The Case of the Missing $15 Billion Fortune: Part 1

Speaker 1 Our colleague Nick Kostoff covers European luxury brands. Nice beat if you can get it.

Speaker 1 And a while back, he took one of the most beautiful road trips you can imagine through the Swiss Alps to a small village called Ferré.

Speaker 2 Yeah, so Ferré is a tiny hamlet. There's maybe 12 houses.
How I got there was I got a train from Paris to Geneva and then I drove through the Alps.

Speaker 2 Really, really beautiful drive. And then you leave kind of the last town, drive another three kilometers, and then you get to Ferré.

Speaker 2 So it's very, very remote. It's incredibly beautiful.
I can't overstate how beautiful the views are from Ferré.

Speaker 1 But Nick wasn't there to sightsee.

Speaker 2 I was there to find a guy called Nicolas Pueche, who is a fifth generation heir to the Hermes fortune?

Speaker 1 Nicolas Pueche is the great-great-grandson of Thery Hermes, the founder of the French luxury goods company. For years, Pueche was Hermes' biggest shareholder and one of the richest men in Europe.

Speaker 1 And then, two years ago, Pueche made a jaw-dropping claim. He was out of money, broke, skint.

Speaker 1 As for his Hermes shares, shares which today would be worth about $15 billion,

Speaker 1 he claimed he didn't own them anymore and he didn't know who did. The shares were quite simply gone.

Speaker 1 What was your reaction when you first heard that this multi-billion dollar fortune had gone missing?

Speaker 2 I mean,

Speaker 2 I think like WTF? Yeah, WTF, exactly, exactly. WTF, Like,

Speaker 2 my first reaction was, I better look into this.

Speaker 1 Nick's been looking into it for over a year now, trying to figure out what happened to Nikola Puesh's lost fortune. The search has taken him deep into the rarefied world of Europe's super rich.

Speaker 1 And the story he's uncovered involves a beloved handyman, a trusted financial advisor, and one of the biggest corporate rivalries in luxury.

Speaker 1 Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza.
It's Tuesday, November 25th.

Speaker 1 Over the next two episodes, we're going to tell you the story of Hermes Air Nicola Puesh's missing billions and what became of them. This is part one.

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Speaker 1 What do you think of when you hear Hermes?

Speaker 2 I think of the absolute pinnacle of luxury.

Speaker 1 Elmez is for many people the ultimate status symbol.

Speaker 2 I think of

Speaker 4 Birkin bags.

Speaker 1 It has since become one of the world's most exclusive and expensive fashion accessories. Famous Kelly bags, silk scarves, elegant scarves, ties, and handbags, all meticulously made.

Speaker 2 It is, you know, top, top-tier luxury.

Speaker 1 But here's something you might not think of. Hermes is one of the top five biggest companies in Europe by market cap.

Speaker 1 It's bigger than the industrial giant Siemens, bigger than banks like Santander and Deutsche Bank, bigger than Airbus and Spotify and Novo Nordisk.

Speaker 1 That's right, handbags are bigger than Ozempic.

Speaker 1 And this has all been a huge boon for Hermes' heirs. Given the company's been around for 188 years, there are a lot of them.

Speaker 2 There are now more than 200 heirs to Hermes.

Speaker 2 So the family has split into three branches, the Gueron, Dumas, and the Pueche.

Speaker 1 Of those heirs, one of the most notable was Nicola Pueche. He would end up holding about 6% of the entire company, 6 million shares of Hermes.

Speaker 2 Nicolas Puesch became the largest individual shareholder in Hermes because he inherited shares first of all from his mother, and then he inherited an extra 1% from his sister.

Speaker 2 And so he ends up with this enormous fortune. Puesh himself,

Speaker 2 how to describe him? I mean, early in his career, he did various things. He worked for an ad agency.
He started a couture house with a stylist that went bust pretty quickly.

Speaker 2 He had a short stint as a water skiing instructor.

Speaker 2 Okay, why not? Why not? Yeah, exactly. And then from the mid-90s or so, he has lived entirely off Hermes dividends.

Speaker 1 With those dividends, Puesh built a comfortable life. He spent most of the 1980s on a farm he owns in Spain, tending to his horses.

Speaker 1 One of the only photos we have of Pueche shows a heavyset man with snow-white hair holding a beautiful white horse by a lead.

Speaker 1 In the early 2000s, Puesh began spending more time in Switzerland, renovating a massive chalet in Ferreil.

Speaker 2 And that's really how he spent his days.

Speaker 1 Puesh is 82 now. He never married and doesn't have any children.
So there would be no one to inherit his multi-billion dollar fortune. Instead, Puesh made plans to leave it to a foundation he set up.

Speaker 2 He'd hired some people to build it up.

Speaker 2 And when you consider that the foundation was expecting a gift worth some 15 billion, you know, they were really building this thing out, expecting to have an enormous amount of money to spend.

Speaker 1 It seemed like Puesh's future was settled.

Speaker 1 And then came a series of seemingly sudden moves, clues that not all was right with the Hermes heir.

Speaker 1 One clue came in the form of a letter. In 2023, Puesh wrote to the head of his foundation.
At the top of the letter, he wrote, in French, cancellation inheritance agreement.

Speaker 2 He sends a letter basically saying, listen, I've decided not to leave my fortune to you for various reasons, including the fact that I thought you guys could protect my fortune, but actually you can't.

Speaker 2 So no more money for you.

Speaker 1 The head of the foundation was shocked. He hadn't seen it coming.
And he wasn't the only one to be summarily written off like this.

Speaker 1 A year earlier, Puesch had sent another letter, seemingly out of the blue.

Speaker 2 He addressed it to his financial advisor. It's a guy called Eric Frémont.
Eric Fremont had total power over Puesch's finances for many, many years. 25 years.

Speaker 1 Frémont served Switzerland's elite and was close to the Hermes family. He'd managed Precious's financial life for decades, and Puesch considered him a friend.

Speaker 1 But in this letter, Puesch fired Fremont with no explanation.

Speaker 2 The Fremont letter basically says, thank you for your service,

Speaker 2 but I don't, you know.

Speaker 1 Goodbye. Goodbye.

Speaker 2 Yeah, exactly. Next.

Speaker 1 Firing your longtime financial advisor, pulling out of your own foundation. These were surprising moves.

Speaker 1 But to Nick, they were less surprising in light of a rumor that had started going around that Puesh was claiming to have lost his entire fortune.

Speaker 1 Last year, Nick wrangled an interview with that fired financial advisor, Eric Fraymont. Nick wanted to get Fremont's perspective on what might be going on with the Hermes heir.

Speaker 2 Yeah, so this was a meeting that took place. We were in a hotel near Geneva airport.
So we were, you know, in a kind of quiet spot of a hotel lobby.

Speaker 1 The man who walked in was about Pusha's age, thin, with white, floppy hair and dark caterpillar eyebrows.

Speaker 2 Frémont is an interesting character. So, I mean, he's obviously a very smartly dressed.
He comes in, he's got neatly combed hair, nice suit.

Speaker 2 He doesn't have a particular aura. He's not particularly charismatic.
He gives off, he really gives off an air of fragility that is almost disarming,

Speaker 2 but sensitive, like sensitive, fragile. That was my impression of Eric Frémont.

Speaker 1 And Fraymont? had a wild story to tell about his former employer.

Speaker 1 I've told you that Puesh isn't married and doesn't have children, but he didn't live alone.

Speaker 2 What he did have was a handyman and his handyman's wife and their children.

Speaker 1 Puesh had grown exceptionally close to his live-in handyman, a guy named Jadil Boutrac and his wife Maria Paz.

Speaker 1 And according to Frayman, The two were key to understanding what was going on with the Hermes heir. Which, Fraymond said, was this.
The Hermes shares weren't actually missing. Puesh was lying.

Speaker 1 He still had the shares, and he was scheming to leave them to his handyman.

Speaker 2 So Fremont's story was that Puesch wants to leave his fortune to his handyman slash gardener. The problem is that he has agreed to leave it to his foundation.

Speaker 2 And legally in Switzerland, once you agree to leave your fortune, for example, to a foundation, you can't go back on that unless it's to give give it, for example, to a child or somebody you're related to.

Speaker 1 Puesh's solution to this problem, according to Fremont, was to try to formally adopt his handyman as his son.

Speaker 1 In Fremont's telling, this adoption would be the culmination of years of manipulation by the handyman and his wife.

Speaker 2 He says that they have a hold over Puesh, that Puesh is a vulnerable old man, that he was isolated by COVID, and that these guys, the handyman/slash gardener and his wife, has got their claws into him and are basically manipulating him to leave his fortune to them.

Speaker 2 That was his story.

Speaker 1 Fremont didn't just make his case to Nick. He filed a report to a Swiss welfare agency claiming that the handyman and his wife were taking advantage of Puesh.

Speaker 1 He said Puesh had gifted the couple multiple properties, including a home in Switzerland.

Speaker 1 Puesh's lawyer called the allegations absurd, adding that the gifted properties would still only constitute about 1% of Puesh's fortune. The report was ultimately dismissed.

Speaker 1 Nick had heard Fremont's version of events, but what about Puesh's? What was his side of the story?

Speaker 1 After the break, Nick tracks down the Hermes heir.

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Speaker 1 Nick drove for hours through the Swiss Alps to the tiny hamlet of Ferreil because he wanted to know what Nicola Puesh made of all of this.

Speaker 1 What did the Hermes heir think had happened to his 15 billion dollar fortune? It turned out, Puesh wasn't hard to find.

Speaker 2 It's pretty obvious which one his house is because it's absolutely huge and all the other houses are normal size. And so I walked up to the door.

Speaker 2 As I knocked on the door, he came round the side of the house and he was leaving to get in a car with a woman.

Speaker 1 So, you don't have a lot of time. He's clearly leaving.
What did you ask him?

Speaker 2 I mean, my first question, to be honest, was, did you have a nice summer?

Speaker 2 Which was not, which was not what I'd driven like eight or nine hours for, but I figured maybe if I just get him talking, you know, maybe he'll become become chatty.

Speaker 2 I think to did you have a nice summer, he said yes, and carried on walking. So I think it was in French I said,

Speaker 2 something like that.

Speaker 2 But basically, meaning like, where are these shares?

Speaker 2 Yeah, where are the shares, Mr. Puesch? And unsurprisingly, he didn't answer me.

Speaker 1 Nick never got a real interview with Puesch. Puesh's lawyer called the whole thing a, quote, murky affair and declined to comment in depth.

Speaker 1 But Nick was able to get a picture of Puesh's thinking from lawsuits the air filed over the years and from conversations with people close to him. Here's what Nick gathered.

Speaker 1 According to Puesh, the whole thing likely started decades ago, back in the early 2000s, when Hermes found itself in a knockdown fight with another big name in luxury, a company called LVMH.

Speaker 1 Talk to me about LVMH.

Speaker 2 So LVMH is the world's biggest luxury company. It's a conglomeration of about 75 brands that go from Dior to Louis Vuitton to Celine to Taghoya to Moet to Hennessy.

Speaker 2 I mean, walk down Fifth Avenue in New York or Rodeo Drive or Monte Sando in Japan or Hong Kong or whatever. A lot of these stores will be owned by LVMH.

Speaker 1 LVMH's name is itself a mashup of various luxury brands. Louis Vuitton, Moet, Hennessy.
And at the very top of this many-headed luxury hydra is one of the richest men in the world, Bernard Arnaud.

Speaker 2 He has many nicknames. The Lord of Logos, the Pope of Fashion, the one he hates the most is the wolf in Kashmir.

Speaker 2 And Arnaud is a capitalist. You know, he was schooled in American capitalism in New York in the 80s and he would go and acquire brands from families.

Speaker 1 Over the years, Arnaud built LVMH up from a handful of brands into a juggernaut with about 75 different labels.

Speaker 2 I think some families who want to sell their brands see him as a safe pair of hands. He's very good at developing brands, making them bigger.
He's got amazing attention to detail, but he's also

Speaker 2 very tough. And if he wants a brand, he will try and acquire it.

Speaker 1 And back in 2001, the brand Arnault was interested in was Hermes.

Speaker 1 Arnaud wanted to build a sizable stake in the company. Because Hermes is still largely owned by descendants like Puesh, this would mean buying up shares from individual members of the Hermes family.

Speaker 1 And so LVMH reached out to someone with close ties to the Hermes clan, someone they thought could help. That person was Nicola Puesh's financial advisor, Eric Fremont.

Speaker 2 So according to Fremont, someone in touch or working with LVMH reached out to him and essentially said, Would you be willing to help us

Speaker 2 build up a stake, an investment in Hermes? And Frémont says, sure.

Speaker 1 Fremont detailed his work with LVMH in a legal claim he later made against Arnaud and the company. He says he worked for years building up Arnaud's Hermes stake.
This was a delicate operation.

Speaker 1 Sure, some Hermes family members might be willing to sell some stock and cash out. But Hermes, the company, most definitely did not want its biggest rival becoming its biggest shareholder.

Speaker 1 To avoid triggering alarm bells at Hermes, the share buying scheme would have to be kept a secret. And it worked.
With Fremont's help, LVMH built its Hermes stake to 14%.

Speaker 1 Hermes was none the wiser. Until 2010, when Arnaud finally revealed his secret stake.

Speaker 2 He decides, okay, I'm going to pull the trigger, and he he announces to the market, unbeknownst to Hermes, that he has a 14% stake, which is going to rise to 17% in the coming days.

Speaker 2 And so Hermes is stunned.

Speaker 1 Yeah, they're all like, wait, wait a minute, when did this happen?

Speaker 2 Yeah, wait a minute, when did this happen?

Speaker 2 And obviously he's been working on it for a decade. And so the question at this point is, where has he got this 17%?

Speaker 1 To build a 17% stake, Hermes knew that Arnaud must have bought shares from Hermes' family members. It was the only way.

Speaker 1 So who had sold? Many angry fingers pointed at one of the company's biggest shareholders, Nicola Puech.

Speaker 1 But Puche denied it. He said he hadn't sold any of his inherited shares to Arnault.

Speaker 2 I still have my 6%.

Speaker 1 So he's like, it's not me.

Speaker 2 Yeah, he's like, it's not me. And Puesh's belief is, and he's asked about this by investigators for the French stock market authorities and others, he's saying I still have my 6%.

Speaker 1 So it must be somebody else, basically, is what they're thinking.

Speaker 2 Must be somebody somebody else. Although at this point, a lot of people are, let's say, suspicious.

Speaker 1 Why was this a mystery? Like, don't companies usually just know who their biggest shareholders are? Can't you just check who owns the shares?

Speaker 2 I mean, usually yes, but Puesh owned bearer shares. Bearer shares are kind of like cash in a way.
They're not registered.

Speaker 1 Unlike normal shares, bearer shares don't need to be registered to a specific person or business. They're owned by whoever physically holds or bears the piece of paper, thus the name.

Speaker 1 And like cash, they're more anonymous. People close to LVMH say not even the company knew for sure whose shares they'd bought.

Speaker 1 The finger pointing went on for years. Hermes and many members of Puesh's family believed he'd sold them out.
Puesh denied it over and over again.

Speaker 1 And then, in 2023, Nicola Puesh filed a series of lawsuits against Eric Fraymont in Switzerland and in France. The contents were explosive.

Speaker 1 In the lawsuits, Puesh accused his former financial advisor of massive fraud. He said his money was gone.
His Hermes shares gone.

Speaker 1 As for what had happened to them, Puesh said he now suspected that Fraymont had sold them years ago. And the most likely buyer was LVMH.

Speaker 1 So he's saying that Fremont sold his shares without his permission, essentially.

Speaker 2 Yeah, exactly. So he's basically saying Frémont has stolen everything I have.
And as part of the lawsuits, he lists a number of people who he believes that investigators should question.

Speaker 2 One of them is, of course, Bernard Arnaud and LVMH.

Speaker 2 And he says, you know, if these guys should be questioned, their offices should be searched, their homes should be searched to see if they know anything about where my shares have ended up.

Speaker 1 Right. Did my shares actually wind up at LVMH?

Speaker 2 Did my shares wind up at LVMH? Exactly, exactly.

Speaker 1 A spokesperson for Arnaud and LVMH declined to comment.

Speaker 1 Nick spoke with Fremont, the former financial advisor, twice last year, once at that hotel in Geneva and a second time in Paris. He asked Fremont about Puesh's allegation.

Speaker 1 How did Fremont respond to the allegation that he stole the shares?

Speaker 2 So he strongly disputed that allegation. He was, I would say, almost incensed.

Speaker 2 He certainly said he felt incredibly betrayed, that this was completely unfair, and that he had worked diligently and honestly for Puesch for 25 years, and that his allegations were completely crazy.

Speaker 1 Accusations were flying. But who to believe? Was it the handyman? Fremont? Puesch himself?

Speaker 1 And then, one day this past summer, Nick got a text from a source. Eric Fraymond was dead.

Speaker 1 Tomorrow on the journal. Finally, some answers.
Have you solved the mystery?

Speaker 2 I'm further along than I was. Yes, I think I know what happened to the shares, yes.

Speaker 1 And no, it wasn't the handyman.

Speaker 1 That's all for today, Tuesday, November 25th. The journal is a co-production of Spotify and the Wall Street Journal.
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See you tomorrow.