Chicago Lawsuit Filed by Rolex AD Former Employee

[NorthboundRolex]

I read all 52 pages of the legal document and claims by the plaintiff.

Incredible, we do live in a time of fraud and deception. The entire document read like a soap opera.

Most of the questions about how Rolex does its' business and the conspiracy theories about backdoor flipping to grey markets has been well documented in this claim. Rolex USA being a VERY private company will not like any of this getting out into the public.

Although Rolex USA played NO part in any of this dirty business does not mean they won't be subpoenaed to come to court and answer to questions surrounding Rolex Corporate policy where contracts with AD's are concerned.

CDP will lose their AD status obviously. Was CDP the only AD doing this? Well, this opens up pandora's box for any other employees from other AD's to come forward with information about what their AD's were doing at their respective locations. I think over the next few months there will be more lawsuits similar to the CDP fiasco.

I think this may be just the push that Rolex SA needs to get them to create their own corporate owned Rolex Boutiques around the globe. I think to this point they were thinking about it, but now it looks like a certainty. I think any AD that signed a Rolex contract should be made aware that once it ends, there will be NO renewal.

I would be interested to know if "Ms. Duan" is still in the Continental USA or has fled back to China with her bag of cash. My own observation from what I read in that legal document is that CDP hired Duan and used her for her connections with the Asian community and her precarious immigration status. I figure they figured that if things went sour, she'd bear the brunt of it all as it was her name all over the paperwork and that she'd be immediately deported the everything swept under the rug.

Time will tell, but this court case could take a couple of years to sort out if not longer. That is unless Rolex gives her a settlement on behalf of CDP. Problem is, if they do that, they'll have to settle with anyone else who comes forward with their story in the future from other AD's.

[NorthboundRolex]

Originally Posted by illiguy

The commercial dispute is one component. The much larger concerns are tax evasion - interstate - and labor & employment retaliation.

In law you sue for as many things as you can and hope a few stick at the end.

[Fleetlord]

Originally Posted by dauster

I agree with all of you here but it doesn't seem logical for a company to destroy the hype and artificial scarcity they helped to create in the first place. They are obviously doing better than ever and also how much brand reputation damage is really at risk here for Rolex? maybe a few thousand people really care and know what's going on. the average consumer that buys 1-2 watches in their life doesn't care about backdoor AD dealings. All they see is hyped up watches that retain their value.

I agree with this. People want Rolex. They are glad they are valuable and have the perception of exclusivity. Non Wis couldn’t care less about this.

[PurpleDial]

In case you havent seen this article yet:

https://atelierdegriff.com/2021/02/1...o-grey-market/

[Hub6152]

It’s all over the forum and is a load of tosh anyway

[Andad]

Yes, you missed the bus on this one.

[cascavel]

The concept of an AD taking advantage of the opportunity to make $15K on Daytona 116500 rather than $5K can't be a surprise to anyone. Imagine the temptation to sell a stainless 5711 for $80K rather than $35K. Any AD whose suppliers include AP, PP or Rolex can turn a watch store into a gold mine.

[Partekular]

Does a high grey market price help brand sales?

Disturbing how many new unworn PPs are available in the grey market.....

How hard would it be with a mere 60,000 sales a year to offer a model ID checking App to avoid being sold a stolen watch, for example? This could serve more than one purpose....

[HMHM]

The lawsuit doesn’t change anything as long as it benefits PP/AP/Rolex. Watches are briskly sold once they reached the AD. In the manufacturer’s record that is considered a watch sold, irrespective of which client it goes to. If they wanted to take action it would have been done a long time ago. Just like how Rolex completely stopped one of the companies that modded DJs with colourful dials so quickly even though the OP 36/41 were not introduced to the market yet. So don’t expect anything to change as long as sales continue to soar despite the lawsuit. At most a ‘stern’ warning letter to the AD lol

[Ichiran]

After spending billions on marketing, I'm pretty sure Rolex does not want to be associated with all the negativity surrounding this alleged practice.

[casadecamporolex]

As a long time buyer of Rolex watches all over the USA, I’ve been introduced several times to the owner of CDP. We have attended private social functions in Chicago, New York and Los Angeles. This man always struck me as a braggart and loved to exclaim how big a Rolex AD he was. The top management of this company also acted entitled.
"The Rolex Way? Hardly.
Rolex could care less. Purely hypocritical.
I feel sorry for the ADs with honor who are punished by the arrogance of Holtzman and Co.
He originally owned credit jewelry stores and bought Gruen’s assets.
Can’t buy class or honor.

[Goin2drt]

Originally Posted by btinl

I hope they lose their AD status.

Then A LOT of AD's should. Oh and if you guys think that Rolex has no clue this is going on, you live under a rock. While they will distance themselves they absolutely know the back door BS going on with grays. You don't have that many "brand new" watches at grays and not know this crap is and has been going on for years.

[Chester01]

Lol, shocker! I mean seriously, is this a surprise to anyone. I mean all the business about demand, and all the folks in Asia buying up all the goods. About time people wake up to the fact they are being played, and it happened because so many viewed things through emotion and did not apply simple reason when there were so many facts out there. I mean I contested the so called “Asian market” demand just last week with facts and people here couldn’t handle it. Well now we will see what’s what.

[Partekular]

Originally Posted by Goin2drt

Then A LOT of AD's should. Oh and if you guys think that Rolex has no clue this is going on, you live under a rock. While they will distance themselves they absolutely know the back door BS going on with grays. You don't have that many "brand new" watches at grays and not know this crap is and has been going on for years.

Exactly so.

And PP?????????

[crew]

Originally Posted by Fleetlord

I agree with this. People want Rolex. They are glad they are valuable and have the perception of exclusivity. Non Wis couldn’t care less about this.

Absolutely. Non Wis not only couldn’t care less, they most likely think that people like us are nuts to support a brand that allows this type of nonsense.
They may be right, perhaps we are a little nuts.

[321Forever]

Originally Posted by NorthboundRolex

I read all 52 pages of the legal document and claims by the plaintiff.

Incredible, we do live in a time of fraud and deception. The entire document read like a soap opera.

Most of the questions about how Rolex does its' business and the conspiracy theories about backdoor flipping to grey markets has been well documented in this claim. Rolex USA being a VERY private company will not like any of this getting out into the public.

Although Rolex USA played NO part in any of this dirty business does not mean they won't be subpoenaed to come to court and answer to questions surrounding Rolex Corporate policy where contracts with AD's are concerned.

CDP will lose their AD status obviously. Was CDP the only AD doing this? Well, this opens up pandora's box for any other employees from other AD's to come forward with information about what their AD's were doing at their respective locations. I think over the next few months there will be more lawsuits similar to the CDP fiasco.

I think this may be just the push that Rolex SA needs to get them to create their own corporate owned Rolex Boutiques around the globe. I think to this point they were thinking about it, but now it looks like a certainty. I think any AD that signed a Rolex contract should be made aware that once it ends, there will be NO renewal.

I would be interested to know if "Ms. Duan" is still in the Continental USA or has fled back to China with her bag of cash. My own observation from what I read in that legal document is that CDP hired Duan and used her for her connections with the Asian community and her precarious immigration status. I figure they figured that if things went sour, she'd bear the brunt of it all as it was her name all over the paperwork and that she'd be immediately deported the everything swept under the rug.

Time will tell, but this court case could take a couple of years to sort out if not longer. That is unless Rolex gives her a settlement on behalf of CDP. Problem is, if they do that, they'll have to settle with anyone else who comes forward with their story in the future from other AD's.

Thanks for your analysis!

I wish that more watch enthusiasts realized how we have the potential to contribute to situations like this. The irony of having "trusted sellers", meaning scalpers, who profit from similar efforts is not lost on me. Their lack of transparency regarding how they acquire their products is significant. Rolex and PP play a part in it and we all have the potential to do so, too. If true, CDP really screwed up and crossed many lines. Yet, there are likely similar efforts going on that are technically legal, but just immoral.

[dannyp]

A few thoughts...

1. This isn't really about being a "whistleblower" in a meaningful way; this is about being mad that watches were being unfairly allocated, compromising plaintiffs' ability to make sales themselves. They just backed into that in order to justify the suit.

2. There is a huge difference between violating company policy, violating a commercial contract with Rolex and violating state/federal law. There are suggestions of the latter, but only really solid evidence of the former.

3. We're assuming that Rolex was the victim of some kind of fraud here. However, I've seen speculation that the company knows darn well about ADs moving large volumes of PM pieces at discount to the grey market, and relies on this to avoid publicly "discounting" those watches.

4. Not sure what the overseas angle adds to this...

5. Most interesting to this forum: the assertion that all "scarce" (read: stainless) Rolexes are special order, and that the "waiting for one to come in" is just a line that customers are fed...

[sco]

Just jumping in to say I've never had a good experience in CD (multiple locations) over the years..

[PPcollector]

Not surprised ADs resort to shenanigans to peddle watches that are 2-3x their profit potential. They are selling stock at $10k knowing they can actually get away with 2-3x profit... all you need is a pansy to take the fall when discovered!

[breitlings]

I think there are some criminal issues here. I guess it would come down to taxes like the ferrari NA CEO.

[TheVTCGuy]

For those of you that say “There is not enough here for a conviction.... no criminal element.. will be settled before it reaches court blah blah blah..” Are all probably right, I doubt we will see anything in court, but you’re missing the point. This practice (IMHO) is widespread amongst ADs. FINALLY, it is being placed in the public arena with this lawsuit. Again IMHO, I think there has been significant damage to this AD’s reputation, (which I think it should and am glad for) but MAYBE, this will curtail other ADs from using this practice to such a great extent. MAYBE, it will have some effect and offer us poor schleps that walk in to an AD with a hope of buying a SS sports at MSRP MORE of a chance.

It might not have any effect at all, but at least this is now out in the public and MIGHT have a positive impact (albeit very slight) on the average Rolex fan that would like to buy from ADs at MSRP.

Maybe

[dannyp]

Originally Posted by PPcollector

Not surprised ADs resort to shenanigans to peddle watches that are 2-3x their profit potential. They are selling stock at $10k knowing they can actually get away with 2-3x profit... all you need is a pansy to take the fall when discovered!

That all depends on whether there are actual laws broken. And it's still not clear if there were. We don't know that, for example, the store wasn't recording the sale at "full price, no tax" for a Rolex audit and "discount price + tax" for reporting sales tax to the state. The latter would seem to avoid violating any laws (I recall buying a Miele vacuum this way; store "paid the tax" since Miele doesn't allow discounting).

So, once again, it all depends on whether they were doing anything that would actually piss anybody off (besides the salespeople set up for failure because they didn't have an outlet for large numbers of watches under this "system").

[Rolexhater]

I found and started watching the Time Piece Gentleman on YT and he basically states that all his "new" watches have been back-door'd by AD's and they can't call him fast enough.

[dannyp]

Originally Posted by TheVTCGuy

For those of you that say “There is not enough here for a conviction.... no criminal element.. will be settled before it reaches court blah blah blah..” Are all probably right, I doubt we will see anything in court, but you’re missing the point. This practice (IMHO) is widespread amongst ADs. FINALLY, it is being placed in the public arena with this lawsuit. Again IMHO, I think there has been significant damage to this AD’s reputation, (which I think it should and am glad for) but MAYBE, this will curtail other ADs from using this practice to such a great extent. MAYBE, it will have some effect and offer us poor schleps that walk in to an AD with a hope of buying a SS sports at MSRP MORE of a chance.

It might not have any effect at all, but at least this is now out in the public and MIGHT have a positive impact (albeit very slight) on the average Rolex fan that would like to buy from ADs at MSRP.

Maybe

What damage to reputation? All I see is evidence that they aren't fair to their salespeople. But it says in there that the majority of pieces moving this way were PM pieces, which we all know move far less quickly no matter what. In fact, as discussed here for some time, Rolex relies on the grey market to move these.

Now, there is the issue of the sought-after stainless watches... But all we've learned here is that they can be ordered (for the right person), and the assertion that "you have to wait til one comes in" is bullshit.

Ultimately, though, I don't see how any customers actually lost out, or would have had their difficulty of purchasing a watch increased.

[TheVTCGuy]

Originally Posted by dannyp

What damage to reputation? All I see is evidence that they aren't fair to their salespeople. But it says in there that the majority of pieces moving this way were PM pieces, which we all know move far less quickly no matter what. In fact, as discussed here for some time, Rolex relies on the grey market to move these.

Now, there is the issue of the sought-after stainless watches... But all we've learned here is that they can be ordered (for the right person), and the assertion that "you have to wait til one comes in" is bullshit.

Ultimately, though, I don't see how any customers actually lost out, or would have had their difficulty of purchasing a watch increased.

Really? No damage? So, if you desired to purchase a Rolex, the first place you would look is an AD. Are you going to consider purchasing from THIS AD? That (allegedly) sold the watch you desired out the back door so they could make a much higher profit, and thereby eliminating the opportunity of YOU purchasing that watch at MSRP? You would feel comfortable dealing with THAT AD as opposed to another huh? Well then by all means, give them all your business.

[sxdcfv]

It might dissuade a few ADs to think twice. There's nothing wrong with making a good or even great living, but whe you bite the hand that feeds you, you have to pay the price. Rolex has a set of rules the ADs agree to abide by and if they don't (and especially if they are caught) they deserve to lose AD status, IMO.

[TheVTCGuy]

Originally Posted by sxdcfv

It might dissuade a few ADs to think twice. There's nothing wrong with making a good or even great living, but whe you bite the hand that feeds you, you have to pay the price. Rolex has a set of rules the ADs agree to abide by and if they don't (and especially if they are caught) they deserve to lose AD status, IMO.

Yep, agree completely, and if it does dissuade a few ADs then I consider that a positive result of this lawsuit.

[drfrankenstein]

Originally Posted by dannyp

What damage to reputation? All I see is evidence that they aren't fair to their salespeople. But it says in there that the majority of pieces moving this way were PM pieces, which we all know move far less quickly no matter what. In fact, as discussed here for some time, Rolex relies on the grey market to move these.

Now, there is the issue of the sought-after stainless watches... But all we've learned here is that they can be ordered (for the right person), and the assertion that "you have to wait til one comes in" is bullshit.

Ultimately, though, I don't see how any customers actually lost out, or would have had their difficulty of purchasing a watch increased.

This could damage their reputation if everything broke the right way.

Your average jury or judge isn't going to have sympathy for someone who is selling luxury goods from a retail location for additional, untaxed profit, akin to scalping.

Furthermore, the defendant can claim that Rolex puts unfair demands on his business as an AD and this requires him/her to bend/break the rules in what is a rampant practice anyway, this makes Rolex look bad.

Obviously this is all a stretch but it does have the potential to go bad for all parties involved.

[jaisonline]

I actually enjoyed reading all 50-some pages. Need to get outside more. Only one ceramic SS Daytona was mentioned (by price). Lots of 16610LV references and 1-2 116710 BLNRs.

[dannyp]

Originally Posted by TheVTCGuy

Really? No damage? So, if you desired to purchase a Rolex, the first place you would look is an AD. Are you going to consider purchasing from THIS AD? That (allegedly) sold the watch you desired out the back door so they could make a much higher profit, and thereby eliminating the opportunity of YOU purchasing that watch at MSRP? You would feel comfortable dealing with THAT AD as opposed to another huh? Well then by all means, give them all your business.

Yea, but consider how many pay grey prices anyways, in order to get coveted timepieces. You think anyone who'd be willing to do that would think twice before accepting one at MSRP from an AD, any AD? So far all I've seen for sure is that their labor practices (which salespeople have "access" to Rolexes) are shady, and that the lesson to the consumer is that even within the same dealer, different salespeople may have access to different inventory.

Originally Posted by drfrankenstein

This could damage their reputation if everything broke the right way.

Your average jury or judge isn't going to have sympathy for someone who is selling luxury goods from a retail location for additional, untaxed profit, akin to scalping.

Furthermore, the defendant can claim that Rolex puts unfair demands on his business as an AD and this requires him/her to bend/break the rules in what is a rampant practice anyway, this makes Rolex look bad.

Obviously this is all a stretch but it does have the potential to go bad for all parties involved.

We don't know that the profits were untaxed (contrary to popular belief, not all cash transactions are for tax avoidance). Perhaps CDP in fact fears IDOR/IRS more than it fears Rolex retribution :).