Which one of your childhood friendships is worth a million bucks?
That’s the amount in dispute in a legal feud between billionaire blue jeans entrepreneur Renzo Rosso and his onetime partner at the Pelican Hotel on South Beach, Michele Merlo. His 2010 lawsuit seeking money he said was owed him in a settlement over a missing $1 million has boomeranged into a counterclaim asking Miami-Dade Circuit Judge Abby Cynamon to hold Merlo in civil and criminal contempt and refer him for criminal prosecution.
“Renzo helped Michele begin a wonderful, high-profile life, and he has been repaid with dishonesty and indifference,” said one of Rosso’s lawyers, Jason Giller of Miami.
Giller’s motion for sanctions said Rosso brought Merlo from their hometown of Bassano del Grappa in northern Italy to oversee the renovation and operation of the Pelican in 1993. He gave Merlo a “handsome” salary and a 50 percent interest in the business.
Rosso acquired another Art Deco property on Ocean Drive, the Carlyle, and let Merlo operate it, too. In time the properties and businesses appreciated.
“Merlo, ungrateful for these opportunities, began to behave as though it were he that owned these properties and was he that invested many millions of dollars that were at the heart of the success of these properties,” Giller’s motion said.
In 2006 a new accountant said the Pelican’s books were $2 million short. Merlo returned $1 million and told Rosso he lent the other $1 million, which he would soon recover, to Bakara Corp. in a transaction brokered by Stefano Fanfani of Portfolio Resources Group Inc.
Merlo was fired after the Bakara money failed to reappear, and litigation ensued.
“Although Merlo and Fanfani directly negotiated with Mr. Michael Haws of High Desert Natural Gas Company Inc., whom they met on many occasions, Merlo has sworn repeatedly that he had no knowledge where the embezzled money went other than to a loan to Bakara,” Rosso’s 2011 countercomplaint said.
Coral Gables attorney Ricardo Pines Jr., who represents Merlo, disputed the contentions and said identical allegations were raised in previous suits and settled.
“Mr. Merlo didn’t steal a dime,” Pines said. “It’s just a bunch of nonsense.”
Rosso sued in 2007 to evict Merlo and the hotel operating company after Merlo balked at paying more rent than the lease called for. Merlo in turn sued Rosso for defamation.
In the resulting settlement, Merlo gave up his half-ownership of the Pelican operating company and promised to repay Rosso $450,000. So far he has repaid nothing, the motion for sanctions said.
A hearing on Giller’s motion has not been scheduled. Rosso is also represented by Lawrence Gordon, a partner at Conroy, Simberg, Ganon, Krevans, Abel, Lurvey, Morrow & Schefer in Hollywood.
Forbes magazine last month announced Rosso is now on its list of world billionaires, valuing his holding company, Only the Brave, at $2.5 billion. Besides the Diesel brand of jeans, sportswear, sunglasses, fragrances and shoes, the company has more than 400 stores in 80 countries. Only the Brave also has controlling interests in four other fashion houses and companies.
Fighting Rosso’s “battalion” of lawyers and accountants has left Merlo “financially stranded,” Pines said.
Merlo now manages sandwich shops in Miami Beach after failing to start a venture in Coney Island, New York, Giller said. He lives in a 16th-floor condominium unit in the Continuum on South Beach, which the property appraiser values at $1.3 million.