Inside The Fall Of One-Time Bangle Billionaire Carolyn Rafaelian

Once America’s richest jeweler, Alex and Ani’s Carolyn Rafaelian has lost $900 million in less than two years — and no longer works for the company she founded. The inside tale of hypergrowth, executive turnover, legal turmoil and the whims of fashion at America’s charm bracelet foundry.

^Just two years ago, Alex and Ani founder Carolyn Rafaelian was sitting in her airy, nautical-themed Venice Beach home, hobnobbing with one of hip-hop’s greatest artists. Over coffee with O’Shea Jackson Sr., better known as Ice Cube, the jeweler mapped out plans for an audacious $10 billion bid for nearly two dozen of 21st Century Fox’s regional sports cable tv networks. Rafaelian, who had invested in Ice Cube’s 3-on-3 basketball league made up primarily of former NBA players, was ready to commit $1 billion of cash and debt, essentially gambling all of her then estimated $1 billion net worth.

That unlikely deal never happened — the pair was outbid by Sinclair Broadcast Group — but Carolyn Rafaelian could be forgiven for wishing that her money was tied up in televising local sports rather than in Alex and Ani, the Rhode Island-based charm bracelet maker she founded in 2004.

It’s been a terrible, horrible, really bad 18 months for Rafaelian and her celestial jewelry brand. Alex and Ani’s lender cut off its line of credit; sales tumbled and at least two lawsuits have been filed. Rafaelian was forced to give up one third of her stake in the jeweler. She was first asked to step down as Alex and Ani’s CEO and then claims she was fired as its designer. Her net worth has plummeted from an estimated $1 billion in June 2017 to roughly $100 million. (Don’t feel too bad — she still owns at least a dozen homes, including spreads in Rhode Island, New York City and Venice Beach, California.

It’s a dramatic reversal of fortune for the entrepreneur who starred on the cover of our Richest Self-Made Women issue in June 2017. Back then Alex and Ani was pulling in revenues of $550 million. Now it’s more like an estimated $420 million and Rafaelian, 54, is moving on. A week ago, in front of a roaring fireplace at her Belcourt mansion in Newport, Rhode Island, Rafaelian announced in an Instagram video that she would no longer be designing for the company she founded.

“I am excited to tell everyone that I’ve started a new company called Metal Alchemist. Metal Alchemist is where I plan on continuing all the love and the efforts and designs that support things that are truly important to me, such as the Armenia Fund,” said Rafaelian, whose grandparents were Armenian immigrants. The jeweler, who declined to comment for this story, was vague on the details and Metal Alchemist’s website gives little further information, although it appears to be launching during the holiday season this year.

Rafaelian made the Forbes’ list of America’s Richest Self-Made Women for four years straight, starting in 2016. The year she appeared on the cover, she ranked No. 18 and was worth $1 billion. In 2020, she fell out of the ranks entirely.

Rafaelian’s troubles first became public in July 2019, when Alex and Ani, named after her two oldest daughters, filed a gender discrimination suit against one of its lenders, Bank of America, seeking $1.1 billion in damages. The company claimed that Bank of America treated it differently because it was female led, specifically cutting off the company’s revolving line of credit in December 2018 after a woman was named chief financial officer. As a result, the company alleged, sales declined around $80 million after it failed to pay vendors, which in turn delayed product launches. It also alleged in the suit that its valuation dropped by hundreds of millions of dollars, and that morale and employee productivity were hurt. 

Less than a month later, Alex and Ani dropped the lawsuit. Its lawyer claimed that Alex and Ani had reached a confidential resolution; a Bank of America spokesman told Forbes that the bank made no payment in connection with the lawsuit and that Alex and Ani had voluntarily withdrawn the suit.

Almost immediately after the suit was dropped, London-based investment company Lion Capital—which then owned 40% of Alex and Ani—stepped in and negotiated with the bank, which alleged that Alex and Ani was in default on a $100 million line of credit. Alex and Ani couldn’t be reached for comment.

In the ensuing shakeup, Rafaelian gave up 20% of the company, reducing her stake to 41% and increasing Lion’s to 59%. In return, she claims, Lion Capital agreed to fund two new businesses up to $1 million a year for two years. No longer in control, Rafaelian stepped down as CEO in September 2019 and became chief creative officer. She was fired from that role on May 8, she alleges, just as the company was reeling from the pandemic. She filed a lawsuit against Lion Capital in June, alleging that it reneged on its promise to fund her new ventures. Lion Capital, which filed a motion to dismiss the suit, declined to comment about the lawsuit or Alex and Ani. The case is still pending. 

All of this legal wrangling was happening at about the worst time. Covid hit Alex and Ani hard. Already fading out of fashion before the lockdowns started, sales tumbled 60% for the 12 months through August, according to data analytics firm Earnest Research. “Jewelry, like most discretionary items that are not at-home fitness and athleisure, found itself against a semi-existential question of what’s the motivation to purchase if you can’t find the occasion to wear it?,” says Simeon Siegel, a senior analyst at BMO Capital Markets. 

“Oil And Water In A Healthy Way”: Giovanni Feroce (left), an Iraq war veteran, and Carolyn Rafaelian met at a University of Rhode Island reunion. She hired him as Alex and Ani’s CEO in 2010 and they ran the company together for four years.

“I live in Rhode Island, and you don’t even hear about Alex and Ani anymore,” says Dana DiPaolo, who worked at the company as the Innovation Lab director from 2011 to 2014 and credits Rafaelian with giving the bangles an edge. “When you look at Alex and Ani now, it’s just a white label of any other jewelry company out there. You can take one of their images and you can just add, ‘Steve’s Jewelry Company’ to the bottom of it because it’s so generic and has no meaning.”  

All in all it’s been quite the series of unfortunate events, and Rafaelian isn’t one to chalk things up to bad luck. “I believe there is no such thing as coincidences: Everything is strategically and divinely coordinated,” she once told Forbes. A master marketer who claimed her jewelry was imbued with energy that could have a positive effect on its wearer (she had a priest and a shaman bless her inventory), Rafaelian built her fortune selling thousands of styles of charm bangles, commemorating everything from birthdays and graduations to zodiac signs, favorite charities and religious totems.  

“When it was in its heyday, you’d go to Dunkin Donuts and the person working the drive-thru couldn’t get their arm out the window because they had 15 Alex and Ani bangles on their arm,” says DiPaolo. “There was this magnificent buzz about it.”

It was a spin on a business Rafaelian grew up in. Her father made costume jewelry of all kinds, but was best known for American-flag lapel pins he sold wholesale.  

Alex and Ani officially launched from inside her father’s jewelry factory in Cranston, Rhode Island in 2004. Her signature design was an expandable wire charm bangle, which she patented that same year. The business grew steadily, and opened its first retail store in Newport in 2009. But it didn’t take off until Rafaelian brought in Giovanni Feroce, a former Rhode Island state senator with a background in eyewear, as CEO in 2010.  Deals with department stores, including Saks Fifth Avenue, followed, as did licensing agreements with Walt Disney, the National Football League, and the Marines. Sales surged from $5 million when Feroce came on board to $230 million three years later. 

Rafaelian bought Belcourt mansion, the famed former home of suffragist and socialite Alva Vanderbilt, for $3.6 million, and paid another $1 million for its contents, in 2012.

“Anything from the Super Bowl commercial…to Main Street locations, to a large majority of hiring, or personnel, everything, all of those moves, every single one of those moves, were my moves,” Feroce says.  

A former executive describes Feroce and Rafaelian as “oil and water in a healthy way.” But despite what seemed like a winning partnership, Feroce says he was pushed out in 2014, though won’t say why, and that many of his hires left the company shortly thereafter.  

His replacement was Harlan Kent, the former CEO of Yankee Candle. Kent lasted less than a year. His replacement, Cindy DiPietrantonio, was out after a year. In December 2017, Alex and Ani hired then-26-year-old Andrea Ruda, whose role was at the heart of the gender discrimination lawsuit against Bank of America, as its chief financial officer. 

It was an epic level of executive instability for a company already subject to the whims of teen fashion. For now, a much diminished Alex and Ani is surviving the pandemic without Carolyn Rafaelian. And some think that is for the best.

“When it comes to creative, I think Carolyn can be one of the best in the world,” says Feroce. “When it comes to business management and business leadership or corporate leadership, I don’t know of anything that would suggest she has the skill set to run a billion-dollar company.”