s the people that are going to help you deliver the message. His message.?

Despite her upbringing in the Armenian Church, Rafaelian?s embrace of New Age spiritual ideas and practices was more than good marketing. At Alex and Ani?s headquarters, desks and walls were studded with crystals for positive energy. Statues of Rafaelian?s spirit animal, the panther, prowled atop bookshelves, desks, and filing cabinets. Spaces were regularly ?smudged,? or purged of bad energy with burning sage. Store openings were timed to coincide with auspicious astrological phenomena. ?There?d be quarters lying around in your office that the shaman had put there,? one former employee remembers. ?Carolyn believed all of that.?

Spaces were regularly ?smudged,? or purged of bad energy with burning sage. Store openings were timed to coincide with auspicious astrological phenomena.

Designers paid careful attention to religious traditions, both ancient and modern, in collaboration with a former animal therapist turned ?chief symbologist,? Marisa Morin, who regularly consulted academics and theologians as new pieces were developed. Every piece of Alex and Ani jewelry sold, Rafaelian explained in 2014, ?has been blessed by my priests, it has been blessed by my shaman friends, protected from radio frequency, from radioactivity.? In that way, she added, each item was sure to ?hold vibration of pure energy, healing love.?

For the most part, the company?s spiritual practices prompted eye rolls; some staff members even found them spooky. ?She believes frankly in witchcraft,? one former executive alleges, describing Rafaelian?s use of so-called freezer spells, said to prevent enemies from bringing harm. ?She?ll write the person?s name on something and put it in the freezer, and she thinks she has control.? Gregory Williams, a former senior director of retail operations, sued Alex and Ani in 2017 over religious discrimination, citing his Episcopalian faith. He attributed his eventual termination to a series of complaints about spiritual practices he said made him uncomfortable, including being made to undergo tarot readings during the hiring process. (The case was settled out of court.)

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Another controversial topic was the increasing authority that Rafaelian?s ?master intuitive,? Jocelyn Coleman, seemed to exercise over personnel matters. ?She had this psychic ? life coach, medium, whatever you want to refer to her as ? and any person we were ready to hire had to speak to them prior to onboarding,? a former executive recalls. Senior staff members were invited to consult with Coleman on a monthly basis, though doing so wasn?t mandatory. ?It was seen as a gift, allowing you to speak to someone at this level of spirituality and understanding,? the executive says. ?And you just think, ?What if she?s right, and she has me on the right path?? You drink the juice.?

Sometimes, a source says, Coleman?s insights did seem uncanny. Some employees speculated that she was being fed information ? and perhaps sharing employees? personal details with higher-ups. In any case, the sessions became a critical management tool. ?If someone was having a tough time or didn?t do so hot on a performance review or a direct report wasn?t feeling it, [Coleman] was utilized in that respect,? according to the executive, a practice that began to raise questions from an HR standpoint. ?Most of those calls were recorded. From my understanding, [Coleman?s] got a recording of everyone that she?s spoken to.? (Coleman did not respond to calls seeking comment.)

Some, including events and partnerships honcho Rick Simone, thought such speculation was overblown. ?We could schedule a call with her, but no one was forced to do it,? he recalls. ?I could see where people might wonder about it, but I never shared anything personal. To me, it was just Carolyn?s way of doing things.?

?Jewelry has an energy; it?s conductive,? Rafaelian explained in Path of Life. ?So for any piece, who it?s created by, where it?s created, and the synergies achieved in that process wind up in the DNA of that piece. If you don?t know who is making what you wear, what kind of labor conditions it was produced in, or what kinds of toxins are in the metals, it does nothing to elevate your vibration.? Alex and Ani?s use of recycled materials and its made-in-America pledge ? enabled by Rafaelian?s deep knowledge of the industry, her long-standing relationships in the jewelry district, and, critically, her ownership of the family factory ? were mainstays of the company?s branding from the start.

As Alex and Ani?s sales exploded, the impact rippled through the local economy. A 2013 study credited the jeweler with creating as many as 4,000 new jobs in Rhode Island, many at small manufacturing companies and vendors.

?We really connected with the story of the company,? notes jewelry retailer Allison Leitzel-Williams. ?Their family aspect was big for us because we?re family-owned as well. We liked that they used recycled materials. And we?re always a big proponent of domestically made products.?

As Alex and Ani?s sales exploded, the impact rippled through the local economy. A 2013 study credited the jeweler with creating as many as 4,000 new jobs in Rhode Island, many at small manufacturing companies and vendors. Soon, Alex and Ani became a highly visible sponsor of local civic attractions. The company helped bankroll WaterFire Providence, an annual public arts project, and the University of Rhode Island unveiled the Alex and Ani basketball court. The Roger Williams Park Zoo opened the Alex and Ani Farmyard, and the skating rink in downtown Providence became the Alex and Ani City Center.

?It was like a beacon of hope for the state and especially the city of Cranston, something positive in a downturn,? a former executive remembers. By 2014, Alex and Ani was trumpeting its rescue of the local economy in a second Super Bowl spot. For some residents, it was all a little much. One local blog published an April Fools? Day parody, ?Alex and Ani buys naming rights to state formerly known as Rhode Island,? reporting that the DMV would soon be issuing ?new license plates with a choice of four collectible bangles.?

Meanwhile, inspired by her father, a well-known benefactor of the Armenian community, Rafaelian made charitable giving a cornerstone of the company ? partnering directly with various causes, working with them to develop signature bangles, and donating significant portions of the proceeds. Operation Smile, Product Red, Big Brothers Big Sisters, the American Cancer Society, Living Water International ? in all, Alex and Ani?s Charity by Design initiative has donated more than $60 million over the years to 55 nonprofits. One of the first was Friends of Jaclyn, an organization dedicated to improving the lives of children with pediatric brain tumors and other cancers, launched in honor of a girl named Jaclyn Murphy who?d been diagnosed with a malignant brain tumor at age nine. When Alex and Ani?s VP of Charity by Design Nicki Maher reached out and asked if the jeweler could create a charm in Jaclyn?s honor, ?I was like, ?Of course,?? recalls Jaclyn?s father, Denis Murphy. They agreed on an elephant, Jaclyn?s favorite animal.

?It was a really good seller,? Denis says. ?Fortunately for us, it turns out a lot of people like elephants. It was phenomenal. They definitely helped put us on the map.? Murphy declines to share the exact amount raised but says ?it was significant.?

?The woman who is gifted a pink Yankees charm bangle becomes a member of the tribe. She?s now buying or getting gifted the mom bangle, zodiac bangle, her kids? initials. All of the sudden, she?s a superfan, at $30-$40 a pop. That?s how you become number one in repeat purchases in the history of jewelry.?

?We were donating 20% off the top,? a former Alex and Ani executive recalls. ?Not off proceeds, off sales.? Charities loved the program, and solicitations poured in. ?Every nonprofit you can name wanted a bracelet with their cause on it,? the person adds. ?Every month, we were working with a new charity.?

At one point, more than a dozen staff members were focused entirely on Alex and Ani?s charitable endeavors. Another initiative allowed employees to volunteer for any charitable organization on the company dime (eight hours per quarter). ?Carolyn used to say, ?If you give a bucketful, you get a waterfall,?? a former executive recalls. ?The more you make, the more you give,? a colleague agrees. ?In Carolyn?s eyes, that was the heart and soul of the company.?

Alex and Ani?s altruistic endeavors turned out to be a stunningly effective marketing technique as well, with a powerful halo effect. Since nonprofit partners promoted the pieces to their donors directly, millions of customers wound up being introduced to the brand by charities they already knew and trusted. Once they purchased that first bangle ? not only supporting the nonprofit financially but wearing the commitment on their sleeve, as it were ? some of that goodwill naturally rubbed off on Alex and Ani.

The same was true for noncharitable partners, such as sports teams and entertainment powerhouses. Warner Bros., for instance, pitched the Alex and Ani Harry Potter Collection directly to the boy wizard?s most devoted fans. ?The ability to partner with various groups and create affinity on a co-branded basis is incredibly powerful,? a former Alex and Ani executive points out, explaining, ?The woman who is gifted a pink Yankees charm bangle becomes a member of the tribe. She?s now buying or getting gifted the mom bangle, zodiac bangle, her kids? initials. All of the sudden, she?s a superfan, at $30-$40 a pop. That?s how you become number one in repeat purchases in the history of jewelry.?

For all of the company?s philanthropic work, high-flown rhetoric and strict adherence to military discipline, the team was on a wild ride, and they knew it. Rafaelian went on a real estate buying spree, ?collect[ing] homes the way Alex and Ani fans collect her bracelets,? as the Wall Street Journal put it. She snapped up a six-story, $13.8 million town house in Tribeca, a $9.4 million home in Venice, California, and a pair in Palm Beach as well as growing her real estate portfolio in Rhode Island. She bought a mansion in Newport for $3.5 million, then dropped another $15 million on lavish restorations. And she purchased a Rhode Island vineyard for $8.4 million. (The property is currently the subject of a four-year legal dispute with neighbors over its right to host weddings and music performances.)

Alex and Ani?s employees had some fun too. In those heady years, ?it seemed like there was always something to celebrate,? an employee recalls. Store openings, new partnerships, sales milestones. The annual ?That?s How We Roll? party marked the precise moment revenues exceeded the previous year?s totals. ?We never knew what day it would be,? Feroce remembers. ?The first year, it was June, and by the next year, we were partying in March.? For the annual White Party, retail partners were brought in from as far away as Las Vegas to tour the factory and enjoy a Gatsby-esque soiree in one of Newport?s various high-profile locations. ?It was really over the top,? an attendee recalls.

?It was the work hard, play hard mentality,? Feroce tells Marker. If an entire department went out for a boozy lunch and never came back, he?d happily sign off on the expenses. ?It was like, ?Who gives a fuck, if the business is on fire??? he explains. ?There was a very strict policy: Basically, as long as you perform, then we?re all having a blast. The idea was to create the best and most fun environment on the planet.?

Given the festive backdrop, it?s no surprise that the other law of attraction came into play for some members of the staff. While much of the executive team was male, the rest of the staff was overwhelmingly female, notes Joe Triangelo, Rafaelian?s former romantic partner of nine years, who in addition to overseeing the restoration of Belcourt and construction of numerous Alex and Ani retail outlets, says he advised her throughout this period. ?There were 1,000 employees, and like 900 of them looked like runway models,? he adds, noting that certain male staffers found the odds all but irresistible. ?It was like a freaking frat house. A free for all.? A former executive remembers it as ?a raunchy boys club, totally out of control.? Another source alluded to ?all kinds of not savory activities from an HR perspective,? declining to provide specifics.

Feroce disputes the idea that the atmosphere created HR problems ? although he admits it did contribute to his divorce. ?I don?t mind if people at work date each other,? he says. ?How do you think Bill Gates met his wife? Besides, at Alex and Ani, you?re talking about people that grew up with one another. We were all friends, classmates, cousins, whatever.?

Then, in March of 2014, despite the company?s breakneck growth, Feroce learned he was being removed as CEO. Nobody seemed to doubt that he?d set the company on an astonishing trajectory: Sales had increased by 11,000% in just four years. Even now, Rafaelian allows that he was a transformative presence.

Within months of his departure, the company parted ways with its chief financial officer, chief technical officer, chief strategy officer, chief digital officer, acting chief operating officer, assistant general counsel, and its VPs of transitional operations, retail, and wholesale.

But behind the scenes, the two had been clashing for months. Unsurprisingly, the battles came down to power and turf. Before agreeing to take the job, Feroce insisted on absolute authority over all operational decision-making, and for a time, Rafaelian had obliged him. Eventually, though, she sought more control.

A remarkable number of other executives followed Feroce out the door. Within months of his departure, the company parted ways with its chief financial officer, chief technical officer, chief strategy officer, chief digital officer, acting chief operating officer, assistant general counsel, and its VPs of transitional operations, retail, and wholesale. Meanwhile, the top leadership at Seven Swords, the PR and media agency Alex and Ani had acquired in 2012 that was responsible for all of its advertising, including the Super Bowl spots, also resigned.

?After Giovanni Feroce left, there was a big round of people let go, anyone with loyalty to him,? recalls one former executive who survived, at least for a while. ?It was disappointing because we figured Carolyn would want to put her own stamp on things, but we thought that she would at least appreciate all the growth.?

?We reached that unicorn valuation mark, and there was so much energy and excitement. And all of the sudden, there was a change in the air, this fear of who was going to get fired next.?

As a new regime took over, lower-level employees found themselves facing layoffs. Things changed further in December 2014, when JH Partners unloaded its 40% stake to another private equity investor, the London-based Lion Capital, run by Lyndon Lea, for around $400 million, valuing Alex and Ani to over a billion dollars. At the time, according to a source with direct knowledge of the deal, Rafaelian was in talks with another potential partner who she hoped would buy the JH share. But the Lion deal was made without her knowledge, a distressing turn of events the source later compared to ?an arranged marriage with this guy whom she?d never even spoken to.?

At the time, some observers had begun to view Alex and Ani as a potential fashion empire ? the next Michael Kors or Under Armour. As talk of an IPO began to heat up, the senior management team began looking to reduce costs through aggressive budget cuts and layoffs. ?We reached that unicorn valuation mark, and there was so much energy and excitement,? one former executive remembers. ?And all of the sudden, there was a change in the air, this fear of who was going to get fired next. It got a little messy to say the least.? Another former executive, who was dismissed during this period, compares it to a political purge where officials are never seen again. ?It was just brutal, like Game of Thrones,? the person says. ?Every week, it was like five people just walked out the door who had given their lives to the place.?

Among those who remained, the emotional impact was devastating. ?It was very disturbing to see large groups of people let go and not understand why or who would fill the vacuum,? one says. ?Every time there was a layoff or firing, like 40 people called into a room and told they had an hour to clean out desks, nobody understood where the company was going.?

Before long, Alex and Ani University was quietly dissolved as well.

Several employees who spoke with Marker acknowledged that new leadership ? the more seasoned fiscal types often called in when a company is preparing to go public ? may well have been necessary as Alex and Ani sought to evolve into a global brand. ?The team who gets you from A to L isn?t necessarily the one who is going to get you from L to Z,? one jewelry industry insider points out.

?I mean, look, if we were going to be a billion-dollar company, corporate had to change,? a former employee allows. ?But that didn?t mean we had to lose our culture. People used to love coming to work. Suddenly, the culture changed. There wasn?t that same lively energy. People dreaded showing up each day.?

Feroce was promptly replaced by Harlan Kent, a former CEO of Yankee Candle, but tellingly, he was hired as president while Rafaelian retained the CEO title. ?Harlan was focused on maximizing profitability,? recalls a former executive. ?It was, ?Let?s accelerate growth and maximize the EBITDA [earnings before interest, tax, depreciation, and amortization] now so we can get new investors in and go public.??

The problem, according to this executive, was that the loss of so many key team members had quickly eroded the company?s institutional knowledge and damaged its relationships with retail partners and others. ?A couple people that were brought in just didn?t understand how complex the business was,? the executive recalled. Additional cost-cutting, including slashing the budgets for events and digital marketing ? ?the nucleus of the machine,? as the source puts it ? reportedly led to a disappointing quarter at precisely the moment when investment banks were kicking the tires.

Kent lasted a little less than a year.

Former insiders tend to lay the company?s troubles at Rafaelian?s feet ? along with its successes. ?She comes off as very dynamic when you first meet her,? one former executive remarks. ?You can?t not like her. She has an electric personality, and her passion is infectious. But at the same time, you can immediately see her head is somewhere else. She?s extremely creative, but the problem was that she wanted to run the business, and someone like that should never run a business.?

Meanwhile, the talent exodus had created additional difficulties for the company. Among those who were let go in the initial wave of departures was former acting COO David Medeiros, a lieutenant in the state police department recruited by Feroce in 2013. Medeiros, an army veteran, remained an active member of the National Guard during his tenure at Alex and Ani. This military service was initially viewed as an asset, but in the wake of Feroce?s departure, ?it became clear that Rafaelian was no longer interested in having a military influence in her company,? he claimed in a 2015 wrongful termination suit filed in Rhode Island Superior Court against Alex and Ani and Rafaelian herself. At one point, the complaint alleges, ?[she] made a statement to the effect of ? ?I?m done with this military bullshit.??

Medeiros alleged that he was fired as part of a ?sexist policy.? Alex and Ani, he said, ?made it their mission to increase the number of female executives ? and to similarly oust male executives in part or in some cases solely based upon their gender.? He also claimed that he was terminated partly in retaliation ?for his knowledge and subsequent reporting of Rafaelian?s illegal and unethical business practices and the fact that she had been secretly profiting from the Company in numerous ways at its expense and to the detriment of other shareholders of the Company.? The alleged improper business practices included having Alex and Ani employees take on duties related to Rafaelian?s other businesses, most notably Carolyn?s Sakonnet Vineyard and the mansion, Belcourt of Newport.

Perhaps the more interesting allegation in the complaint involves the relationship between Alex and Ani and Cinerama, which was at the time owned by Carolyn Rafaelian and her younger sister, Rebecca, and run by Rebecca. Medeiros? claim noted that Cinerama was manufacturing Alex and Ani bracelets at a price of approximately $4.25 per piece. When Medeiros found a vendor willing to do the work for $1.10 a piece and at a higher quality, he claimed, his superiors sought to bury the information. He also alleged that Alex and Ani ?ran an unusually high [inventory] surplus in the amount of approximately $45 million,? which eventually rose to $70 million. According to Medieros?s complaint, when he learned of the alleged conflict of interest, he ?threatened to inform JH Partners, a shareholder of Alex and Ani [at the time], of these facts,? which he claimed led to his May 2014 termination. (Alex and Ani is fighting the case in court.)

Though turnover continued in the upper ranks, Alex and Ani seemed to stabilize. Stackable charm bracelets remained reasonably trendy, and the company?s forays into handbags and candles seemed on track. Meanwhile, the brand?s seemingly bulletproof aura of authenticity offered some protection from the kind of snark aimed at its chief rival, the Danish jewelry conglomerate Pandora, ridiculed by Saturday Night Live as a go-to source of easy gifts from clueless husbands.

?Unfortunately, it?s somewhat classic for a company like that. They essentially rely on small businesses to grow the brand and be ambassadors, and then they switch over.?

From the beginning, Alex and Ani, like many specialty retailers, has reached consumers through three avenues: its own stores, of which there are currently 94, mostly in the U.S.; its website; and retail partners, which range from big retailers like Bloomingdale?s, Nordstrom, and The Paper Store to small independent shops.

There are significant benefits to wholesale partnerships, especially for a young company: A brand can achieve significant market penetration without the long-term leases and costly build-outs required for brick-and-mortar locations, and retail partners actively promote the brand to their own customers, providing free marketing. But as a company like Alex and Ani starts to grow, the disadvantages become more apparent, including the challenge of maintaining a consistent brand message and the difficulty of managing so many relationships. ?It?s a lot of work,? notes Fred Magnanimi, founder of the jewelry company Luca and Danni. ?It can be tough to manage the reputation of the brand, and if [retailers] buy the wrong stuff for their market, it?s your problem.?

By 2018, Alex and Ani was eager to scale back its wholesale business, and the new strategy, announced in an interview with Digiday, reportedly antagonized some longtime retail partners. ?The company has a plan centered on cutting out the middlemen,? the article stated, ?in favor of increasingly selling the pieces, and communicating their supposed positive energy, directly to consumers. Within 18 months, the goal is 75 to 80 percent of sales will be through Alex and Ani stores or the website, up from 50 percent as they stand.? Adding to the sting, the company announced plans to open 25 more of its own stores in the coming year, utilizing market data gleaned from the very partners it was now casting aside.

Among those who felt miffed by the new direction were the proprietors of Pennsylvania retailer Leitzel?s Jewelry. ?Unfortunately, it?s somewhat classic for a company like that,? Leitzel-Williams says. ?They essentially rely on small businesses to grow the brand and be ambassadors, and then they switch over. You get to a point where you know that they?re not invested in the relationship.?

The retailers were shocked. ?They felt abandoned,? a former Alex and Ani executive recalls. ?And they?re what started the company. Without them, the growth wouldn?t have been there.?

Nonetheless, Leitzel-Williams took the change mostly in stride. By that point, she notes, interest in Alex and Ani had already begun to wane. ?It?s kind of inevitable. People have 20 Alex and Ani bracelets, and they?re maybe ready to move on to the next thing.?

In the summer of 2016, Rafaelian?s Sakonnet Vineyard hosted a fundraiser on behalf of Armenian orphans. Among the attendees was attorney Mark Geragos, the Los Angeles-based criminal defense lawyer best known for his representation of celebrities. Like Rafaelian, Geragos is Armenian American. The two hit it off, and in subsequent years, they began working together closely.

In addition to representing Rafaelian personally on some matters, Geragos became an outside counsel to Alex and Ani, with an estimated $75,000 per month retainer, according to a former board member. Asked about the various legal claims against the company in a 2017 interview, he replied, ?We?ve got a couple of, for lack of a better term, knuckleheads, who think they?re going to do this, that, or the other. We?ll deal with them.? (Geragos confirmed he was hired as outside counsel but declined to discuss his fee.)

Geragos, who has represented Michael Jackson, Chris Brown, and Colin Kaepernick (a member of Medium?s board of directors), also began representing Rafaelian?s vineyard and introduced her to Ice Cube, whose basketball league, Big3, was another Geragos client. Rafaelian later joined Geragos as an investor in the league and teamed up with Ice Cube to put up $10 billion for 21 regional sports networks. (The bid failed.)

Geragos became a regular presence around the Alex and Ani headquarters, former staff members say, and acted as an informal member of the leadership team. According to a sworn declaration in a lawsuit filed with the Superior Court of California by Alex and Ani against their former outside employment counsel, Tracy Warren, and her law firm Ogletree Deakins, Geragos ruffled feathers by allegedly ?attempting to run Geragos and Geragos expenses through AA? and authorizing a $500,000 payment to Big3 for ?marketing,? among various other offenses. The declaration was filed in response to a civil claim by the jewelry company accusing Warren ? and by extension Ogletree ? of legal malpractice. Warren insisted she?d acted properly. Geragos declined to comment on the lawsuit, saying he didn?t have the authority to be quoted. The suit is ongoing.

According to Warren?s court filing, on December 18, 2017, acting on Rafaelian?s behalf, Geragos sent an email firing Alex and Ani president and COO Cindy DiPietrantonio and CFO Bob Woodruff. Under the subject line ?Nope,? he thanked them for their ?lack of service and disloyalty? and added, ?You are immediately relieved of your at will position and only because Carolyn is so good hearted that I haven?t personally perp walked you out of HQ. ? Shame on you both and good riddance.? Woodruff and DiPietrantonio declined to comment.

Geragos publicly attributed the departures to the end of the executives? one-year contracts and told National Jeweler magazine that the company expected to fill the positions internally. While no hire was announced for the role of president, the CFO job was promptly filled by Geragos and Geragos?s own CFO, Andrea Ruda. Landing the job was an impressive achievement for the 26-year-old executive. Having obtained her bachelor?s degree from NYU?s Stern School of Business in 2013, she?d worked for three and a half years as an analyst and consultant at Accenture before coming aboard at the Los Angeles law firm. She?d held the post there for 10 months when she was tapped to oversee the finances of a billion-dollar company. (Ruda declined to comment.)

Ruda?s role became a point of contention on July 25, 2019, when Alex and Ani filed a $1.1 billion gender discrimination lawsuit against its creditor, Bank of America, alleging breach of contract, tortious interference, and violation of the Equal Credit Opportunity Act. The complaint, spearheaded by conservative legal crusader and sometimes Geragos co-counsel Harmeet Dhillon, laid bare the company?s precarious financial situation, claiming the bank?s actions had ?driven Alex and Ani to the precipice.?

But taking on so much debt carried significant risks. According to a source who has examined the company?s finances, it was this move, coming at a time when the upward trajectory was already flattening, that precipitated Alex and Ani?s downfall.

The company?s relationship with Bank of America had begun well. In 2014, the bank even featured the brand in a national commercial touting its support of women-owned companies. Bank of America ?helped Carolyn Rafaelian?s business grow from a Rhode Island storefront into a global sensation,? the spot noted.

In 2016, Alex and Ani borrowed $170 million from Bank of America and six other banks, in part to purchase the Cinerama factory. Meanwhile, it also negotiated a $50 million rotating line of credit. At the time, the Cinerama acquisition seemed to make good business sense ? a smart play for vertical integration, viewed as a logical precursor to a planned IPO. It was also an evident windfall for the factory?s co-owners, Carolyn and Rebecca Rafaelian.

But taking on so much debt carried significant risks. According to a source who has examined the company?s finances, it was this move, coming at a time when the upward trajectory was already flattening, that precipitated Alex and Ani?s downfall. At the time of its $1.2 billion valuation in 2014, according to this person, EBITDA was approximately $80 million per year and growing at a 30% clip. By the end of 2018, that number had fallen to less than $10 million. In December of that year, the banks, apparently taking note of the company?s precarious situation, allegedly held Alex and Ani in default. The amount then owed to the lenders, according to the source with direct knowledge, was roughly $100 million, though the alleged default seems to have been triggered by a narrower issue, a provision of the contract known as an ?add-back? that allowed for an additional $8.7 million payment to Cinerama?s owners. According to Alex and Ani?s complaint, the bank claimed the payment was inappropriate; Alex and Ani disagreed, insisting that the creditor had ?made-up? the allegation in order to execute ?a planned takeover by Bank of America?s team of outsiders.?

As a result of the alleged default, the banks moved quickly to protect their assets. In addition to raising interest rates on the primary loan and freezing the credit line, Bank of America took steps to liquidate the company, estimating its value at approximately $20 million, a fraction of its 2014 peak, according to the source. Facing the potential demise of her company, Rafaelian agreed to a deal that left Lion Capital with a majority stake. Meanwhile, at the banks? insistence, outside consultants were brought in to restructure the company.

For a legal document focused on the intricacies of corporate banking, Alex and Ani?s complaint against the lender makes for highly dramatic reading. Not only did it take the bank to task for its role in the 2008 financial crisis, which arguably has no bearing on the case, but it slammed the financial institution?s alleged betrayal of its own ?woke advertising.?

More critically, it accused the bank of gender discrimination. During the tenure of CFO Bob Woodruff, the complaint alleged, the bank had ?raided the Alex and Ani corporate kitty, harvesting millions of dollars from the company through bloated fees, nonsensical consulting arrangements, and gold-plated reimbursements.? When Woodruff was replaced by Ruda, a ?new sheriff,? as the complaint put it, the bank retaliated.

?Ruda is a woman,? the complaint noted ?which (despite its market-facing messaging) Bank of America considers to be a problem.? The complaint even included a photo of Ruda to underline its point. The reason for the bank?s actions, it alleged, came down to what it said were ?two time-tested BofA values: greed and sexism.?

To some legal observers, the suit seemed over the top ? ?more of a closing argument masquerading as a complaint,? in the view of Joe Patrice, senior editor of the legal blog Above the Law. ?They?ve put it in front of the other side to let them imagine how that would play to a jury,? he theorizes. Another goal might be ?laying out a closing argument to the press and hoping it gets enough play to get a settlement,? he says, adding that the inclusion of visual aids designed to contrast Alex and Ani?s female leadership team with the male bank executives and Woodruff was ?definitely weird.?

The suit was mysteriously withdrawn on August 19 of last year, less than a month after it was filed. Neither side admitted wrongdoing, and to all outside observers, Rafaelian remained the CEO of Alex and Ani.

The lead attorney on the suit, Harmeet Dhillon, is well known for her combative approach, having come to national prominence with an unsuccessful suit against the University of California, Berkeley, for refusing to allow far-right firebrands Ann Coulter and Milo Yianoappolus to speak on campus, and with her dogged representation of fired Google engineer and men?s rights cause celebre James Damore. (Dhillon did not respond to a request for comment.) According to one well-placed source who spoke with Marker, the suit was filed without the board?s approval, in violation of the law. ?The whole thing was outrageous,? the source says. ?It was a sham. Carolyn had no legal right to file that suit. We read about it in the papers the same time as everyone else.?

When Rafaelian was confronted about the move, the source recalls, she said the board would just have to ?deal with it? and attributed the aggressive stance to maternal instinct. ?You can?t separate a mama from her baby,? she said.

The suit was mysteriously withdrawn on August 19 of last year, less than a month after it was filed. Neither side admitted wrongdoing, and to all outside observers, Rafaelian remained the CEO of Alex and Ani.

But behind the scenes, it was a different story. Lyndon Lea, the London-based head of Lion Capital, the private equity firm that then owned some 40% of Alex and Ani, had stepped in to negotiate a deal with the bank consortium aimed at preventing the company?s liquidation. In exchange for a cash infusion from Lion, Rafaelian was required to divest herself of her controlling equity interest.

Lion took a majority stake and promptly installed a new CEO, Bob Trabucco, a jewelry industry veteran. (Trabucco declined to comment.) Geragos was also sidelined, though he continues to serve as an outside counsel. ?Carolyn has brought in different people she trusted at the time,? says a well-placed source. ?Each relationship lasts at the longest about a year, and Mark was the last one in that line.? (Both Geragos and Rafaelian say they remain on good terms.) Pointing to the long line of C-level executives who have passed through the company, the source adds, ?It?s just a trail of destruction. At some point, you?ve got to stop and ask. One? Yeah. Two? Maybe. But everybody??

Rafaelian has since sold off several of her properties, including the home near Worth Avenue in Palm Beach and another on nearby Hypoluxo Island. Her alleged default on a promissory note connected to the resolution of the Bank of America issue may cost her the Venice Beach property as well, according to a lawsuit she recently filed against Lion Capital.

?What Carolyn did [building that company] was genius,? a source with intimate knowledge of the company?s inner workings tells Marker. ?But once it became a certain size, she should never have been in that role as CEO.? Echoing a view shared by several other sources, the person adds, ?Carolyn lives in her own world. That?s been a wonderful world at different points in time, but it?s not necessarily a rational world.?

After being pushed out years earlier, former CEO Giovanni Feroce went on to unsuccessfully revive the watch company Benrus, then made a failed bid for governor of Rhode Island on the Republican ticket. These setbacks don?t seem to have dampened his trademark bluster, however: ?There?s a reason Carolyn had a billion-dollar company,? he tells Marker, speaking by phone from his home in Puerto Rico. ?Because I left her a $2.5 to $3 billion company.?

Now, even that billion-dollar valuation seems like a distant memory. The jewelry empire is a shadow of its former self. Several of its retail stores, including locations in Washington, D.C.?s ritzy Georgetown shopping district; Princeton, New Jersey; Saratoga Springs, New York; and Palm Beach shuttered earlier this year, and the company became increasingly reliant on discounts and special promotions. Then the Covid-19-induced retail shutdown dealt Alex and Ani another devastating blow. An insider reports that ?most? of the company?s employees have been laid off or furloughed and estimates that revenues ? already dwindling when the virus struck ? had dropped by approximately half in the months since. According to a jewelry industry source, the Newport, Rhode Island, outlet ? the company?s first retail store ? recently closed its doors for good, another Covid-19 casualty. ?When stores are a significant percentage of revenue, and that goes to zero, you?re looking at a big hit.?

Even after being pushed out, Rafaelian seems relieved to have untethered herself from the burdens of corporate intrigue.

Lyndon Lea, who declined to comment on specifics involving pending litigation, attributes Alex and Ani?s recent challenges ?to several years of mismanagement due to a failure to implement proper systems, controls, and processes within the company as it grew. Covid notwithstanding, I believe that if we can do some simple things, proven processes that have been used widely, the business can be turned around. It?s not splitting atoms. The company?s best times could still be ahead of it.? As the economy starts reopening, the brand may find itself in a better position than most: A $30 bracelet infused with positive juju may be just the low-investment spiritual balm financially stressed consumers are looking for.

As for Rafaelian, who remains the company?s second-largest shareholder, she ascribes its stunning fall to what she still sees as unfair treatment by Bank of America and to a lack of support from her private equity partners. In early June, she filed a lawsuit against Lion Capital, alleging that she had signed the 2019 deal to save Alex and Ani from liquidation ?under duress? and that Lea had broken an agreement to fund two new product lines she was developing. Rafaelian?s attorney declined to comment on the litigation.

Reached by phone at her home in Rhode Island, Rafaelian also declined to comment on the suit or on specific allegations contained in this article, explaining that she prefers to keep things positive. She nonetheless insists that the real story is far crazier than anyone can imagine. ?Ho. Ly. God,? she says with a laugh. ?That?s all I have to say.?

Even after being pushed out, Rafaelian seems relieved to have untethered herself from the burdens of corporate intrigue. ?I feel so free and elated,? she says. ?Majority shares, minority shares ? I don?t care. As far as I?m concerned, I already won. I did it. I?m successful. I took a company which arose out of passion for my kids and my father?s factory and jewelry, and I turned a dying industry into a billion-dollar business in fricking Rhode Island. I didn?t do it to build a big monstrosity of a business. I did it because it?s what the world needed. It?s what I needed.?

Now, what Rafaelian says she needs next is another jewelry company. It?s already in the works, with a name picked out and a plan to launch before the end of the year. ?Already something is manifesting in front of my eyes,? she says. ?That?s where I?m putting all of my love, energy, and resources. And there are no banks involved and no partners!? The new company, she promises, won?t even have an HR department. ?It?s going to be an HP department,? she says. ?Human potential.?

Update: An earlier version of this piece misidentified the amount Alex and Ani allegedly paid to Big3. According to the Warren declaration, the amount was $500,000.


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