Thursday, May 13, 2010

Gen Art's Closing Hits Designers in the Wallet

Posted By on 05.13.10 at 10:58 AM

When Gen Art abruptly shut down earlier this month, some designers lost more than a potential supporter of their work: they lost cash. Those who'd paid for space at an upcoming ShopChicago, the organization’s popular shopping event, are apparently out of hundreds of dollars—not an insignificant amount for struggling independent designers.

Jewelry designer Veronica Riley Martens told me she got several e-mails and phone calls from Gen Art’s Chicago office urging her to sign up. After she wrote a check on April 22nd for $350 to share a booth, she continued to receive urgent e-mails, sometimes twice a day, she says. “That freaked me out.” Her check was cashed on the 28th. When the announcement about Gen Art's collapse came, Martens says, Gen Art Chicago’s representative told her she'd receive a refund. But then she got a mass e-mail from Gen Art head Ian Gerard, which read in part, “We very much regret if you have lost any booth fees associated with this event. We know that you work hard for every dollar and that this is unfair. The situation has also left thousands of Gen Art members with unfulfilled memberships, our corporate partners with unfulfilled programs and we as the principals with substantial personal losses. . . . Please know that our team who were your day to day contacts did everything in their power to protect your interests."

Martens shot off an angry email to Gerard, who responded with sympathy but wrote that he and his brother and co-founder of Gen Art, Stefan, had put $750,000 of their own money into the organization "to prop the business up during the rough times," adding "All of that money, which is basically all that we had in assets (our homes) is completely lost." He also wrote that they did not know the investment deal they had hoped to keep Gen Art running had failed until around May 3.

Martens's subsequent calls to the Chicago chapter of Gen Art went unanswered.

Kate Boggiano reports a similar experience, except she's out the price of a whole booth, $550. She calls Gerard’s e-mail “genuine and heartfelt," but says "it doesn’t address the fact that they took our money a week before they closed their doors. I used to be a CPA, I used to audit companies—no way you don’t know this is coming.” She says she's particularly disappointed because she enjoyed the ShopChicago events and did well at them.

Ian Gerard told me via e-mail that the reason Gen Art's Chicago rep was so aggressive about the event was because the venue had changed several times and she was simply trying to fill the spaces. She was not, he added, "on the management committee of the company and had no idea whether or not there was bigger economic issues at play and we certainly did not pressure her to sign up vendors.” Any monies received from Shop Chicago designers were “insignificant” to the organization’s operating expenses, he went on, accounting for perhaps “less than 1%” of revenue counting all Shop events around the country.

As to the possibility of a refund, Gerard wrote, the company is bankrupt and owes many creditors and investors.

"The truly disappointing and sad aspect for me, is that me and many others have dedicated our lives to showcasing and supporting talent," he wrote. "All of us could have made far more money than we did at Gen Art. No one got rich or well compensated for the past 16 years of work. We did it because we believed in the mission and we believed we could make a difference for the talent we showcased. We never got any royalties or a piece of the talent's business. We simply gave our time and efforts to help their careers and if they suceeded like a Zac Posen or Rebecca Taylor, that was what justified our work."

Now, he lamented, "at the end of it all, [it] will just be negative press pieces about how we tried to dupe designers from their money."

Boggiano for one is considering disputing the charge with American Express and notes that the application for ShopChicago states that designers will be refunded if the event is canceled. “It always feels like no matter what, it’s the designers and manufacturers who get screwed," she says. "You can’t make it your company to support these people and screw them too."

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