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How Could This Happen to Annie Leibovitz?

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Goldman Sachs, which helped finance the loan, now seems to be distancing itself from Art Capital and reaching out to Leibovitz. “We are deeply troubled by recent developments concerning Annie Leibovitz and Art Capital,” says Goldman spokeswoman Andrea Raphael. “Goldman Sachs owns a portion of the loan underwritten by an affiliate of Art Capital to Annie Leibovitz, but we have no involvement in the current sales-agreement dispute between Art Capital and Ms. Leibovitz. We have proposed to Art Capital that we terminate the current loan agreement with their affiliate so that we can work directly with Ms. Leibovitz to help her resolve her financing needs.”

Leibovitz has told people that she didn’t understand the ramifications of the agreement she signed. She did not show the contract to any member of her family or even her agent before she signed it, nor did she hire her own attorney to review the document. Instead she relied on an attorney whom Starr provided. “Trust me,” says her sister Paula. “She thought it was a pure loan. That New York Times article was as much news to her as it was to anybody else.”

“Ms. Leibovitz and a small army of her lawyers and financial advisers understood the terms of the deal,” insists Montieth Illingworth, a spokesman for Art Capital. “It was discussed explicitly with her numerous times over several months. Ms. Leibovitz signed her name five times to different documents in the transaction. To say otherwise is not credible.”

“Annie is working to resolve the situation, so it would be inappropriate to comment,” says Leibovitz’s spokesman Matthew Hiltzik.

Art Capital has treated borrowers aggressively in the past. In 2003, the company loaned $1.5 million to a wealthy young widow named Melanie Gill—who had inherited a large collection of museum-quality furniture—so she could buy a hotel and spa in New Orleans. After Gill missed one interest payment, Art Capital consigned her antiques to Christie’s and foreclosed on and sold her apartment.

The chances of Leibovitz’s getting out from under the pile of debt now looming over her seem slim. At one point in time, Si Newhouse may have stepped forward to bail her out, but with Condé Nast suffering badly in the current economic climate, along with everyone else, it’s hard to imagine that he would cover more than a portion of Leibovitz’s debt.

One potential white knight, however, has emerged: Getty Images, the world’s leading stock-photo agency. For years, Getty had pursued Leibovitz unsuccessfully. In January, Art Capital reached out to the agency to gauge its interest in purchasing the rights to Leibovitz’s photo archive, which Art Capital now claimed to have the right to sell. Art Capital believed the work was worth $50 million or so. Getty offered $15 million. The deal went nowhere.

On March 19, Getty announced that it had entered into a business agreement with Leibovitz. The deal, struck with Orchard Represents, Getty’s advertising representation arm, called for Leibovitz to shoot eight photography assignments for $1.1 million.

Following the March press release from Getty, representatives from Art Capital began calling Leibovitz repeatedly to schedule a time when they could come over to the Greenwich Village townhouse to inspect her belongings and bring a real-estate agent who would be listing the place. Leibovitz felt harassed by the calls. Among other things, Leibovitz was not under the impression that she was going to have to sell her apartment.

In April, Art Capital sued Getty for breach of contract and fraud. In essence, they argued that Getty had improperly used its dealings with Art Capital to strike its deal with Leibovitz. Three months later, Art Capital filed suit against Leibovitz, charging that she had willfully ignored the terms of the loan by not allowing Art Capital into her house. Getty has moved for the case to be dismissed; a judge recently agreed to dismiss some of the charges, but not others. Both cases are still pending.

Whatever happens, Leibovitz’s life will obviously never be the same. Paula Leibovitz thinks it’s time for her sister to start over. “As a person from California, I’ve been trying to get her to move out here,” she says. “I keep telling her, everyone’s really nice in California.”


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