The Rolex War Rages On for Beverly Hills Jeweler

Jeweler Carl Marcus doesn’t mind being known as the pawnbroker of Beverly Hills. Because, he acknowledges, he does make no-interest loans to close customers, holding as elegant collateral their Mercedeses, their LeRoy Neiman originals, even the gold Audemars Piguet watches he sold them in flusher times.

Marcus will not flare at a discussion of his dingy past, of being a New York street kid, of menial jobs in a depressing youth where his two years of county time for burglary was an improvement in life style.

But mention Rolex.

“Their ads are going to destroy my business,” he storms.

The suit is Brooks Bros. and the car he drove to work this day is a Rolls-Royce Corniche convertible, but the voice is gruff and thick with Far Rockaway anger. “Customer inquiries are down 50 calls from 150 calls daily. The Wall Street Journal has just called to say they won’t take my ads and I’ve been advertising daily with them since 1980.

“This is the end of everything. Once you lose your credibility, it’s the end. I can’t afford to sue Rolex . . . and if you get into a battle of newspaper advertisements, it’ll end up like a Tammy Bakker thing.”

Four weeks ago, nothing was this bad.

Marcus, 53, was high-profile owner of a discount watch and jewelry business--by national mail orders and California showroom sales--that in 15 years had grossed $150 million.

An office wall at Marcus & Co., his showroom in an upscale skyrise next to the Beverly Wilshire Hotel, is a gallery of household names.

Best wishes from Sinatra. Thanks for everything from Carson. Y’all terrific, signed Vanna White. With wedding congratulations to Carl and Rosie Marcus from Ronald and Nancy Reagan.

A company brochure makes mention of “over 20,000 satisfied customers.”

Then, last year, came one dissatisfied customer, Kathleen Harvey of Los Angeles.

She testified in Beverly Hills Municipal Court that Marcus had sold her a gold Rolex for $5,600. He had told her it was a new watch. Two days later, after another jeweler had stirred her suspicions, Harvey took the watch to an authorized Rolex dealer.

He told Harvey, and so testified on her behalf, that a registration number on the Rolex indicated that it was 6 or 7 years old. A watchmaker’s mark, coincidentally his own, proved prior ownership by a man in San Diego.

In court, Marcus testified that he himself was duped, that he purchased the watch from a jewelry dealer in New York who said it was new. It was, Marcus said, a single, honest, regretted business error.

But on Sept. 30, Judge Charles D. Boags found for Harvey and awarded her compensatory damages of $6,000 and punitive damages of $19,000. And she got to keep the watch. Marcus is appealing the decision.

Rolex Steps In

The complaint and its conclusion could have ended there . . . except representatives of Rolex Watch USA Inc. of New York had been monitoring the case and, said John Flaherty, an attorney for Rolex, “we tried to find out everything that was relevant to this particular incident.”

A week ago, Rolex took out quarter-page advertisements in the New York Times, the Los Angeles Times and USA Today.

It was addressed “To Consumers Who Have Purchased Rolex Watches From a Company Known as ‘Marcus & Co’ or from ‘Carl Marcus.’ ”

It offered free examination of such watches to determine if the watches were new or used at time of purchase.

And to buttress the offer, Rolex referred to Harvey vs. Marcus & Co., Carl Marcus et al, noted the judgment and its amount against Marcus, and quoted significant paragraphs contained in Judge Boags’ ruling:

“The Court, after listening to (Carl Marcus) found that he has been advertising his services nationwide and has been selling used watches, like the one in issue to many unsuspecting customers as new. . . . The court believes that Mr. Marcus’ sale and advertising practices are completely unacceptable in any society.”

Rolex attempted to place its advertisement with the Washington Post. It was rejected, according to a Post spokesman, owing to confusion over Marcus’ precise connection with a Washington firm that uses his name and sales method in a discount watch and jewelry business.

(According to Marcus, he sold rights to the use of his name and marketing technique in 49 states to Alan Furman, a Washington, D.C. businessman, in 1984. Furman currently does business as Carl Marcus & Co. Inc.)

The Wall Street Journal found similar problems with Rolex’s public message, and also declined to run the advertisement.

“From what we had here we couldn’t ascertain a connection between Marcus on the coast and Marcus in Washington,” explained Bob Higgins, the Journal’s director of advertising services, “and we want a better explanation of their involvement.”

Customers’ Rights

Despite these rejections, said attorney Flaherty, Rolex must insist on “the right to inform consumers and defend the integrity of our product.

“He (Marcus) is not an official Rolex jeweler . . . and Rolex’s job is to pick jewelers that best represent the image.

“He (Marcus) sure doesn’t best reflect the image of Rolex and that’s what concerns Rolex.”

Flaherty emphasized that the suit against Marcus was filed by one dissatisfied customer and not by Rolex. However, he added, Rolex will continue its advertising campaign “just telling the facts . . . through the same advertisement in the same outlets. And we would hope that the Washington Post and the Wall Street Journal will reconsider (the decision not to publish).”

To Marcus, however, all damage is done.

First, he says, the Los Angeles earthquakes. Then Meltdown Monday on Wall Street. “Now Rolex comes along . . . and what I object to is Rolex taking an isolated incident, one that is under appeal and malevolently steamrollering these ads that cause people to draw conclusions that are not realistic.

“We take all precautions to buy genuine, new watches, and sell them as such,” said Marcus. “Just once in our career, we bought and sold one that wasn’t. We don’t know if it was examined by us and put in the wrong bin.

“An error was made. We’re sorry. But this is like having a fly jump into your hamburger at McDonald’s. What do you want us to do? Close up the business?”

In fact, Marcus believes that his closure may well be Rolex’s ultimate intention.

It is a common fate, he says, for merchandisers who attempt to discount a quality manufacturer’s suggested list prices.

A Better Deal

Marcus points out “that the markup on Rolex, Piaget, Omega, Patek-Philippe, Cartier and others is between 40% to 50%. By not dealing with manufacturers, by not going in for frills, by getting dealers to sell to us . . . I had more of the markup to work with.”

Marcus bought from dealers who had been unable to move expensive, upscale watches in their markets. He bought from “parallel brokers” who buy time pieces outside the United States wherever currency fluctuations establish bargains in gold watches.

He started in business, he said, “with the intention of bringing the world’s best jewelry down to a price where most people can afford it, to sell the most for the least.”

The result, he said, has been freedom to sell a $10,000 Rolex President at “a significant discount . . . anywhere from 5% to 25% less than most jewelers.”

The downside of finding a better way to market watches, however, was “becoming the pariah of the watch business. Everybody (manufacturers and official dealers) hates us.”

Moreover, Marcus sees an underlying motive to the advertising campaign by Rolex. By offering to inspect watches purchased from Marcus & Co., he said, Rolex can obtain their registration numbers and identify those dealers who sold to Marcus.

“You don’t easily obtain a Rolex franchise, and you can easily lose it by their militant policies,” he said. “Now they (Rolex) know where I got them, it will be a blood bath.”

Flaherty denied any conspiracy to put Marcus out of business. Nor, he said, is the company’s free inspection offer aimed at learning which Rolex dealers have been selling to Marcus.

“I think it is very important for a consumer to know that what he got and what he paid for was what he thought he was getting,” said Flaherty. For if a buyer is duped, he said, “that effects Rolex and the consumer attitude toward Rolex and its product.”

Devastating Blow

For Marcus, the attack has been brutal.

It wouldn’t be so bad, he said, if he’d been educated at Loyola or had a family crest or had been born to prestige.

But he is the son of immigrants, the oldest of six children who slept in one bedroom of a fifth-floor walkup while his parents slept in a Castro convertible in the living room.

His first job, at 16, was as a delivery boy for Gotham Meats and a page boy at the Gotham Hotel. He has sold vacuum cleaners for Electrolux, cars for Ralph Williams and hearing aids for Belltone. Marcus was an apprentice tool and die maker, apprentice gardener, apprentice auto mechanic and graduate stitcher of buttons on cards.

Then, he said, he had his better idea.

Now, he says, it’s all in jeopardy.

“In two weeks everything has fallen apart,” he said. “The phones have stopped ringing. Can a 15-year business crumble that quick? It seems so.”

Marcus says he is taking his case to his customers and the public as best he can, but his options are limited. “We’ve had some success in getting the ads pulled. We’re appealing the case. But we can’t sue Rolex. We can’t afford to.”

Marcus has fired the attorney who handled Harvey vs. Marcus & Co. He is consulting with a new lawyer, a public relations counsel, and maybe, he says, there’s a contingency lawyer somewhere who might be interested in the case.

Meanwhile, he continues to wear his gold-and-diamond watch. It’s worth $40,000. It’s a Rolex.