Professional Documents
Culture Documents
Krajisnik V CD Peacock Inc Et Al Ilndce-21-00775 0001.0
Krajisnik V CD Peacock Inc Et Al Ilndce-21-00775 0001.0
COMPLAINT
Plaintiff Suzana Krajisnik (“Krajisnik” or “Plaintiff”), by her attorneys, the Garfinkel Group,
LLC, complain against Defendants C.D. Peacock, Inc. (“CDP”), Seymour Holtzman (“Holtzman”),
Christopher Croteau (Croteau”), individually, and Yingxue Duan (“Duan”), individually, for (1)
terminating her employment in retaliation for whistleblowing and refusing to engage in flagrant
illegal activity that violated state and federal law, in violation of the Illinois Whistleblower Act, 740
Ill. Comp. Stat. 174/1, et seq. (“IWA”); (2) firing her and committing common law retaliatory
discharge; and (3) engaging in racketeering, in violation of the Racketeer Influenced and Corrupt
INTRODUCTION
uncovered a Scheme of illegal activity (the “Scheme”). They discovered that the Scheme was being
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perpetrated by a coworker and multiple management-level employees, including the CEO, and with
2. The heart of the Scheme was a conspiracy by the Defendants to illegally sell Rolex
watches to foreign grey market resellers in order to enrich themselves. In order to further the
Scheme, the Defendants conspired to violate numerous federal and state laws including but not
limited to racketeering, money laundering, mail, wire, immigration, and credit card fraud, and Illinois
3. Upon information and belief, they replicated the Scheme described herein with
several other luxury watch and jewelry brands, including, but not limited to Patek Phillipe.
4. The Plaintiff, and the two other innocent co-whistleblowers, repeatedly notified
management of the illegal and fraudulent activities while refusing to participate in the Scheme. In
response, Plaintiff and the two other co-whistleblowers, respectively, were summarily fired for their
knowledge, their unwillingness to be complicit in the Scheme, and their protected whistleblowing
activities. In the meantime, as Plaintiff became aware of the fraudulent behavior, she suffered undue
emotional stress, resulting from the pressure of coercion to participate in the scheme.
5. In addition to the numerous violations of state and federal criminal statutes, the
Scheme defrauded Rolex, the international watch manufacturer, as well as other jewelry suppliers,
6. Krajisnik was a newly hired employee of CDP in 2018, with no previous experience
7. Commencing in late 2018, Plaintiff noticed another newly hired employee, who also
had with no previous jewelry sales experience, Ying Duan, engaging in flagrantly illegal behavior.
Duan, in concert with members of management committed an ongoing pattern of mail and wire
fraud, money laundering, tax evasion, and defrauding Rolex (the “Scheme”). Duan willfully aided
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CDP management and ownership in fraudulently and intentionally violating the Rolex Distribution
8. Upon on information and belief, Duan is a Chinese national, illegally residing in the
United States, by fraudulently leveraging a student visa in concert with CDP management.
9. As part of the Scheme, the other defendants conspired to aid and abet Duan’s
10. The Plaintiff and the co-whistleblowers began reporting Duan’s illegal activity to
11. In response to the Plaintiff and her co-whistleblowers’ reports, the management
13. As the illegal behavior accelerated in early 2019, it became clear to Plaintiff that store
management was complicit in the Scheme. Later it was discovered that the entire chain of
14. The Plaintiff escalated their complaints to higher levels of management, including
15. In May of 2019, Nelson, complained directly to CDP, CEO Baumgardner about the
1 A version of the Rolex’s Distribution Agreement is available on the Securities and Exchange Commission’s
(“SEC”) website. <https://www.sec.gov/Archives/edgar/containers/fix031/817946/0003.txt >. Upon
information and belief, the Distribution Agreement in question, between CDP and Rolex, is substantially
similar in character and substance to the same agreement enclosed herein as Exhibit Q. Exhibit Q is a
document available to the general public and obtained via a Google search from the Securities and Exchange
Commission’s (“SEC”) website between Rolex and another retailer, and contains similar and/or the same
restraints on sales of Rolex products, as discussed herein.
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follows:
A. Baumgardner and Store Director Hill fired Nelson, within weeks of escalating her
C. In this interim period, store manager, Hill, left CDP’s employ under mysterious
D. On November 29, 2019 Krajisnik met with Croteau and reported her knowledge of
the Scheme.
E. In December 2019, just a few weeks after Krajisnik reported the full scope of her
F. In December 2019, Di Lorenzo reported the full scope of his knowledge of the
Scheme to Croteau.
17. This Court has jurisdiction pursuant to the Racketeer Influenced and Corrupt
Organizations Act (“RICO”) 18 U.S.C. § 1961 et seq., (specifically 18 U.S.C. § 1964(c)), and 28 U.S.C.
§ 1331.
18. This Court has supplemental jurisdiction pursuant to 28 U.S.C. § 1367 over
Plaintiffs’ Illinois law claims for violation of the IWA, and common law retaliatory discharge.
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19. Venue is proper in this judicial district under 28 U.S.C. § 1391(b) and (c) because
Plaintiffs and all of the Defendants either reside in this district or have their principal place of
business in this district, and all events giving rise to Plaintiff’s claim occurred within this district.
PARTIES
20. Plaintiff, Suzana Krajisnik, is an adult resident of Cook County, Illinois, residing
Illinois. CDP is a jeweler, that maintains retail locations at Oakbrook Center in Oakbrook, Illinois,
Woodfield Mall in Schaumburg, Illinois, and Old Orchard Shopping Center in Skokie, Illinois.
24. At all times relevant herein, Holtzman was the owner of CDP.
26. On information and belief, Holtzman violated 18 U.S.C. §§ 1962(c) and (d) by
actively participating in the named, individual Defendants’ Scheme. Holtzman oversaw and enabled
A. mail fraud, violating federal statutes including but not limited to the 18 U.S.C. §
B. wire fraud, violating federal statutes including but not limited to 18 U.S.C. §1343;
C. credit card fraud violating Illinois statutes, including but not limited to 720 Ill. Comp.
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D. aiding and abetting immigration fraud, violating federal statutes including but not
E. inflating in-state sales to circumvent state Illinois sales tax laws, including but not
G. money laundering, in violation of §352 of the USA Patriot Act and the
the Village of Skokie in Cook County, Illinois, within this judicial district.
28. At all times relevant herein, Baumgardner was the C.E.O. of CDP.
29. On information and belief, Baumgardner violated 18 U.S.C. §§ 1962(c) and (d) by
actively participating in the named, individual Defendants’ Scheme. Baumgardner oversaw and
A. mail fraud, violating federal statutes including but not limited to the 18 U.S.C. §
B. wire fraud, violating federal statutes including but not limited to 18 U.S.C. §1343;
C. credit card fraud violating Illinois statutes, including but not limited to 720 Ill. Comp.
D. aiding and abetting immigration fraud, violating federal statutes including but not
E. inflating in-state sales to circumvent state Illinois sales tax laws, including but not
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G. money laundering, in violation of §352 of the USA Patriot Act and the
30. Defendant, Dyol Hill, is a former employee of CDP, which is located in the Village
31. At all times relevant herein, Hill was the Store Director for CDP. On information
and belief, Hill violated 18 U.S.C. §§ 1962(c) and (d) by actively participating in the named,
individual Defendants’ Scheme. Holtzman oversaw and enabled the Scheme which involved a
A. mail fraud, violating federal statutes including but not limited to the 18 U.S.C. §
B. wire fraud, violating federal statutes including but not limited to 18 U.S.C. §1343;
C. credit card fraud violating Illinois statutes, including but not limited to 720 Ill. Comp.
D. aiding and abetting immigration fraud, violating federal statutes including but not
E. inflating in-state sales to circumvent state Illinois sales tax laws, including but not
G. money laundering, in violation of §352 of the USA Patriot Act and the
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33. At all times relevant herein, Croteau was the Store Director for CDP. On
information and belief, Croteau violated 18 U.S.C. §§ 1962(c) and (d) by actively participating in the
named, individual Defendants’ Scheme. Holtzman oversaw and enabled the Scheme which involved
A. mail fraud, violating federal statutes including but not limited to the 18 U.S.C. §
B. wire fraud, violating federal statutes including but not limited to 18 U.S.C. §1343;
C. credit card fraud violating Illinois statutes, including but not limited to 720 Ill. Comp.
D. aiding and abetting immigration fraud, violating federal statutes including but not
E. inflating in-state sales to circumvent state Illinois sales tax laws, including but not
G. money laundering, in violation of §352 of the USA Patriot Act and the
34. Defendant, Yinxue Duan, is an employee of CDP, which is located in the Village of
35. At all times relevant herein, Duan was an employee of CDP. On information and
belief, Duan violated 18 U.S.C. §§ 1962(c) and (d) by actively participating in the named, individual
Defendants’ Scheme. Duan participated in the Scheme which involved a multitude of crimes,
including:
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A. mail fraud, violating federal statutes including but not limited to the 18 U.S.C. §
B. wire fraud, violating federal statutes including but not limited to 18 U.S.C. §1343;
C. credit card fraud violating Illinois statutes, including but not limited to 720 Ill. Comp.
D. aiding and abetting immigration fraud, violating federal statutes including but not
E. inflating in-state sales to circumvent state Illinois sales tax laws, including but not
G. money laundering, in violation of §352 of the USA Patriot Act and the
FACTUAL ALLEGATIONS
36. A majority of CDP’s business comes from watch sales. CDP proudly advertises
being an official seller of a variety of expensive, high-end watches, including, but not limited to
to a limited number of select authorized retailers in the United States. Rolex’s own website3
2 https://cdpeacock.com/rolex-watches-chicago/
3 https://www.rolex.com/rolex-dealers/unitedstates/illinois/chicago.html#locateme=true
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38. Once Rolex authorizes a retailer, said retailer must enter into the Distribution
Agreement. The retailer must follow strict guidelines, audited and enforced by Rolex, in order to
39. Rolex utilizes a regional sales representative and “secret shoppers,” shoppers sent
“under cover” to ascertain whether a retailer is following Rolex’s policies. The Rolex Regional Sales
Representative assigned to CDP during the relevant time period was Chad Adams (“Adams”). In
addition, to the best of Plaintiff’s knowledge and belief, retailers are required to submit various
certifications to Rolex.
40. In order to enforce compliance with the Distribution Agreement, CDP ostensibly
maintains its own set of policies to ensure its employees follow and meet provisions of its Rolex’s
contract. Employees are informed that the most important CDP policy is: “Sale of Rolex Products
4Exhibit Q, the publicly available version of the Distribution Agreement, provides similar restrictions on sale
of Rolex products, setting forth, in relevant part:
5. ROLEX TRADEMARKS
5.1 USE OF ROLEX TRADEMARKS. Any promotional materials or other item bearing a
Rolex trademark (such as the words "ROLEX" or “Oyster” and the Rolex Crown Emblem)
furnished by Rolex remains the property of Rolex. Consent to use the Rolex trademarks is
granted to Official Rolex Jewelers on a limited basis only, solely for the purpose of
advertising and promoting the sale of Rolex products during the term of this Agreement.
Jeweler will not acquire, nor will it claim any right, title or interest to the tradename or
trademark ROLEX, nor to any associated trade dress, nor to any other trademarks,
copyrights or other intellectual property owned by Rolex.
See. Ex. Q.
5 This is a fact confirmed in the publicly available Exhibit Q, which sets forth specific guidelines for the
relationship between a retailer and Rolex under which the retailer may sell Rolex products.
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must be made in person at the approved location. Distance selling by catalog, phone, Internet or
41. CDP’s own policies ostensibly enforce mandatory procedures to ensure that it
upholds the Distribution Agreement including Rolex’s strict sales and quality standards, such as the
avoidance of volume sales, “grey market” resales, and the like. These include but are not limited to
the following: (1) sales professionals must be wearing a Rolex timepiece and a Rolex scarf or tie
while making Rolex sales; and (2) protective stickers must be removed from any watches sold in-
store. With respect to this last rule, CDP’s Rolex policies specifically provide that this step is
required so that watches are not sold on the “grey market.”7 Id. “Failure to follow this policy is
42. CDP’s Rolex policy makes clear that Rolex does not allow sales of limited availability
models to unknown clients. Id. The policy provides that certain high-demand Rolex watches should
only be sold to clients that the sales professional already knows, and the buyer should not have a
purchase history consisting of only limited availability models.8 “If [the hard-to-get models] end up on
the internet, this will result in a significant problem for the company.” Id.
6 See excerpts from various iterations of CDP’s Rolex policies, attached as Exhibit A.
7 “Grey market” and “black market” are terms used interchangeably to refer to the market for unlawfully
resold Rolex products.
8 This policy, too, is confirmed by the publicly available Exhibit Q, which mandates:
3. RETAIL SALES ONLY. Jewelers will sell Rolex products only to ultimate consumers, at
the retail level, in transactions that originate over the counter at its authorized location(s). All
other methods of the sale (except for Rolex-approved corporate/presentation sales) are
considered transshipping. Rolex is the sole distributor of Rolex watches in the United States.
Rolex has not authorized any ORJ or any other person to act as a wholesaler or
subdistributor; therefore, any transshipment of Rolex watches, even if unintentional, is
prohibited. ORJs may not sell watches to customers referred from outside their local market
area (unless the sale is transacted in person at an authorized location), nor may they pay a
feel for any referrals.
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43. CDP has myriad other Rolex-specific sales rules. These include but are not limited to
prohibiting above-market or above-retail sales of Rolexes. The policy makes clear that there are
44. Rolex has strict warranty requirements which are required to be enforced by CDP,
through their store policies. Until the time frame discussed below, CDP required that for all Rolex
sales, the store’s Rolex Manager and/or Store Manager must monitor the sales. For every Rolex sale,
CDP’s policy required that both sides of the completed warranty card are copied, along with the
sales slip in the store. This process ensures that Rolex is able to verify that the watch was not sold
on the grey market but rather sold to an eligible customer at an approved Rolex retailer.
45. When customers used credit cards, CDP sales professionals were required to verify
46. These policies were enacted to ensure that the Distribution Agreement was not
47. In order not to violate the relevant Illinois sales and use tax statutes and regulations,
the CDP policy9 was that the shipping of watches should not be volunteered or offered unless a
customer inquired. Watches could only be shipped to the same customer who bought the watch in-
person. The address that the watch was being shipped to had to match the address of the buyer.10
48. This rule was another check on unknown and untrusted customers volume-selling
Rolexes or re-selling them on the black market. This policy is a ruse to ensure that in the event of a
sales tax audit by the Illinois Department of Revenue, CDP maintained plausible deniability and
9
See Exhibit A, pg. 5.
10 This policy is a per se violation of 35 Ill. Comp. Stat. 120/13.
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49. As part of its sales tax collection and shipping policies, CDP required, unequivocally,
that watches could not be shipped to states that were not already on the approved list contained
within Exhibit A.
50. The sales tax collection policy also provided that sales taxes “must be collected at
51. In order to adhere to the Distribution Agreement and policies stated above, CDP
also maintained strict control over the allocation of Rolex watches to its sales professionals (e.g. this
policy would serve to restrict the sale of a limited availability watch to an inappropriate customer).
52. Upon receipt of watches, the Rolex Manager and Store Director would take each
watch into the Store Manager’s office, where they would record the watch’s serial numbers, the
warranty numbers, and determine, based on demand and other factors, which sales professional
53. CDP also instituted basic sales procedures depending on the nature of the
transaction. CDP’s Old Orchard store had two entrances: a CDP entrance and a Rolex entrance.
The general rule was that, for the customers who entered on the Rolex side, the Rolex Manager
would make contact with the customer and attempt to make a sale. For customers who entered on
the CDP side, the customer was assigned to whichever sales professional’s turn it was for a customer
to be assigned.
54. Prior to the time period described herein, newly hired sales professionals were not
allowed into the Rolex room and/or to sell Rolex products until they had an established client base
and had been trained specifically on Rolex, its products, and its sales policies
11
See Exhibit A, pg. 20.
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55. Until approximately late November or December 2018, the CDP Rolex policies
56. Two events catalyzed the Scheme. The first was Duan’s hiring.
57. The second occurred in either December 2018 or January 2019. At that time, CDP
staff were informed that a certain $10 million sales goal had been set.
58. CDP sales professionals were told that if they hit $10 million in sales, Rolex would
help pay for a remodel of the CDP Old Orchard store, and that certain executives, namely Hill and
Baumgardner, stood to make substantial bonuses. Lastly, they were informed that if they attained the
59. Di Lorenzo began working for CDP in October 2012 as a sales professional in the
60. In 2017, he was promoted to Rolex Manager of the Old Orchard store.
61. As the store’s Rolex Manager, Di Lorenzo’s duties included overseeing Rolex sales.
This included ensuring access to Rolex products rotated between sales professionals when new
customers visited the store, monitoring Rolex sales interactions to ensure policies were followed,
ensuring that Rolex warranties were properly issued, selling to customers when they entered the
store from the Rolex entrance, and attempting to ensure Rolex products were not sold to
“flippers.”12
62. When new Rolex products arrived, Di Lorenzo and Hill were responsible for
meeting, recording the serial and warranty numbers for each Rolex product, and assigning them,
12 The colloquial term for grey market sellers who attempted to obtain watches for resale.
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either to the sales professional who requested the watch on behalf of an existing customer or to
63. When Di Lorenzo was hired, and throughout his training, CDP made clear that
online and grey market sales of Rolex watches were strictly prohibited.
64. Nelson was hired in July 2016 and was promoted to Assistant Store Manager on
65. As Assistant Manager, Nelson’s duties included selling and designing custom jewelry,
66. In approximately November 2017, CDP hired Dyol Hill, a friend of Baumgardner.
67. When Hill was hired, Nelson, Di Lorenzo, and the rest of the staff were told that
Hill was being brought in to “clean up”13 the Old Orchard Store.
68. Plaintiff Krajisnik was hired to work as a sales associate at CDP in approximately
69. Krajisnik was hired at approximately the same time as Duan, another first-time sales
professional.
70. Neither Duan nor Krajisnik had a prior customer base or any jewelry sales
experience.
13 Until approximately November 2017, CDP’s Old Orchard Store experienced significant turnover of its
store directors. A series of store directors, Ralph Zupo, Sally Salcena, and Mariann Alkhovsky, were all hired
and fired within months of one another for various policy and performance-related violations.
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71. Working under Nelson, their immediate supervisor, both Duan and Krajisnik
completed CDP training: they were shown how to cold-call potential customers and taught CDP
72. Krajisnik initially performed adequately, when she was allowed her full hours of time
73. It was only when Krajisnik was denied access to Rolex products, as a result of
reporting and/or refusing to partake in the illegal pattern of activity referenced herein, that she had
her hours cut, and therefore was prevented from meeting the requisite sales expectations.
Nelson Catches Duan Breaking Store Policies, Rolex Policies, and Several Laws
75. Nelson stopped her from engaging in the behavior and reported it to Hill.
76. Contrary to the training that all new sales professionals receive, Hill inexplicably
defended Duan, responding that she was “new” and “did not know better.”
77. This was merely the first time she was observed by Krajisnik or her co-
78. It was around this time, in late December 2018, that Baumgardner and Hill informed
Krajisnik and her co-whistleblowers of the $10 million sales goal. This announcement coincided
with the acceleration of Duan’s illegal activity and the overall initiation of the Scheme.
79. The integral element of the Scheme was Duan’s participation in the conspiracy to
commit the aforementioned criminal activity via prohibited volume sales of Rolex watches out of
the country.
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respectively, began observing Duan openly and flagrantly engage in activities that not only clearly
violated CDP and Rolex policies, but were also criminal activities that consisted of racketeering,
money laundering, mail, wire, immigration, and credit card fraud and Illinois sales tax evasion.
81. As the Old Orchard Store Rolex Manager, Di Lorenzo was privy to Rolex sales
numbers.
82. In late January or early February 2019, typically a slow post-holiday season period for
CDP, Di Lorenzo knew that customers had not been visiting the store in great numbers. Yet,
despite the lack of in-store customers, Di Lorenzo discovered that the Rolex sales numbers were
skyrocketing, and Duan, who had no established customer base and rarely, if ever, had in-store
83. He discovered that Duan was regularly engaging in forging signatures on credit card
receipts and making remote sales of Rolex products, whether on the phone or online, to heretofore
unknown customers.
84. Di Lorenzo uncovered that Duan was using her own credit card to complete sales
transactions for sales allegedly made to customers, and either forging customer signatures and/or
simply writing, “known by Ying [Duan]” in the signature line.14 Based on information and belief
these activities fraudulently violated CDP’s credit card processing merchant services agreement.
14Exhibit B, collectively, depicts both one such receipt signed as, “known by Ying,” as well as photographs of
Duan’s credit card being used for this purpose, along with a completed purchase showing her card number as
the payment used to complete the transaction. The card numbers, both on Duan’s credit card itself, as well as
the receipts included herein, have been redacted except for the last four digits of card or account numbers to
protect their private information and in conformity with Federal Rule of Civil Procedure 5.2. Transactions for
which account or payment information is less relevant than the names or addresses to which watches were
shipped have been redacted in their entirety for the same reasons.
17
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85. Duan was also shipping three to four watches out-of-state at a time, thereby avoiding
Illinois sales taxes for the buyers on each watch and violating a myriad of CDP and Rolex policies.15
86. Included within the list of states to which Duan was shipping were multiple states
restricted by CDP policies specifically to avoid violating state sales tax laws.16
87. The states Duan shipped watches to includes, but is not limited to Nevada and
Arizona, which was prohibited by CDP. As Exhibits B and C make clear, she also shipped to
Wisconsin and Indiana without collecting sales taxes.17 The sales tax policies were ostensibly in place
to comply with the recent U.S. Supreme Court decision in South Dakota vs. Wayfair, 138 S. Ct. 2080
(U.S. 2018).
88. The watches Duan was volume selling and fraudulently shipping were frequently
gold model watches priced at between $25,000 and $40,000 per watch.
89. Di Lorenzo also discovered that although the watches were allegedly being sold and
sent to customers with different names, the watches were all sent to the redundant address or
addresses.
90. Di Lorenzo also discovered that Duan’s credit card information was used to
“friends” on Facebook.
15Exhibit C, collectively, shows several receipts and warranties demonstrating multiple watches being sold to
the same individuals, Ying Gong and Phoebe Zhang, and shipped out of state, in volume, to the same
addresses.
16
See the list of states to which CDP permitted shipping as part of Ex. A, pg. 20; see the receipts contained within
Exhibits B and C, respectively.
17
The receipts depicted in Exhibits B and C, respectively, show no sales taxes collected on any of these purchases.
18
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93. Krajisnik and her co-whistleblowers openly observed that, despite CDP and Rolex’s
clear policies forbidding online advertising and sale of Rolex products, and in clear violation of the
Distribution Agreement, Duan was openly posting Rolex products on her Facebook page for sale in
foreign countries.
94. Included in Duan’s social media activities were posts she made on Facebook pages
95. Enclosed as Exhibits D-I are partial conversations and/or social media posts
discovered by the Plaintiff and her co-whistleblowers, which Duan left open and accessible to
Exhibit E. Social media posting by Cici Hsieh titled “a bag of cash for a bag of
watches,” with corresponding picture of a Rolex watch and warranty
card from CDP inventory;
Duan – “If you need more pictures with detail, I can take them. I work for a foreign
authorized Rolex authorized provider. The product comes from the shop with full
membrane.
Exhibit H. Duan listing numerous Rolex products for sale on social media; and
Exhibit I. Facebook Messenger conversation with Ming Feng listing she her
location as Taiwan, confirming her to be an overseas buyer.
96. Distressed by Duan’s actions, and well aware of the no-online sales policies,
19
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97. Duan eventually became very bold with pursuing online and illegal sales. Krajisnik,
and her co-whistleblowers, respectively, all witnessed Duan using her Facebook account to promote
Rolex products and sales. Duan left her Facebook account open on CDP computers on several
different occasions.
98. On another occasion, Nelson saw direct private Facebook messages between Duan,
99. The messages showed that Tu sent Duan lists of watches that he wanted, for resale
100. Eventually, Tu came into the store on multiple occasions. He browsed products and
101. Nelson witnessed Tu bring Duan a gift at the store. On another occasion, Tu came
102. Krajisnik also began witnessing Duan engage in more flagrant violations of company
policy and illegal behavior. She, too, began witnessing Duan utilize her own credit card18 during sales
103. Exhibit J depicts several instances of Rolex transactions utilizing Duan’s personal
credit card19 to sell repeatedly to the same overseas buyers over short periods of time.
104. In approximately January 2019, Nelson observed Duan come to the store and
package two boxes, ostensibly containing Rolex products. Upon investigation by Nelson, the boxes
18 Not only should this have alerted CDP management to flagrantly illegal activity, but this was a clear
violation of CDP and Rolex policies against employees purchasing Rolex products.
19 Financial information other than the last four digits of Duan’s credit card number have been redacted
20
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were addressed to another store employee, Haiwei Yuan, at his personal residence in Indiana.20 Of
particular note and concern, the box was shipped with Ralph Zupo’s21 name listed as the return
105. Upon information and belief, while Haiwei was employed by CDP, he was paid cash
106. Rolex made a point of monitoring and limiting the amount of watches provided to
its licensed retailers, including CDP. One of the ways that Rolex maintained high demand for limited
supply watches was to require that they be special ordered, solely for known and existing customers.
107. Beginning in February 2019, after the $10 million goal was announced, Hill ordered
Krajisnik and her co-whistleblowers to place fraudulent “special” orders with Rolex in order to
increase the CDP Rolex inventory available for unauthorized overseas sales by Duan, without the
108. As Duan continued making unauthorized and illegal sales to fake purchasers, with
Hill’s knowledge and approval, more Rolex policies fell by the wayside. Eventually, Hill stopped
meeting with Di Lorenzo to catalogue new watches. Rather, he began bringing them into and storing
them in his locked office and either assigning them all directly to Duan, or giving others an
unrealistically brief window to sell them before then assigning them to Duan, announcing that they
had run out of time to find a buyer, and giving them to Duan to sell online. Duan would make a
deposit using her own credit card to hold the watches for the online foreign buyers. All other
21
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109. In March 2019, Hill cut Krajisnik’s hours in half, from 40 to 23 hours per week, and
she stopped receiving Rolex products to sell. With no access to work shifts or products to sell, her
sales suffered. At the same time, CDP increased her sales goals ensuring that she would be unable to
Hill Attempts to Involve Di Lorenzo in the Scheme and Threatens Him for Refusing
110. Immediately after the $10 million sales goal was announced in early 2019 – Hill
112. Approximately one week later, Hill told Di Lorenzo that he and Baumgardner were
going to fly Duan to Colorado to work on a side business. He stated that the side business would
113. A few days after Di Lorenzo’s refusal of a share of the ill-gotten gains, Hill told Di
Lorenzo, “Bob and I are not going to let no one derail our retirement plans.”
114. Hill would repeat the phrase, that he would “not let no one” derail his retirement
complaints and became suspicious as the behavior continued over a period of several months
22
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116. In reviewing the point of sale software utilized by CDP, The Edge, Nelson
discovered multiple transactions in which Duan allegedly sold Rolexes to individuals named, Jesse
Shan and Phoebe Zhang.22 Those transactions were all completed via Duan’s personal credit card.
117. In approximately the end of February 2019, a young couple, appearing to be in their
mid-20’s, came to the store. No one working in the store, save Duan, had ever seen them, they did
not have appointments, and they were not existing CDP customers with a verifiable purchase
history.
118. That evening, with no prior notice to security or Nelson, Duan brought the couple
into a private room, and brought 5 – 7 Rolex watches, each valued at $20,000 or more, into the
119. Nelson reported Duan’s actions, in real time, to Hill. She told him that Duan had
taken seven watches into a room and was violating numerous Rolex and CDP store policies. Hill
simply told Nelson to “explain” the watch values to Duan, so she would be “more careful” in the
120. Nelson later uncovered that the couple’s names were Jesse Shan and Phoebe
Zhang.24
121. That evening, despite the existence of CDP policies prohibiting sales of Rolex
products to unknown buyers and the sale of multiple watches to such individuals, Duan sold three
rare watches to the couple. However, the buyers did not leave with their watches. Rather, Duan had
22 See Exhibit J.
23 Exhibit L depicts Nelson’s text message to Hill, reporting Ying’s behavior.
24 Zhang is one of the buyers depicted repeatedly in Exhibits B, C, and J. Zhang, Shan, and a third buyer,
“Yunyue,” were all repeatedly sold and shipped watches at the same address. “Yunueye” was a third client
name that Duan used to mask her volume sales to repeat “customers,” but was not actually a third buyer.
23
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the watches shipped to Las Vegas. Nelson, in performing her job duties, investigated the Las Vegas
address that Duan used and determined that it was the address for a Walgreens.
122. Nelson reported the incident, via text message, to Hill, as it transpired, who took no
corrective action.
123. Duan would eventually sell the same customers three or four more rare Rolex
timepieces over the next month or so. Of the six or seven watches Duan sold to this couple, they
were all shipped out of state, to avoid paying sales taxes, to the same Las Vegas address.
124. Nelson later discussed the incident in-person with Hill, who she did not yet suspect
of being in concert with Duan. She told Hill that Duan was “dishonest,” that she was “flipping”
watches, and described her actions in selling a barrage of watches to these unknown buyers and
shipping them out-of-state to avoid sales taxes. Duan’s conversation depicted in Exhibit F
125. Hill’s response was that the buyers were “influencers,”25 and that it would be good
126. Nelson voiced her objection to Hill over Duan flipping watches multiple times in
127. During that same time period, Krajisnik reported some of Duan’s actions to Hill.
Hill’s response to Krajisnik was to tell her to “protect” Duan from Nelson and others when he was
128. In April 2019, on a day off, Di Lorenzo received a call from CDP’s watchmaker,
Paul Nichols.
25People who work in an advertising capacity, typically making social media posts to large social media
followings on platforms like Instagram to sell various products.
24
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129. Nichols called to inform Di Lorenzo that Duan left her phone open and he had
observed that she had received an automated text that was sent to confirm a $26,000 deposit from
overseas.
130. In approximately May or June 2019, CDP announced to staff that the company
would be further restricting out-of-state shipping due to concerns related to state tax laws. Hill,
obviously concerned because this would affect his ability to continue his scheme with Duan, told Di
Lorenzo that he had done research and discovered that Portland, Oregon did not apply sales tax. He
later told Di Lorenzo that he mentioned this fact to Baumgardner, who approved him and Duan
131. Subsequently, Duan began shipping empty boxes to Portland, furthering the fraud in
which she and Hill were now clearly engaged. Duan began shipping empty boxes to the same
Portland address, despite allegedly selling to different buyers each time. On information and belief
132. In approximately March or April 2019, Nelson reported concerns to CDP’s Head
133. Nelson explicitly told Vicky the following: (1) that Duan was using her own credit
card to flip watches, and likely committing some form of credit card fraud; (2) that Duan’s credit
card numbers were showing up over and over on different receipts to watches allegedly sold to
legitimate buyers; (3) that Duan was signing receipts on behalf of clients who never visited the store,
sometimes forging signatures and other times signing, “Known by Ying [Duan]”; and (4) that Vicky
25
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needed to review, carefully, Duan’s sales receipts. Nelson also told Vicky about how Duan was
deliberately and consistently shipping watches to out-of-state addresses to bypass sales taxes.
134. Vicky’s told Nelson that she no longer had the time to review the accounting books,
her primary job duty, as she had suddenly, and for no obvious reason, been relegated to a private
135. Prior to that new duty, Vicky’s primary duties were checking and rechecking sales
slips, sales receipts, and related paperwork. Now, she could no longer regularly perform those tasks.
136. Vicky asked Nelson for the credit card numbers that she had mentioned. During the
discussion, Ms. Nelson asked Vicky to whom she was loyal. Vicky said “Seymour [Holtzman].”
Nelson ended by saying that what Duan and Hill were doing was not right.
137. Hill undertook other measures to keep Nelson from uncovering the full scope of the
Scheme.
138. Hill was often out of town or otherwise away from the store. Prior to Duan’s sudden
influx of sales and autonomy, Hill regularly allowed Nelson to use his office and computer.
Beginning around February 2019, Hill began locking his office and prohibiting Nelson from entering
139. On approximately May 4, 2019, Hill and Baumgardner ordered Nelson into an
unannounced meeting with the two of them. Hill began by telling Nelson, “You’ve had some angst.”
140. Nelson told Hill that she believed he was “in bed” with Duan. She said, specifically,
in front of both men, that she believed Duan was flipping watches and that Hill was allowing it.
26
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142. As Nelson exited the room with Baumgardner, Hill asked, “Flipping watches? Like
143. Once they were in private, Nelson told Baumgardner, “Bob, I’m not sure what to do
144. During that discussion, Nelson showed Baumgardner images she discovered when
Duan left her social media accounts open on company computer screens for all to see. The posts
showed Duan communicating with sales contacts overseas, openly marketing Rolex products.28
145. She also informed Baumgardner about witnessing Duan repeatedly shipping watches
after using her own credit card to complete sales transactions, that Duan was frequently assisting her
friends or sales contacts in flipping these watches in Asia, hence the non-removal of stickers, and
that she witnessed Duan enter the store with bags of cash, and place large quantities of cash in the
sales register. She showed Baumgardner images of Duan entering with the bags of cash.
146. During that conversation, she also showed Baumgardner Duan’s sales report,
reflecting how she was volume-selling to the same customers and shipping all of the watches out of
147. Among the documents shown to Baumgardner were conversations between Duan
and her “buyers,” wherein they discuss how she is going to get them difficult-to-obtain watches. In
those conversations, Duan openly discusses discounting and otherwise altering watch prices in
27 As Di Lorenzo would later learn, this was a racist remark, likely made because Di Lorenzo’s wife is of
Serbian descent and a reference to a past sale he made to a customer of Eastern European descent in
approximately December 2018. Baumgardner and CDP would later use that transaction – which was made
lawfully, and in accordance with CDP and Rolex policies – as a flimsy and racist pretext to fire Di Lorenzo
for “flipping.”
28 See Exhibits D – G.
27
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148. At the conclusion of their meeting, Baumgardner told Nelson not to discuss any of
149. Following the meeting, Nelson emailed Baumgardner additional evidence of Duan’s
150. In approximately early May 2019, a few weeks after Nelson’s meeting with Hill and
Baumgardner, Krajisnik and Nelson were standing near the front of the store when Duan’s
boyfriend entered.
151. Duan met him near the front where he unwrapped a plastic bag and removed a
lunchbox. Near the cash register, he opened the lunchbox and removed a large quantity of cash.
152. Hill then appeared from his office, greeted Duan and her boyfriend warmly and
expectantly and brought them into his office, where they began counting the cash, with the door
open.
153. Upon information and belief, in furtherance of their money laundering activities,
Duan and Hill, failed to report many of these cash transaction to the IRS on Form 8300, as required.
154. Later that same evening, as part of her job duties, Nelson counted the cash in the
register. In investigating, she uncovered that the cash had been applied to a specific customer’s sale
155. This was not the only time Hill or Duan engaged in odd behavior with large sums of
cash.
29Exhibit M depicts a portion of Nelson’s email to Baumgardner, corroborating her protected whistleblowing
activities.
28
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156. On another occasion, Hill came to the store and, for no obvious reason placed a
157. Following the May 4 meeting, Hill spent most of the next month working to further
marginalize Nelson and making preparations to preemptively legitimize her imminent firing.
158. Hill hired another employee, Erik Kiluk, and assigned him several of Di Lorenzo and
Nelson’s most important job duties. Now, only Kiluk was allowed to close the cash register each
night. Thereby precluding Di Lorenzo and Nelson from continuing to observe the Defendants
illegal activity.
159. Based on information and belief, Kiluk’s new job duties also included doctoring
160. Nelson, an assistant manager, and Di Lorenzo, the Rolex Manager, were no longer
161. The Rolex boxes were locked in Hill and Kiluk’s offices. Soon Mr. Di Lorenzo was
no longer included on the emails discussing their Rolex inventory. They hired new sales staff, all
while cutting Ms. Krajisnik’s hours and barring her from access to selling Rolex products.
162. Krajisnik, Nelson, and Di Lorenzo continued suffering in other ways due to their
refusal to keep quiet about Duan and Hill’s transgressions, and because they refused to participate in
the Scheme.
163. During this period Hill continued ordering them to make fraudulent “special” Rolex
orders.
29
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164. On one occasion, three Rolex Green Submariner watches came to the store. On this
occasion, Krajisnik had a buyer for the watch and requested that Hill give her access to one so she
could sell it. Instead, Hill yelled at her, “You have not made any ‘special’ orders.” Hill told her that
the watches were all for Duan and simply told Krajisnik to make fraudulent watch orders if she
165. In late May or early June, CDP Human Resource Employee Caroline Di Batista
contacted Krajisnik and said she was investigating allegations that Nelson had sexually harassed
Duan by showing her social media photographs around the store inappropriately.
166. Krajisnik told Di Batista that she was unaware of Nelson doing anything
inappropriate.
167. Krajisnik did, however, tell Di Batista of Duan’s illegal activity. Di Batista responded
that she was not investigating that issue and refused to discuss it.
168. On June 19, 2019, Hill and Baumgardner initiated their plan to silence Nelson and
warn any other would-be whistleblowers not to come forward. After completing the sham human
resources investigation designed to corroborate their desired findings, CDP fired Nelson under a
false pretext of her sexually harassing Duan, insubordination towards Hill, and “making false
statements.” The alleged primary pretext for her termination was the statement she made in the
course of her protected activity of reporting illegal behavior, that “Doyle [Hill] was in bed with Ying
[Duan].” Nelson was told that “in bed” was construed to have sexual connotations, when clearly
169. Her firing document contained a barrage of other falsehoods, accusing her, in part,
of making false accusations of Duan of shipping empty watch boxes, even though the firing letter
30
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itself included acknowledgements by Duan that she had shipped empty boxes.30 The same letter also
170. Indeed, the document Hill provided Nelson included that Duan had attempted to
ship an empty Rolex box, which Hill claimed he personally caught and stopped, in December 2018.
The document also included that he advised Duan that, “shipping an empty box was a terminable
offense at CD Peacock,” and, most importantly, that such behavior was “against the law and against
company policy.” It falsely claimed, however, that this was the only instance of such behavior.
172. When CDP fired Nelson, they requested that Nelson return her company laptop,
which she returned. They falsely accused her of breaking the computer and deducted $900 from her
final paycheck.
173. On July 21, 2019, after her firing, Nelson wrote to Holtzman and notified him of the
174. In her email, she told him about Duan’s credit card fraud, tax fraud, and about the
175. Nelson’s email also detailed Hill and Baumgardner’s respective roles in the Scheme,
31
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177. After Nelson’s firing, Baumgardner made a series of moves to create the appearance
that the store was reaffirming its existing policies and that all of his, Hill, and Duan’s recent actions
were legal.
178. Baumgardner reissued store policies as they related to Rolex. The policies reiterated
all of the previously discussed requirements, with a particular emphasis on the requirement of in-
store purchases.
179. For the first time, Baumgardner also instituted a rule that all newly sold Rolexes must
be sent to a specific engraver to ensure they were not sold improperly. This policy was seemingly
issued for the benefit of all but Duan: her behaviors did not change, and only she was not required
180. Following Nelson’s firing, Hill hired Mark Reinhardt, a former manager who had
181. Hill also announced that moving forward, he and Reinhardt would be in charge of all
Rolex shipments. Reinhardt would take any watches newly sold to the engraver.
182. At around this time, Duan, in an effort to cover up the Scheme, began sharing partial
sales commissions with other sales professionals (excluding the Plaintiffs), who had begun
183. In July 2019, Kiluk allowed Krajisnik to sell a Rolex that she requested via special
32
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184. After Krajisnik had successfully completed the sale, she witnessed Hill berate Kiluk
for allowing her to sell the Rolex. She specifically overheard Hill ask Kiluk, “Why did you give those
185. When Kiluk replied that they had been assigned to her, Kiluk said, “Don’t give
Suzana Rolexes.” Hill then yelled at Kiluk to come into his office.
186. Krajisnik’s fears about her status at the company were later confirmed when Hill told
Di Lorenzo that he, too, should not allow Krajisnik access to Rolex products and that he had
specifically moved her sales goals such that she would be unable to meet them and be fired.
187. On approximately October 10, 2019, Krajisnik again reported Duan’s actions, this
time to Hill. She told him, after a company-wide meeting, that Duan was still listing products online
in violation of policies. Hill’s response, incredibly, was that he had “always encouraged posting
watches online” and that this did not violate any of CDP or Rolex policies.
188. Just a few days after Hill’s bizarre claims about posting watches online, Hill left
189. Hill told Di Lorenzo in a text message that he had been fired.
190. However, CDP employees were told Hill had resigned and moved home to Texas to
be closer to his wife’s family. Even after Hill’s “firing” or pseudo-resignation, customers continued
visiting the store to speak with Duan because “Dyol [Hill] sent them.”
191. Following Hill’s departure, in the course of performing his duties as the Rolex
Manager, Di Lorenzo discovered several Rolex warranties filled out by Duan that contained patently
33
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and obviously false names of the watch buyers. The watch buyers’ “names” included “Lebron
192. Duan’s behavior, by this point, was quite open. Exhibit B, referenced earlier, depicts
Duan’s credit card, left in plain sight, and a receipt containing her card number still open in front of
her credit card on a computer screen, showing a blatant instance of her fraudulent behavior and lack
193. Di Lorenzo informed new Store Manager Reinhardt of Duan’s fraudulent activity.
Reinhardt’s answer was: “Ok, I’ll bring it up to Bob and take care of it.” Duan still faced no
repercussions.
194. At around this time, Reinhardt made further efforts to marginalize Krajisnik,
ordering her to spend her time organizing inventory and cleaning items specifically to keep her out
of the Rolex room and away from Duan and her illegal activities.
Krajisnik is fired for whistleblowing under a false pretext of poor sales numbers
195. In approximately October 2019, CDP hired Chris Croteau to formally replace Hill as
Store Director. Both Di Lorenzo and Krajisnik immediately experienced hostile behavior from
Croteau, who would avoid making eye contact with or speaking to either unless absolutely necessary.
196. On November 29, 2019, about 3 weeks before her firing, Krajisnik met with
Croteau. She asked him if he had something against her. During the meeting, she also engaged in
protected whistleblowing activity. She reported everything she knew about Duan’s actions: the social
32 See the top right-hand corner of page 4 of Exhibit C, showing “Lebron James” written on a warranty card.
To the best of Plaintiff’s knowledge, Mr. James was not a customer of CDP and had not purchased the watch
in question.
33 Richard Mille is the name of a noted watch brand. This sale was a split commission with Reinhardt himself,
who must have known about the fraudulent behavior and profited from it.
34
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media postings she had seen open on company computers, the violations of CDP and Rolex policy,
the fraudulent use of credit cards, and the tax avoidant shipping. At one point, she said, “I think
they are doing money laundering and tax evasion.” She even bluntly told Croteau, “I think Duan is
197. Croteau asked Krajisnik for proof. Ms. Krajisnik directed Croteau to the CDP
computer network, explaining that much of the fraudulent information Duan entered should be
readily accessible for all to review. She also told Croteau that Reinhardt and Hill were “in on” the
scheme and profiting from Duan’s actions, that she knew Hill was still involved as clients had
198. Croteau told her, “Don’t worry, be my eyes and ears about what’s happening in
store.”
199. Krajisnik voiced fear over her sales, which had dipped through no fault of her own,
but instead, as a result of a carefully orchestrated effort by the management to restrict her hours,
deny her access to inventory, and clean and organize, rather than sell. Croteau told her, “Your job is
not on the line, you’re fine, I’ll get you taken care of and get you training, and you’ll be fine. I’m
200. During the meeting he also asked about Nelson, who he said he had heard had been
fired for stealing. Lastly, Croteau ended the meeting by saying, “Don’t tell Joe [Di Lorenzo]
anything.”
201. Just after this meeting, in December 2019, a shipment of popular Rolex watches
35
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202. As requested, Krajisnik succeeded in having several customers come to the event,
but Croteau refused her access to the watches to sell, most of the clients eventually left as
Defendants in furtherance of the scheme, did not allow her to sell merchandise to them.
203. Upon Krajisnik requesting permission to sell watches to her customers at the event,
Croteau first lied and tried to tell Krajisnik that the shipment had not arrived, but Krajisnik insisted
204. Croteau finally relented and gave her one GMT watch to sell, which she sold.34 He
refused, however, her requests to also sell a “Green Submariner” Rolex or a “Deep Sea” Rolex to a
customer at the event, claiming, falsely, that these watched had been specially ordered by Duan.35
Croteau’s refusal to permitted her to sell the second watch, . Instead, Croteau gave those watch to
Duan to sell after the event as part of the Scheme, and deliberately blocked Krajisnik from selling
them.
205. Three weeks later, like Nelson, Krajisnik was fired. This time, CDP’s pretext was
that it was due to her lagging sales numbers, which were a result of CDP’s illegal Scheme and
deliberate efforts to marginalize and fire her for her whistleblowing reporting and refusals to
206. By the time of Krajisnik’s firing, Holtzman had already received Nelson’s
whistleblowing email months earlier, and was on notice of the ongoing illegal conduct.
34 Exhibit S depicts the receipts showing first the receipt reflecting the sale Krajisnik was allowed to make.
The second page reflects one of the watches that was given to Duan after the event.
35 This claim, too, is easily disproven as false. On CDP receipts, on the left-hand side below where the
receipts read “Purchase,” “special orders” will read “special order.” On the second receipt, depicted as part of
Exhibit S, no such designation is written on the receipt, proving Croteau lied about the watch in question
being specially ordered by Duan.
36
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207. On December 28, 2019, after her firing, Krajisnik too, emailed Holtzman to report
208. In her email, Krajisnik informed Holtzman about how she had been fired as
209. Krajisnik also informed Holtzman about how Duan was engaged in an ongoing
practice of violating company policies, about how Duan was engaged in “tax evasion,” and about
210. Holtzman’s response belies any notion that he was concerned about her allegations,
surprised by the email, or cared about the criminal enterprise being openly conducted at CDP.
211. Holtzman’s response was as shocking as it was damning. Holtzman’s only response
was to “Reply All” and to state, “Bob [ Baumgardner,] Tom[Keevan, Senior Vice President of
Merchandising] I don’t know who this person is and find out who gave her my email address ?”
212. Damning for Holtzman, his response cements that he was well aware of the
conspiracy, now having been notified and given specific details of the Scheme by two separate
employees making substantially similar allegations, and was too busy profiting from it to care about
the consequences. At a bare minimum, Holtzman approved of the Scheme. At worst, he was its
mastermind, now angry that someone had uncovered his own participation in the Scheme.
European descent. He had never met this person before, and never spoke again. Di Lorenzo’s wife
36Exhibit P contains Krajisnik’s email to Holtzman, and his flippant and dismissive response, demonstrating
his full support for and complicity in the Scheme.
37
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is also of Serbian origin. The customer applied for financing through a third-party finance company
214. Di Lorenzo followed CDP procedure in making the sale, requiring the customer to
provide a copy of his driver’s license, which was valid and unexpired, before completing the sale.
Apparently, the license was to expire within a month or two of the sale. No policy or law prohibited
Di Lorenzo from completing the sale because the license might expire soon after. Di Lorenzo
215. In November 2019, Croteau and Vicky Hill brought Di Lorenzo into a meeting and
accused Di Lorenzo of engaging in possibly fraudulent behavior in concert “with the Serbian truck
driver.”
216. Apparently, CDP used the fact that the now nearly one-year-old sale was made to
flipping watches. They insinuated that he was involved with a criminal organization and committing
fraud because the buyer’s license would have expired soon after the sale was completed. Notably, no
one had raised concerns about this sale until almost a year after it was completed. Furthermore,
there was never a policy in place to check the proximity of the expiration of the identification to the
217. In early December 2019, just after Krajisnik met with Croteau to engage in
whistleblowing activity, Croteau ordered Di Lorenzo into a closed-door meeting. Croteau told him,
“I know everything that’s going on here. Seymour [Holtzman] sent me here to clean up.” Surprised,
37Hill’s remark to Nelson back in May 2019 was not communicated to Di Lorenzo until much later – likely
after his firing. It is now apparent that Hill’s comment, “Flipping watches? Like Joe and the Serbians” was a
thinly veiled threat to trump up charges of “flipping” against Di Lorenzo as retribution for objecting to
and/or reporting the illegal activity.
38
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Di Lorenzo said, “Really? So, you know about the tax evasion, Duan using her credit card, and the
money laundering?” Croteau said, “Yea, re the address [Duan] is shipping to: I know that area
because my sister-in-law lives right around the corner.” At one point, Di Lorenzo said, specifically,
that he was “worried that something illegal was going on,” related to Duan’s the credit card uses and
218. Nothing improved after Di Lorenzo’s December complaint. Duan’s illegal activity
219. On January 6, 2020, Di Batista, Croteau, and Assistant Manager Mark Reinhart
220. They blamed his firing on his having made sales being to Eastern European men
with soon-to-expire driver’s licenses. Gallingly, they claimed that Di Lorenzo was engaged in a kick-
back scheme with “European guys” that “exposed the company to fraud.”
221. They told him he was fired, though they would let him resign in exchange for a
positive employment reference. Di Lorenzo refused, and refused to sign their paperwork. A few
hours later, Croteau sent him a text message, stating he would give a good referral for a new job; Di
222. They fired Di Lorenzo even though they knew he was the only breadwinner for his
family and that his wife had just given birth to a child a few months earlier, after years of struggling
to become pregnant.
223. They fired Di Lorenzo, like co-whistleblower Nelson and Plaintiff Krajisnik, because
he refused to participate in the illegal racketeering scheme, refused to accept bribes to remain silent
about the scheme, and continued to complain about or report the illegal conduct.
39
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RICO ALLEGATIONS
Baumgardner, Hill, Croteau, and Duan (the “RICO Defendants”) conducted or participated in the
§1962(c).
227. Alternatively, the RICO Defendants, through an agreement to commit two or more
predicate acts, conspired to conduct or participate in the conduct of an enterprise, SCJ, through a
pattern of racketeering activity in violation of 18 U.S.C. § 1962(d). The actions of the RICO
Defendants as against Plaintiff, and as described above, were in furtherance of the RICO
THE ENTERPRISE
228. CDP was and is the passive instrument of the Defendants’ racketeering activity and
constitutes an “enterprise” as that term is defined in 18 U.S.C. § 1961(4), separate and distinct from
information and belief, to present day, the Defendants, as well as other persons known and
unknown, being persons associated with CDP, which was and is engaged in, and the activities of
which affected and affect interstate commerce, unlawfully and knowingly conducted or participated,
directly or indirectly, in the affairs of that enterprise through a pattern of racketeering activity, that
is, through the commission of two or more racketeering acts set forth herein. This illegal
racketeering activity includes, but is not limited to engaging in a coordinated pattern of illegally
40
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fraudulent behavior, to sell Rolex merchandise improperly and illegally at a high volume in order to
hit the $10 million sales goal while defrauding Rolex, various state taxing authorities and to the
230. Plaintiff seeks to prohibit the Defendants from utilizing the pattern of unlawful
conduct in which they have continually engaged during the relevant time period.
231. The pattern of racketeering engaged in by the Defendants involved at least two
separate but related acts of racketeering activity, carried out from approximately November or
232. Plaintiff was directly injured by the RICO Defendants’ acts of racketeering activity.
233. Section 1961(1) of RICO provides that “racketeering activity” includes any act
indictable under 18 U.S.C. § 1341 (relating to mail fraud), 18 U.S.C. § 1343 (relating to wire fraud),
and 18 U.S.C. § 1513 (relating to retaliating against a witness, victim, or an informant). As set forth
below, the Defendants engaged in conduct violating 18 U.S.C. §§ 1341, 1343, and 1513 to effectuate
234. The Defendants’ acts were not isolated, but rather formed a pattern of conduct
through which the RICO Defendants used the enterprise, CDP, to defraud Rolex and state taxing
authorities, for monetary gain, and to silence the Plaintiff and the whistleblowers from complaining
235. The pattern of the Defendants’ illegal racketeering activity, as defined by 18 U.S.C. §
1961(1) and (5), and 18 U.S.C. §§ 1341, 1512, and 1513 are based on the following facts:
236. The Scheme involved fraudulently falsifying Rolex sales transactions in a conspiracy
to defraud Rolex, and most significantly, violating a multitude of state and federal laws, including but
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not limited to racketeering, money laundering, immigration fraud, credit card fraud, and sales and
use tax evasion, in service of reaching this $10 million sales target and/or other nefarious purposes.
237. The Scheme, set forth chronologically earlier, was complex, involved all of Duan,
Hill, Baumgardner, and, later, Croteau, and occurred with Holtzman’s knowledge and/or tacit or
explicit approval as he repeatedly failed to act or investigate when given explicit notice by Nelson
238. The Scheme involved Duan listing Rolex products on online on her various social
239. Duan would sell the watches, many of which were rare products, to both unknown
buyers and known buyers who she knew intended to violate CDP and Rolex policies and CDP’s
240. In support of this practice, Duan would intentionally fail to remove the Rolex
241. The fraudulent acts by Duan, include but are not limited to sales she purportedly
made to “customers,” using her own credit card, on the following dates:
A. On April 10, 2019, Duan “sold” a $49,670 watch to “Phoebe W.” using her own
credit card;
B. On April 11, 2019, Duan “sold” a $34,650 watch to “Phoebe W.” using her own
credit card;
C. On April 13, 2019, Duan “sold” a $34,650 watch to “Phoebe W.” using her own
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D. On April 16, 2019, Duan “sold” a $14,050 watch to “Phoebe W.” using her own
credit card.
242. On each of the sales set forth in paragraph 243, Duan recorded the sales as to
“Phoebe” in the Edge computer system used by CDP, even though the transactions were completed
243. Duan engaged in additional fraudulent credit card transactions, using a different
244. Duan completed these transactions by using her own credit cards and, at times, large
quantities of cash brought to CDP in literal sacks of money by her friends and buyers. Duan would
doctor receipts, forge “buyers’” signatures, or write “known by Duan” on receipts in place of the
customer’s signature.
245. By forging signatures, misrepresenting who actually purchased the watches, and/or
using her own credit card to complete transactions purportedly made by others, Duan committed
fraud on an ongoing basis between November or December 2018 and the present, in addition to
246. Duan would then either fraudulently represent on CDP sales documents and
paperwork that the buyer had purchased the watch in the store but wanted it shipped as a gift or
sent to themselves. She would either ship an empty box to make it appear that the watch had been
shipped or would ship the watches themselves. She would send several watches to the same
addresses around the country, including in Las Vegas, Nevada and Portland, Oregon, among others.
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These watches were all purportedly sold to different buyers yet were continually sent to the same
addresses. Some of the addresses did not even exist (e.g. were abandoned warehouses or the like),
others were the homes of some of her customers who would flip the watches.
247. By shipping and pretending to ship the watches, she allowed her buyers to evade
248. In support of the Scheme, Hill ordered all of his sales staff to make fraudulent
requests to Rolex for specific hard-to-acquire watches, falsely claiming that the requests were on
249. Hill’s actions in demanding CDP sales staff commit fraud, on his behalf, so Duan
could continue fraudulently volume selling watches include several instances of such behavior. One
example was the incident in approximately July 2019, in which Hill berated Krajisnik for selling two
watches, “Black and Blue Bezel GMT Master” (a “Batman watch”), which she had ordered and
procured lawfully, and berated Kiluk for allowing her to do her job and sell the watches, rather than
250. In turn, Hill precluded all other sales staff from accessing and/or selling Rolex
products to their actual existing customers. He barred Di Lorenzo, the store’s Rolex Manager, from
access to inventory, and precluded anyone but Duan from selling the Rolex products.
251. Hill also created unnecessary and bizarre tasks for Di Lorenzo, Krajisnik, and Nelson
to keep them busy and away from Duan and the scheme.
252. Hill also removed job responsibilities from all of these individuals, as well as anyone
253. For example, in approximately May or June 2019, Hill hired Kiluk and stripped Di
Lorenzo and Nelson of their job duties so they could not supervise and/or otherwise impede
Duan’s actions.
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254. It was part of the Defendants’ racketeering scheme to offer the Plaintiff and her co-
actions, and to punish them by interfering with their scheduled work hours, work duties, and to
255. Hill similarly diverted head accountant Vicky Hill’s efforts, so no one was
256. Upon information and belief, in return for their participation in this scheme, Hill and
Baumgardner received both cash kickbacks from the overmarket value resale of the improperly sold
Rolex products. The payments came from the volume flippers of Rolex products, who frequently
brought large quantities of cash to CDP both to help complete various transactions and as cash
257. Baumgardner ensured that he supported Hill’s efforts and the pattern of illegality
generally by shaping the narrative of events presented to Holtzman if/when he received direct
whistleblowers, and carrying out those firings, first Nelson, and later Plaintiff Krajisnik and co-
whistleblower Di Lorenzo.
258. On approximately May 4, 2019, before Baumgardner was able to fire Nelson, he
ensured she would not further engage in whistleblowing by ordering her not to discuss her concerns
February or March 2019, when he warned Di Lorenzo that, “Bob and I are not going to let no one
260. It was part of the Defendants’ racketeering scheme to threaten Nelson, Krajisnik,
and Di Lorenzo against reporting their concerns elsewhere, and to otherwise interfere with Plaintiff
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and her co-whistleblowers’ lawful employment and livelihood by terminating their employment in
retaliation for providing truthful information relating to the Defendants’ fraudulent scheme to the
261. Part of the Defendants’ scheme was to conspire to interfere with Plaintiff and her
providing truthful information relating to the RICO Defendants’ fraudulent scheme to the other
managers and for refusing to participate in the scheme, in violation of 18 U.S.C. § 1513(f).
262. Later, after Nelson had been fired, Baumgardner seemingly pretended to fire Hill
and/or misrepresented that Hill had moved home to Texas to make it appear as though he had
264. Croteau met with both Krajisnik and Di Lorenzo in late 2019 under the guise of
expressing concern over rumors of illegal behavior. In reality, the meeting was an effort to learn
what information the two had, what sort of proof they could produce, and to determine their
loyalties.
265. Furthermore, in order to cover up their illegal activities, CDP management illegally
terminated three conscientious employees, Nelson, Krajisnik, and Di Lorenzo, who complained,
266. As they repeatedly engaged in protected activity, Plaintiff and her co-whistleblowers
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RICO VIOLATIONS
18 U.S.C. § 1962(c)
267. Section 1962(c) of RICO provides that “it shall be unlawful for any person employed
by...any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to
conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a
268. As set forth above, the Defendants are employed by an enterprise, CDP, which
269. As set forth above, the Defendants, as employees of the enterprise, used their
positions with CDP to conduct or participate, directly or indirectly, in the conduct of CDP’s affairs
270. As set forth herein, the RICO Defendants’ pattern of racketeering activity is
comprised of predicate acts including mail fraud, wire fraud, and retaliation.
271. As set forth above, the pattern of racketeering activity engaged-in by the Defendants
was for the common purpose of engaging in credit card fraud, concealing and benefitting from
fraudulently misrepresenting sales to defraud Rolex, as well as state taxpayers through that
18 U.S.C. § 1962(d)
272. Section 1962(d) of RICO makes it unlawful “for any person to conspire to violate
any of the provisions of subsection (a), (b) or (c) of this section.” 18 U.S.C. § 1962(d).
273. The Defendants’ conspiracy to commit mail and wire fraud on a wide scale in order
to volume sell watches, engage in credit card fraud, concealing and benefitting from fraudulently
misrepresenting sales to defraud Rolex, as well as state taxpayers through that concealment, and to
silence Plaintiffs from exposing that concealment, as described above, violates 18 U.S.C. § 1962(d).
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274. Each Defendant agreed to participate, directly or indirectly, in the conduct of the
affairs of CDP through a pattern of racketeering activity comprised of numerous acts of mail fraud,
wire fraud, and retaliation, and each Defendant so participated in violation of 18 U.S.C. § 1962(c).
275. Plaintiff reincorporates and realleges by references paragraphs 1 through 274 against
276. Plaintiff bring Counts I against the Defendants for violation of RICO 18 U.S.C.
§ 1962(c).
277. As alleged with particularity above, the facts demonstrate that the Defendants
willingly and knowingly conducted or participated, directly or directly, in the conduct of CDP’s
278. As alleged with particularity above, as a direct and proximate result of the
Defendants’ aforementioned RICO conduct, Plaintiff’s lawful employment and livelihood have been
irreparably damaged.
279. As alleged with particularity above, the Defendants are jointly and severally liable to
Plaintiff for treble damages, together with all costs for this action, plus reasonable attorneys’ fees as
280. To the extent permitted by law, Plaintiff is entitled to damages, plus court costs, and
281. Plaintiff reincorporates and reallege by reference paragraphs 1 through 274 against
282. Plaintiff brings Count II against the Defendants for violation of RICO 18 U.S.C.
§ 1962(d).
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283. As alleged with particularity above, the facts demonstrate that the Defendants
284. As alleged with particularity above, as a direct and proximate result of the
Defendants’ aforementioned RICO conduct, Plaintiff’s lawful employment and livelihood have been
irreparably damaged.
285. As alleged with particularity above, the Defendants are jointly and severally liable to
Plaintiff for treble damages, together with all costs for this action, plus reasonable attorneys’ fees as
286. To the extent permitted by law, Plaintiff is entitled to damages, plus court costs, and
WHEREFORE, Plaintiff respectfully requests that this Court grant her the following relief:
a. Treble the amount of all wages and benefits Plaintiff would have received but for
Defendants’ unlawful conduct, including but not limited to back pay, front pay, and
pre-judgment interest;
the damage to her reputation, loss of career opportunities, humiliation, anguish and
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COUNT III: VIOLATION OF THE IWA 740 ILL. COMP. STAT. 174/20
287. Plaintiff reincorporates and realleges by reference herein against the RICO
288. Plaintiff brings Count III against CDP, Holtzman, individually, Baumgardner,
individually, Hill, individually, and Croteau, individually, for violation of the IWA. 740 Ill. Comp.
289. Under the IWA an employer may not retaliate against an employee for refusing to
participate in an activity that would result in a violation of a State or federal law, rule, or regulation.
290. An employee may bring a civil action against an employer who violates the IWA. 740
291. CDP, Holtzman, Baumgardner, and Hill were the Plaintiff’s employers, and the
Plaintiff was CDP, Holtzman, Baumgardner, and Hill’s employee as those terms are defined under
292. The Plaintiff engaged in legally protected activity, to wit, refusing to commit and/or
participate in several fraudulent and otherwise illegal activities, including but not limited to credit
card fraud, mail fraud, and wire fraud, when they refused to accept partial commissions from Duan’s
illegal sales.
293. Defendants CDP, Holtzman, Baumgardner, Hill, and Croteau terminated the
Plaintiff’s employment in retaliation for their refusals to participate in the Scheme, racketeering
activity, and the other frauds enumerated herein, in violation of the IWA.
294. As the direct result of Defendants CDP, Holtzman, Baumgardner, and Hill’s actions
in violating the IWA, Plaintiff has suffered the loss of income, benefits, and career opportunities, as
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295. Plaintiff realleges and incorporates by reference herein against the Defendants
297. Illinois law permits an employee to recover damages for retaliatory discharge from
their former employer, if the former employer discharges the employee in retaliation for refusing to
participate in activity or the employee complaints to a government entity or internally, and the
298. The Plaintiff engaged in legally protected activity when she complained, repeatedly,
to various members of management about Duan’s illegal behavior, as well as when she escalated
those complaints.
299. The Plaintiff engaged in legally protected activity when she refused to participate in
300. Defendants CDP, Holtzman, Baumgardner, and Hill discharged the Plaintiff in
301. As the direct result of the illegal termination of her employment, the Plaintiff
suffered loss of income, benefits, and career opportunities, as well as humiliation and emotional
distress.
WHEREFORE, Plaintiff Suzana Krajisnik respectfully requests that this Court enter an
order granting judgment in their favor against Defendants C.D. Peacock, Inc., Seymour Holtzman,
individually, and Yinxue Duan, individually, grant her the following relief:
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A. Lost wages in the form of back pay, with statutory interest penalties pursuant to 740
JURY DEMAND
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