Nursery Crime?

When a popular chain of baby stores closed abruptly this spring, expectant parents were left without their nursery furniture - and without their refunds. The two founding brothers were left at war. What happened to Boston Baby?

The Boston Globe Magazine

August 13, 2006

By Keith O’Brien

THEY WEREN’T JUST BUYING FURNITURE. KEITH AND MELISSA FRAGOZA were buying a dream. This was going to be their first child, their first nursery. They wanted the furniture to be both solid and stylish and weren’t afraid to pay a little more for it, even though they couldn’t really afford it. The way they saw it, the furniture would be an investment for the future. The couple, who now live in Quincy, liked what they saw in Boston Baby’s Newton showroom last winter and decided on February 15 to buy. The Fragozas wrote a check for $2,332.47, payment in full on a crib, dresser, and bureau.

Sure, it was a lot of money for Keith, then a medical student about to graduate, and Melissa, a third-grade teacher. And, sure, they were going to have to wait six to eight weeks for delivery. But their child, to be named Olivia, wasn’t due until April 21. And they felt good about the salespeople they had met at Boston Baby. “They made it seem like a really good deal,” Keith recalls. “They never gave us the impression that they were having any financial difficulties.”

In reality, though, Boston Baby, a specialty store with other locations in Danvers and Braintree, already was in its death throes, unable to pay manufacturers for furniture and falling tens of thousands of dollars behind on rent. The Fragozas’ daughter eventually arrived, but her furniture didn’t. Boston Baby closed in late March, leaving more than 900 customers out a total of $671,000, and today it is being investigated by the state attorney general’s office.

“I think the worst part about it is the way they portrayed themselves as a reputable business,” says Keith, who later learned that Boston Baby placed his order but never paid for it. “Taking advantage of pregnant women – people expecting children – is kind of the lowest form of a con artist.”

Harvey Slobodkin gets called that, and probably worse, these days. But employees who watched the company fall apart in the spring paint a different picture of Boston Baby’s owner. To them, he wasn’t a con artist, he was a guy in trouble. By the end, Slobodkin, 58, appeared to be a “broken man,” says Donna Michienzi, the company’s former customer service manager. Michienzi, still out of work months later, recalls how depressed Slobodkin looked the day Boston Baby shut its doors. The company had made a name for itself by selling top-notch furniture – and selling a lot of it. In the 1980s and ’90s, it was considered by industry observers to be the top independent baby retail store in the United States. Everybody in the business knew Boston Baby and the men who ran it together for years, Harvey Slobodkin and his brother, Michael.

But now that it’s over, now that Michael is suing Harvey, and TD Banknorth is suing both of them, many wonder if there’s anything either brother could have done to save the business. In fact, some now believe that Michael left the company in November 2004 because he knew what was coming. Boston Baby was about to be crushed by a convergence of forces: the slowing economy, the rise of the big-box chains, the Internet retailing boom, and the Slobodkins’ failure to respond to each of these pressures.

It is a cautionary tale, and it’s not all that uncommon. In fiscal 2005, the state attorney general’s office and local consumer programs received a total of more than 12,000 written complaints and 110,000 phone calls from customers alleging everything from scams to shoddy business practices. Each year, millions of dollars are paid in restitution to consumers, but the complaints don’t always lead to criminal allegations. State investigators have found no evidence of criminal intent on the part of Boston Baby’s owner. In fact, according to employees, Harvey’s biggest mistake may also be the saddest: The man simply held on too tight for too long to his family business, unwilling or unable to recognize that its heyday was long gone.

“To be honest with you, it was just being ignorant,” says Brian Nastasia, Boston Baby’s warehouse supervisor and an employee for 19 years. “That’s what it was. Just being ignorant.”

THE NAME BOSTON BABY DATES BACK MORE THAN 50 YEARS IN NEW England, says Jeff Coffman, a Brockton realtor whose father, Max, bought the original Boston Baby stores around the early 1970s. There were five locations at the time, says Coffman. But soon they all went under, he explains, “and Boston Baby evaporated from the face of the earth.” At least until 1980. That’s when the Slobodkin brothers incorporated a new business under the same name. It was a savvy move to use a familiar name, says Coffman, even if it didn’t exactly contribute to truth in advertising. At the time it closed in March, Boston Baby boasted on its website that the company had been in business for 50 years.

The truth was a bit less impressive. Ian Sacks, the national sales manager for Canadian furniture manufacturer Morigeau-Lepine, says he first began selling baby furniture to Michael Slobodkin around 1983, when the two brothers still worked at their father’s South Boston store, Sands Five & Ten. “It was kind of a little unusual,” says Sacks, “but they were successful in marketing it.” And within about a year, the Slobodkins opened their first store in Newton. Donna Michienzi was one of Michael’s first hires. “He was an honest guy, doing great business, and he knew it,” Michienzi recalls. “He knew he had hit the baby industry right at the right time in this state, knew it was a business to grow.”

And grow it did. In less than a decade, one store became three, and in 1997, the Slobodkins decided to expand further. They launched B.B. Kids, a store for older children, and it, too, soon had multiple locations. “They were a very big player – a very, very big player, even on a national stage, just in terms of the volume they were doing,” says Jeremy Edmondson, an independent sales representative who sold Child Craft/Legacy furniture to the Slobodkins. “Everybody in the country – all the retailers – knew who Boston Baby was.”

Both Harvey and Michael Slobodkin declined through their attorneys to be interviewed for this story. But court documents, state records, and the recollections of customers, employees, and colleagues yield a portrait of the two brothers and their family business. Harvey, 41/2 years older than Michael, was the quieter of the two, more reserved. “He knew the numbers and figures,” recalls Nastasia. “Boom – he knew it.” But since Harvey often stayed behind while Michael flew off to trade shows, few people in the industry knew Harvey well. Michael was the face of the company. “Uncle Mikey,” he was called in advertisements that ran in the ’90s. A caricature of him appeared in the ads, depicting him cradling an infant in one arm. This was a guy you could trust, the ads seemed to say. Colleagues considered him smart, savvy, and ambitious, and they eventually elected him president of the National Independent Nursery Furniture Retailer’s Association, a major trade organization. Michael was the natural leader – not Harvey. Michael could intimidate people – not Harvey. Michael, according to former industry colleague Rochelle Hoff – man, who served on the retailer association board – was the “bright light in the juvenile industry” – not Harvey.

As different as they were, however, the two brothers knew how to work. Former employees recount six-day workweeks and run-ragged Saturdays. And this work soon paid off – for everyone. Business was going so well in October 1988 that the Slobodkins paid $1.4 million for their Newton storefront. Five months later, Michael Slobodkin bought a four-bedroom home in Sharon for $638,000. And a year after that, Harvey paid $460,000 for a four-bedroom house in Canton. Fine cars were registered to their names: an Infiniti Q45 for Harvey and a Mercedes-Benz Roadster for Michael. The license plate on Michael’s car said BABYBZ. A 25-foot speedboat registered to Harvey was named Bodacious.

“They did well,” Nastasia says. “Michael and Harvey had good lives. But they shared it with their people.” The Slobodkins threw holiday parties for their employees, handed out generous year-end bonuses, and offered a matching 401(k) plan. As Michael became president of the trade group, Harvey became president of Handi Kids, a nonprofit camp in Bridgewater for children with cognitive and physical disabilities. There, he earned a reputation for generosity. Harvey “would donate a lot of time, as we all do,” says Joseph Bank, a member of the camp’s board of directors. “But there were times when the bills were due, and the money hadn’t come in yet … small amounts – a few thousand, $5,000, $10,000. He would write the checks, and when the funds came in, he was reimbursed.”

Even as recently as February 2001, the Slobodkin brothers felt confident enough in the future of their baby business to plunk down $2.5 million for a new company headquarters and warehouse in Avon. Employees felt as though the brothers could do no wrong. But months later, planes crashed into buildings in New York City and Washington, D.C., the national economy began to sputter, and retailers – especially small independents – started to feel the crunch. It was, for Boston Baby, the beginning of what Nastasia calls a “long, slow, dying death.”

THE PROBLEMS, BY HARVEY’S OWN ADMISSION IN COURT DOCUMENTS, came to a head in 2004. By then, Boston Baby, like many retailers, had endured a few lean years. There were no more holiday parties, no more yearend bonuses. Everything was down, according to employees and vendors: sales, volume, customer traffic. Boston Baby, by the time it closed, was competing with six Boston-area Babies “R” Us stores, along with other bigbox retailers and the Internet. And in this changed landscape, the customer had changed as well. A new generation of parents now seemed more than happy to buy online. But Boston Baby never offered an online gift registry like the major chains.

“The industry is not a healthy industry,” says Sacks, the Morigeau-Lepine sales manager. “In the heyday, customers would buy a crib and maybe four or five different chests of drawers. Now they’re buying a crib and maybe one or two chests of drawers. Or maybe just one. Or maybe just a crib.”

With sales down, the bills began to pile up. In October 2004, the Slobodkins were more than $84,000 behind on rent at their Danvers location. And within a month, Michael had made a decision that stunned employees: He was leaving the company. Boston Baby and B.B. Kids split, the Slobodkins relinquishing ownership of the latter. The two companies still shared a warehouse and a customer service center, but the Slobodkins no longer owned B.B. Kids and no longer worked together.

“Honestly,” says Scott Nastasia, Brian’s brother and an employee as well, “it was kind of scary.” This was Uncle Mikey, after all. Michael gave his brother a $250,000 loan to keep the company afloat and, about a year later, sold his house in Sharon for $1 million. Michael and his family were bound for a new life in Boca Raton, Florida. But Harvey, a husband and father of four girls, was staying.

Everyone hoped things would improve. Harvey most of all. In September 2005, he borrowed a second sum of money from his brother – this time $350,000 in the form of a mortgage – and then quickly paid off some of his debts. He wrote a $36,000 check in late November to pay some of the back rent he owed and agreed to pay off the balance – some $73,000 – by January 2006. At this point, employees were talking openly about downsizing. Michienzi says it was a conversation that took place “all the time, like every other day.” But Harvey wouldn’t hear of it, she says. He remained dead set on saving the business as it was. “He wouldn’t say this,” says Michienzi, “but he probably wanted to prove to Michael that he could do this… . He was probably a little stubborn.”

By February of this year, however, Harvey had lost what little control he still had when B.B. Kids filed for bankruptcy. This might have had no effect on Boston Baby except for one prickly detail: Harvey and Michael had personally guaranteed a line of credit with TD Banknorth in May 2004 for both companies. When B.B. Kids went out of business – and customers of undelivered merchandise called their credit card companies refusing to pay their bills – TD Banknorth was being forced to pay the disputed claims back to the credit card companies and went after the Slobodkins for $138,000. Meantime, manufacturers that for years had allowed Boston Baby up to 30 days after delivery to pay bills – a common industry practice – were now demanding money for orders upfront. In other words, says Michienzi, until Harvey paid for the furniture, it wasn’t going to be shipped. And since he usually only had customers’ deposits in hand – not payment in full – he couldn’t afford to pay for it. And since he couldn’t afford to pay for it, orders were going to be late, and customers would be asking for their furniture.

“We’d tell them, ‘We’re waiting for the trucks to load,’ which wasn’t a lie,” says Michienzi. “We were waiting for the trucks to load.” But no one told the customers why they were waiting. No one revealed that the Slobodkin family business was about to collapse. Right up until the end, says Michienzi, she believed Harvey when he said that he just needed more time, that the bills would soon be paid, the furniture soon delivered.

But then, in the last week of March, TD Banknorth finally cut off Boston Baby’s line of credit. And that was it.

MOST CUSTOMERS HAVE GOTTEN THEIR money back now. They had paid on credit cards, disputed the charges, left the fight up to the credit card companies, and then went out and bought new furniture elsewhere. But not the Fragozas. They are among the unlucky ones. They paid with a personal check – a mistake, Keith Fragoza admits now. Their money is gone. Yet they are not alone in their frustration over what happened at Boston Baby.

“We were shocked,” says Tricia Guilbeault, a Pembroke mother of two also jilted by the store. “We knew they had been around for a number of years and, from what we had heard, had a good reputation. For them to just close their doors with just nothing at all – nothing, no phone call – it was just very disappointing.”

Harvey is now telling authorities that he wants to cooperate and do what he can to make people whole. Just how that will happen is not yet clear. Alice Moore, chief of the attorney general’s Public Protection Bureau, says investigators are still trying to determine what happened to all the money. In the meantime, Harvey’s assets, including his Canton home, assessed last year at $711,500, have been frozen.

The problem, Moore says, isn’t the fact that Boston Baby closed. It’s how it closed, just shutting its doors, referring people to hot lines that went unanswered, and, worst of all, keeping customers’ deposits. “In many cases like this,” says Moore, “there is a lot of consumer anger.” But given the nature of Boston Baby’s business – expectant parents and new families – Harvey Slobodkin’s abrupt closing of the business inspired a particular amount of ire and emotion. In addition to the case the AG’s office is building against him, Harvey is being sued left and right. TD Banknorth is seeking more than $466,000 in money it had to refund to Boston Baby and B.B. Kids customers. The Danvers landlord wants almost $160,000 in unpaid rent. And Michael is going after his brother, too.

In a complaint filed in Middlesex Superior Court in April, Michael says Harvey owes him roughly $350,000 and alleges that Harvey has been “unjustly enriched” by his failure to pay him the money. Michelle Prager, Harvey’s attorney, says this last lawsuit has taken a toll on the brothers’ relationship. “Let’s just say it’s tenuous, at best,” says Prager, who describes her client as broke and unemployed.

But as Harvey looks for another job – Prager said in June he was interviewing – Michael’s family, now in Boca Raton, hasn’t given up just yet on the baby furniture business. Last December, as Harvey’s company was dying in Boston, Matthew Slobodkin, Michael’s 26-year-old son, registered a new venture in Florida under a familiar name. He’s calling it Boca Baby & Kids.

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