NEWS- Ludwig's leave: Elder Kuttner faces business woe
On June 17, 2005, Tyco CFO and Albemarle County land baron Mark Swartz was convicted for embezzling millions of dollars from Tyco, and now– almost exactly a year later– a private corporate investigation has an even tighter Charlottesville connection. Textile manufacturer Hampshire Group Ltd. announced last week that Charlottesville- and New York-based businessman Ludwig Kuttner has been forced out of his role as CEO of the New York-based company pending a financial investigation.
The reports indicate that the company has placed Kuttner, two other top executives, and two assistants on administrative leave during an investigation into possible "misappropriation of assets for personal benefit" as well as alleged accounting deficiencies, improper tax reporting, and deficient expense reimbursement. Hampshire reps declined comment, but local developers who have worked closely with Kuttner say they believe he'll be cleared of any wrongdoing.
"I would say that Ludwig has been a great partner, and he seems to be an incredibly hard worker who is very attentive to the details of his businesses," says Richard Spurzem, Kuttner's partner in Waynesboro Village, a 136-acre property just off I-64 in Waynesboro. The two have owned that once-struggling outlet mall for a dozen years, says Spurzem, and on Tuesday, June 27, sold a 53-acre portion (to become a Target store) for $7 million.
Kuttner is best known locally as the owner of Central Place on the Downtown Mall, as well as the sprawling Frank Ix building off Elliott Avenue. With his son, Oliver, Kuttner was instrumental in developing The Terraces on the Downtown Mall, which has been owned by the Hampshire Group. He and his wife, artist Beatrix Ost, are known to split their time between their 500-acre Esmont-area estate, Estouteville, and a pied-a-terre in Manhattan. The latter was memorably featured in a 2003 New York Times Magazine cover story.
Coincidentally, Kuttner and convict Swartz were once nearly next door neighbors, each owning adjacent historic Coles family estates, Kuttner Estouteville and Swartz the much larger– and at a $17 million purchase price– Enniscorthy.
Although Kuttner himself did not return calls seeking comment, Spurzem says he believes corporate paranoia is behind the investigation.
"We are in a post-Enron world, where I think directors and boards of directors can get spooked very easily," he says. "A lot of time, directors are spending their time looking for ghosts under the bed, so to speak, instead of spending time running the business."
But Spurzem says he has particular doubts that Kuttner would do anything to jeopardize the Hampshire Group because Kuttner himself remains a large shareholder in that company; to steal, or mishandle funds, would damage Kuttner's own large investment, which Spurzem estimates at 33 percent.
"I just can't see anyone doing that," says Spurzem.
Another person close to Kuttner also says he doesn't believe he engaged in wrongdoing.
"I think my father is very, very smart, a very hard worker," says son Oliver Kuttner, a real estate developer. "I don't see him being a crook, I really don't. I know that when we came over to this country, my father took over a company that was destined to be closed," he says.
A manufacturer of sweaters, the Hampshire Group was formed from two unrelated firms in 1977 and went public in 1992, according to its website. Kuttner served two terms as president and CEO– from 1979 to 1992, and from 1994 to the present.
"He fought very hard trying to not have the company go under the way a lot of textile companies did," says the younger Kuttner.
Indeed, although the company stock has lost nearly 30 percent of its value since January, hitting $15.21 at Hook presstime Tuesday, over the last five years, it has quintupled from approximately $5 per share in late 2001 to a high of $24 per share in January.
"That doesn't happen by accident," says the younger Kuttner. "He must have done something to run a company in a fairly profitable fashion." And, he adds, his father is not someone prone to extravagance, as the elder Kuttners's own choice of automobile is a Chrysler Concourse.
"He's really proud of the Chrysler because he thinks we should all be driving American," says Kuttner, who believes his father will be cleared of any wrongdoing. "He has a Ferrari," the auto enthusiast son admits, "but that's only because I pushed him into that."
[At two places in this story, the company in question was referred to by the wrong name. It has been corrected in this online edition to its correct name, Hampshire Group Ltd.]