Vulgar Favours

by Maureen Orth

  While it may make South Beach a rougher place, its nightlife could have provided the perfect venue in which to spread the word on Cunanan. But to date South Beach lacks the gay political structure to make that happen. “It’s easy to get them into bed, but try to get them out of bed on election day,” quips Andrew Delaplane, editor of the Miami Beach newspaper Wire. “What kills me is, if we had put a poster up—it’s really a small town here, it gets talked about,” says Ocean Drive editor Glenn Albin, who had seen numerous posters during a trip to New York in May. “This guy would have been found in a second.”

  In talking to dozens of the leading movers and shakers of South Beach—the mayor, the police chief, politicians, journalists, and club, bar, and business owners—I did not find a single one who had ever gotten a flier of Andrew Cunanan from the FBI. Yet South Beach has one of the highest concentration of gays in the country. The mayor of Miami Beach then, Seymour Gelber, told me, “Previous to Versace, I don’t think they [the FBI] did anything. I think the FBI did what they did in the cities where the crimes were committed, rather than anticipating him. Our police were certainly not aware of Cunanan. The fact he was on the Most Wanted list never entered into the domain of the police. The police have their own Top Ten list for the city.” Miami Beach Police Chief Richard Barreto agrees. “I get a hundred Top Ten lists across my desk. I was not aware he was on the FBI’s.”

  The one exception I found was in Fort Lauderdale, where Wade Gibson, owner of the Moby Dick, a gay bar with go-go boys and an older crowd, actually got a flier from Keith Evans. Gibson said that the FBI visited the bar five times, particularly after Gibson thought he had spotted Andrew in the bar one night, all dressed up and playing pool with an older man. The FBI responded immediately and staked out the parking lot, not wanting, Gibson says, “to disturb business.” But the two had already left. “The FBI said his MO was to go to clubs, try to spot exotic autos in the parking lot, go into the clubs to try to find out who the owners of the cars were, and then warm them up,” relates Gibson, who praises the FBI for their quick response to him. Still, when the FBI spoke to Gibson, after Andrew had committed four murders and gained extensive national media attention, they persisted in playing it very close to the vest. “The FBI came in here and said Cunanan was wanted for some very serious things—they didn’t say murder.”

  Despite widespread charges to the contrary, the FBI insisted long after Versace’s murder that thousands of fliers of Andrew had been distributed in the Miami area. “The implication that the FBI did not pull its weight in Miami is unsubstantiated completely,” says Kevin Rickett. “Regardless of whether you saw posters or not, I can tell you that they were mailed down. I can tell you agents went out and delivered them, because I personally talked to the agents that did that.” Anne Figueiras, the FBI spokeswoman, repeating what she had said to the media many times before, reiterated, “We gave out over two thousand fliers between the fifteenth and twentieth of May.” Her boss, Paul Mallett, who was made the interim head of the Miami bureau after Paul Philip left in December 1997, said, “If someone in this office is responsible for sending out three thousand fliers and didn’t, I’m going to kick his ass.”

  To prove his point, Mallett, in his Miami office, got Keith Evans—whom I was not allowed to speak to directly—on the phone at his work station in the basement. He asked Evans, specifically for my benefit, about the fliers. Mallett then told me, “Keith says we initially received about ten fliers.”

  “When?” I asked. “Timing is critical here,” Mallett relayed to Evans on the phone. Evans then admitted to Mallett that the ten fliers didn’t really arrive “until the end of June” and then Evans called for more.

  “Approximately three thousand is accurate,” Mallett told me. “Sometime a week or so later, around the first of July, three thousand came in. They were distributed throughout the community. The focus was on the gay establishment. They were given to various state and local authorities.”

  “That was done after Versace died,” I countered, not saying that there really is no organized gay establishment in Miami Beach. Certainly the members of the South Beach Business Guild never received fliers.

  Then Mallett blew his stack. “I can tell you Keith Evans was not passing them out after Versace was dead! It wasn’t dismissed by us that Cunanan was probably in this area. And the distribution of fliers in this area—it was done.” Mallett got up out of his chair and pointed his finger at me. “I am telling you categorically and positively there was no indication of suspicion Cunanan was headed to South Florida from San Diego. There was never any indication, solid or nebulous, that he was heading to South Florida. There was no anticipation that he was traveling in a southeasterly direction.”

  “The reality,” says Dilia Loe, “is if the FBI had followed through, Cunanan would have been caught a lot earlier. They should have been more responsible about getting the fliers out.” She cites the example of a convicted murderer of a gay man, who escaped from Dade County three months after the Versace murder. This time the Miami Beach police did not have to yield to the FBI. They immediately distributed fliers to gay bars locally and nationally. They caught the man three weeks later in New Orleans, where a bartender in a gay establishment recognized him and called the police. In Cunanan’s case, Loe does not see the FBI’s behavior as being prejudicial regarding gays. “It’s more neglect than overtly anti-gay. They were too casual. The FBI didn’t take the lead they had seriously enough.”

  30

  The Secret

  IN JULY 1997, at the age of fifty, Gianni Versace was on the verge of making a great leap forward in business. After years of careful preparation, he wanted nothing more than to be the first Italian designer to have his name listed on both the Milan Bourse and the New York Stock Exchange: Gianni Versace SpA. This trip to America—first to New York and then to South Beach—was extremely important. Versace had come to sign the preliminary papers to have Morgan Stanley, one of the leading Wall Street investment banking firms, manage the U.S. portion of the initial public offering.

  In 1996 the Versace Group, as it’s known in English, had reported total revenue of about $500 million (853 billion lire) and a net profit of $42.8 million. (Although some press reports often gave the misleading impression that the company was a $900 million or even a billion-dollar enterprise, their figures were based on estimates of the retail sales of Versace brand merchandise, which is not equivalent to revenues earned by the Versace Group itself.) An even higher estimation of the company’s value came from the Financial Times of London, which reported in October 1997 that the placement value of the Versace stock would be “estimated at a whopping $1.4 billion”—more than thirty times annual profit. But those bullish estimates preceded a sharp drop in profits reported at the end of the year—down to a net profit of about $33 million on revenue of about $560 million for the Versace Group in 1997. And even the $33 million figure was swollen, since it included a one-time payment of about $20 million for a “keyman” life-insurance policy the Versace Group had with Lloyds of London that was payable on Gianni Versace’s death.

  Versace signed with Morgan Stanley on Thursday, July 10. In recent months Gianni’s brother, Santo, the company’s brainy CEO, had tried to rein in his brother’s wild spending and had taken his credit cards away. To prepare for the stock offering, the family had also spun off their own personal holdings into a limited company called Ordersystem, consisting of their houses and art and acquisitions, the value of which was estimated to be between $80 and $100 million. Since so much of the company’s promotion was also personal and fueled by a small army of publicists and photographers, the $70 million annual promotion budget, which included the freebies to the stars and parties paid out of corporate funds, gave some idea of the level of extravagance to which Gianni had become accustomed. Later, the family would try to justify the excess to the numbers crunchers by saying, “This is what it takes to get people into our shows.”

  From now on, Gianni would have
to temper his whims. Nevertheless, the stock offering represented the culmination of everything Gianni, Santo, and Donatella had worked so tirelessly to realize. To have arrived at this juncture, both Gianni and his business had had to overcome great odds. There had always been rumors that the Versaces, who came from Reggio in southern Italy, a town “in the grip of organized crime,” were somehow beholden to the Mafia. How else, the international fashion community wanted to know, could they have managed to come from nowhere, spend so lavishly, and keep open so many “empty” boutiques?

  Their private company was tightly held and secretive. Despite the fact that Italian law required Versace’s financial statements to be publicly filed and audited by the Italian unit of KPMG, one of the world’s largest accounting firms, the rumors persisted. But whenever those rumors got into print, the Versaces were quick to move against the paper that had published them, particularly in Britain where the burden of proof in a libel action rests with the publication—the exact opposite of U.S. libel law. In 1994, for example, the Independent on Sunday newspaper in London questioned the finances of the Versaces—“How much does he really sell? … There is confusion about how the numbers add up”—and was forced to apologize and pay damages.

  As the stock offering neared, those tiresome questions were becoming moot. Even old-line firms like Morgan Stanley had loosened their requirements considerably in the go-go eighties as competition got stiffer. Still, in order to pass muster with a major investment house, the Versaces would be subjected to a due-diligence investigation to see whether anyone was cooking the books or whether any other irregularities were in evidence. Just two months before, in May 1997, for example, Santo Versace had been convicted of bribing Italian tax officials in 1990 and 1991, and had received a suspended sentence of one year and two months. (In 1998 the conviction would be overturned on appeal when the judge accepted Santo’s claim that he had been the victim of extortion, forced to hand over the money or face prolonged tax inspections that would have prevented the company from meeting orders.)

  Despite that minor setback, plans had gone forward. Banca Comerciale Italiana on the Milan end was to conduct the due diligence. Sid Rutberg, who covered the fashion industry’s financial market for Woman’s Wear Daily for many years, says due-diligence investigations these days are not particularly rigorous. “If any officers were arrested or charged, that would have to be disclosed, as would a guilty plea or a settlement.” Beyond that, he says, “How they could have gotten their money years ago is not pertinent at this point. It’s pertinent how their business has done—the rest, unless it’s something blatantly outrageous, is not a problem if they can show where the sales are coming from and where they do their manufacturing. Say they got their money from an unsavory source at the time of the start-up. Who cares? So forget it.”

  Still, nagging questions persisted about the Versace Group’s finances. Did the figures really make sense? The company claimed that only 15 percent of its income was generated in the United States, the country with the world’s largest economy. “If you don’t sell here, you don’t sell anywhere!” a leading journalist covering fashion told me. “Everybody else who has a big company, there’s visual evidence they’re doing business.” In various reports the Versace Group also claimed that its Asian market was similarly a mere 13 to 25 percent of total sales. Were there sufficient Versace sales in Europe, the Middle East, Africa, Latin America, and Canada to account for the lion’s share of Versace’s sales? The responsibility for conducting the due-diligence investigation before the company could go public would fall to the managers of the proposed public offering, Morgan Stanley in New York and Banca Comerciale Italiana in Milan.

  As part of that process, the investment bankers would be reviewing the audited financial statements of the Versace Group prepared by the Italian unit of KPMG. According to a source familiar with the due-diligence investigation, “They did a pretty thorough audit of inventory and sales.” However, the investment bankers thought, according to the source, that “the profitability of the company should be much higher—one of the things they found was that it’s a hit-or-miss business … What doesn’t sell so much is haute couture. What does sell are the jeans, perfume, bags. The reason the haute couture doesn’t sell is that the market is pitifully small and the prices are too high. They view the haute couture as a marketing tool to put the Versace name in the fashion capitals of the world.”

  Banca Comerciale Italiana had the primary responsibility for conducting the investigation, and Morgan Stanley, according to the knowledgeable source, was depending on its Italian co-underwriter to review allegations of Mafia involvement and money laundering. Morgan Stanley did not hire private investigators itself but had received “repeated assurances. They were informed that Gianni may have known some cruddy people but that the company itself was not mobbed up.” The dependent American bankers were told, “There was no evidence these friends had any role in the company.”

  AFTER SIGNING THE papers with Morgan Stanley, Gianni flew directly to South Beach. He always claimed he went to South Beach to relax, but whether he could ever really let go was a matter of conjecture. He carried the twin burdens of having to be constantly creative and always responsible for so many and so much. After all, he was Versace; his army of young designers, his worldwide sales personnel, his family all depended on him, and in the end they all yielded to his ideas and fantasies. “No other major fashion house in the world,” remarked Business Week, “is so closely identified with the life-style of its marquee name designer.” Now Gianni Versace was about to go public and realize ever greater wealth and enter more and more world markets. He wanted to pioneer for all Italian designers once and for all what it meant to be an instantly recognizable global trademark, like Coke, and he was determined to achieve that goal. Amazingly, he persevered despite guarding the greatest secret of his life: What no one in the fashion or business world was ever supposed to know was that Gianni Versace had contracted HIV, the virus that causes AIDS.

  The news would be shocking if it leaked now, and the consequences to his business would be incalculable. Certainly the public offering would be jeopardized. Was it nerve, greed, or folly that made Versace push so hard to go global with the help of outside shareholders when he knew his health was in jeopardy? When I asked a financial analyst whether Versace’s being HIV positive would have an impact on the stock offering, his answer was an emphatic yes. “Can you imagine saying, ‘Please buy stock in Disney, but oh, by the way, Walt has a disease he will eventually die from’?” Would such a public offering have misled investors? “It’s an interesting question never tested in court.”

  Perhaps in no other business is the image of one person so crucial as it is in the world of fashion and design. “When an entire multimillion-dollar business is dependent on the creative abilities of a single individual, constant good health—and good cheer—is an absolute imperative,” wrote the Irish Times after Versace’s death, presciently speculating about Versace’s health at the time of his murder and citing the example of Italian designer Franco Moschino, who had died of an AIDS-related illness in 1994 but whose condition was not made public until after he died. The American designer Perry Ellis had also died of AIDS, in 1986, but had been very ill before the public was ever told, and when designer Willi Smith died in 1987, his lawyer claimed that he had been tested for AIDS only shortly before his demise. “Too much is at stake to risk offering the consumer anything other than an endless diet of selective information,” said the Irish Times. “Gianni Versace knew this to be the case and throughout his career he was careful to offer outside observers only a carefully airbrushed image.”

  If the Versace business was dependent on the creativity and mystique of Versace himself, and his health was integral to his business, what an irony it was that Versace’s physical and financial health was tied to his sex life: The man who dressed women as hookers and urged the world to “flaunt it,” who created his empire by selling sex, had to buy sex for himse
lf furtively and keep his behavior utterly secret. To the world, Gianni and Antonio were a deeply devoted, monogamous couple—an image that would be used to repudiate the idea that Versace could ever have met or been involved with someone like Andrew Cunanan. Yet in the early and mid nineties, Jaime Cardona, the handsome Colombian who was once a doorman at Warsaw, was regularly asked to procure for Versace and Antonio D’Amico. Sometimes candidates in nearby clubs would be lined up for Versace to choose from, sometimes Jaime would choose the hustler and send him over, but always secretly and to the back door of the mansion.

  A male escort named Alex says that he was first selected by Jaime out of a crowd at the Palace Bar and Grill, a popular gathering spot just down the street from the Casa Casuarina. Jaime took him to the rear door of the Versace mansion “with instructions to go directly up the rear stair-case leading to Gianni and Antonio’s bedroom.” They “had a brief conversation and proceeded to have sex.” Alex says he felt “the whole scenario was more for Mr. D’Amico’s needs than for Mr. Versace’s.” He subsequently returned to sell his sexual favors half a dozen times.

  For over a year between March 1994 and July 1995, Versace did not travel much and rarely visited South Beach. When he did appear in Europe to take bows on the catwalk after his shows, people noticed that he had lost weight and looked weak and emaciated. The news finally emerged that he was suffering from a rare, inner-ear cancer and undergoing chemotherapy. Nevertheless, the publicity juggernaut steamed on; Versace continued to publish books and stage shows. When he did return to South Beach toward the end of 1995, people who hadn’t seen him in the interim were shocked. One says, “He could barely walk a half a block, and needed to be supported by Antonio the whole time.” Another frequent visitor to Casa Casuarina says he would see Versace eating breakfast with an array of prescription medicines in front of his plate. “Gianni was like someone had pulled the plug and all the energy had been drawn out.”