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Chicago Rolex Dealer Accused of Racketeering in Lawsuit
A former employee has accused the owner and employees of C.D. Peacock of selling Rolex watches directly into the gray market and firing employees who blew the whistle on their activities.
C.D. Peacock, which operates three stores in the Chicago area, has been accused of selling Rolex watches to gray market resellers. (Image courtesy of C.D. Peacock’s website)
Chicago—A longtime Chicago jeweler and a number of his employees are being publicly accused in a lawsuit of conspiring to illegally sell Rolex watches to gray market resellers and firing employees who blew the whistle on the alleged scheme.
C.D. Peacock Inc., which has been in business since 1837, operates three stores in the Chicago area and is an authorized dealer of top watch brands including Rolex, Patek Philippe, Cartier and TAG Heuer.
Last week, a former C.D. Peacock employee, Suzana Krajisnik, filed suit against owner Seymour Holtzman and four of his employees in federal court in Illinois.
In the suit, Krajisnik claims she was fired in December 2019 for being a whistleblower on “a conspiracy by the defendants to illegally sell Rolex watches to foreign grey market resellers in order to enrich themselves” and “refusing to engage in flagrant illegal activity that violated state and federal law.”
Two other former C.D. Peacock employees, fired in June 2020 and January 2021, are named in the suit and back up her claims, stating they believe they were also fired for notifying management of the situation and refusing to participate.
In a statement to National Jeweler, a spokesperson for C.D. Peacock called Krajisnik’s claims “baseless.” The jeweler said Krajisnik was “terminated for cause” and it will vigorously defend itself against the suit’s “false accusations.”
C.D. Peacock also said it follows all distribution guidelines outlined by the brands it carries.
“In an industry where demand far exceeds supply for generational timepieces, we value transparency and accountability,” the company said. “We follow all guidelines to preserve our brand partnerships.”
Rolex did not respond to an email request for comment on the lawsuit.
The detailed 50-plus-page filing accuses Holtzman as well as CEO Robert Baumgardner, former employee Dyol Hill, and employees Christopher Croteau and Yingxue Duan of violating “numerous federal and state laws including but not limited to racketeering, money laundering, mail, wire, immigration, and credit card fraud, and Illinois sales tax evasion.”
The court filing outlines the guidelines authorized Rolex dealers must follow as part of the brand’s distribution agreement. The store also has its own policies in place to reinforce that agreement.
C.D. Peacock employees are told the most important policy to follow is that Rolex sales are to be made in person at the approved location, as per court documents. Selling by catalog, phone, online or by other means is prohibited.
The jeweler’s policy requires sales professionals to be wearing a Rolex timepiece and a Rolex scarf or tie while making Rolex sales, and protective stickers must be removed from watches sold in-store, a rule put in place specifically to avoid gray market sales.
C.D. Peacock Inc., which has been in business since 1837, operates three stores in the Chicago area and is an authorized dealer of top watch brands including Rolex, Patek Philippe, Cartier and TAG Heuer.
Last week, a former C.D. Peacock employee, Suzana Krajisnik, filed suit against owner Seymour Holtzman and four of his employees in federal court in Illinois.
In the suit, Krajisnik claims she was fired in December 2019 for being a whistleblower on “a conspiracy by the defendants to illegally sell Rolex watches to foreign grey market resellers in order to enrich themselves” and “refusing to engage in flagrant illegal activity that violated state and federal law.”
Two other former C.D. Peacock employees, fired in June 2020 and January 2021, are named in the suit and back up her claims, stating they believe they were also fired for notifying management of the situation and refusing to participate.
In a statement to National Jeweler, a spokesperson for C.D. Peacock called Krajisnik’s claims “baseless.” The jeweler said Krajisnik was “terminated for cause” and it will vigorously defend itself against the suit’s “false accusations.”
C.D. Peacock also said it follows all distribution guidelines outlined by the brands it carries.
“In an industry where demand far exceeds supply for generational timepieces, we value transparency and accountability,” the company said. “We follow all guidelines to preserve our brand partnerships.”
Rolex did not respond to an email request for comment on the lawsuit.
The detailed 50-plus-page filing accuses Holtzman as well as CEO Robert Baumgardner, former employee Dyol Hill, and employees Christopher Croteau and Yingxue Duan of violating “numerous federal and state laws including but not limited to racketeering, money laundering, mail, wire, immigration, and credit card fraud, and Illinois sales tax evasion.”
The court filing outlines the guidelines authorized Rolex dealers must follow as part of the brand’s distribution agreement. The store also has its own policies in place to reinforce that agreement.
C.D. Peacock employees are told the most important policy to follow is that Rolex sales are to be made in person at the approved location, as per court documents. Selling by catalog, phone, online or by other means is prohibited.
The jeweler’s policy requires sales professionals to be wearing a Rolex timepiece and a Rolex scarf or tie while making Rolex sales, and protective stickers must be removed from watches sold in-store, a rule put in place specifically to avoid gray market sales.
According to the lawsuit, C.D. Peacock’s policy also prohibits the sale of limited availability models to unknown buyers, preferring to sell them instead to customers with a history of purchasing those types of watches in order to avoid them being resold online.
Newer employees were not allowed in the Rolex room and could not sell Rolex products until they were familiar with the brand and had an established client base, as per court documents.
The procedures above were followed, the lawsuit claims, until December 2018.
Two events that happened around that time set “the scheme” in motion, Krajisnik claims in the lawsuit: the hiring of a new employee, Duan, and a goal set by management for $10 million in sales.
Employees were told that if they reached the goal, Rolex would pay to remodel one of C.D Peacock’s stores, select executives would receive “substantial bonuses,” and Rolex would make additional high-demand watches available to CDP, the lawsuit claims.
Though Duan was a new employee, she began selling Rolex watches.
The filing details several instances of Duan allegedly engaging in illegal behavior and violating store and Rolex policies.
For example, the suit states that in late January or early February 2019, a typically slow period for the jeweler, one of the employees who was also fired noted that “the Rolex sales numbers were skyrocketing, and Duan, who had no established customer base and rarely, if ever, had in-store customers, was recording extraordinary Rolex sales.”
The employee discovered that “Duan was regularly engaging in forging signatures on credit card receipts”—to sign for customers who had never visited the store—and “making remote sales of Rolex products, whether on the phone or online, to heretofore unknown customers,” the suit states.
Multiple watches were allegedly being shipped out of state at one time, as per the court filing, to avoid sales taxes, also violating CDP and Rolex policies.
Krajisnik also claims in the lawsuit that she friended Duan on Facebook and noticed she was posting Rolex products for sale in foreign countries, including on pages for jewelry resellers. Both CDP and Rolex forbid online advertising and sale of Rolex products.
Though Rolex is mentioned most often in the filing, Krajisnik claims that several other luxury watch and jewelry brands, including Patek Philippe, may also be included in the alleged scheme.
Krajisnik is requesting a trial by jury to settle the matter and is asking for lost wages, back pay, damages, and attorneys’ fees.
The case was filed with the U.S. District Court for the Northern District of Illinois.
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