Netflix reality TV star Julia Haart told a Delaware court on Tuesday that her soon-to-be ex-husband Silvio Scaglia repeatedly said he had given her 50% ownership of talent and modeling agency Elite World Group LLC and that she had the same amount of control as he did.
But Scaglia, a successful Italian entrepreneur who founded and sold Italian telecommunications company Fastweb before he acquired EWG in 2011, said he contributed at least $150 million to EWG and its holding company, Freedom Holding Inc., and he never intended to hand over half of EWG to his wife.
“I always wanted to retain control. Sharing control never crossed my mind,” Scaglia said in testimony Tuesday.
The dueling testimony came during the first day of a two-day, in-person trial in Delaware’s Chancery Court over the company’s ownership. Haart sued Scaglia in February, claiming he had unfairly pushed her out of EWG and cut off her access to corporate credit cards and Freedom’s bank account.
The “My Unorthodox Life” star alleges that Scaglia promised before they married that they would be equal partners in ownership, control and voting rights of EWG and Freedom, and that she was shocked when she learned in 2020 that he had issued himself preferred shares.
“I was devastated,” she testified from the witness stand Tuesday. “I believed him implicitly … and lo and behold, I was not equal.”
Haart said Tuesday she first met Scaglia in 2015 when she was marketing her shoe brand, and a co-branding relationship between the two evolved into a relationship that led to their marriage in June 2019.
Scaglia promised her that they would grow the business as equal partners, Haart testified.
“I would put in the sweat equity, he would put in the investment, and we would build things together,” she said.
Haart asserts that an entity restructuring agreement the two signed in April 2019 divided control and ownership of both EWG and Freedom equally and transferred 50% of all shares to her.
She said Tuesday that she understood she wouldn’t actually receive her shares in until after the marriage so that the transfer wouldn’t trigger a gift tax.
Scaglia described in his testimony that the entity restructuring agreement was “an internal bookkeeping task” that formerly transferred certain entities under the EWG umbrella, but did not create any change of control.
He said he would never structure a company with 50-50 ownership because it “blocks companies” and prevents them from resolving deadlocks.
Scaglia said he established Freedom and is its sole director and owns all 123,665 shares of its preferred stock, which was created when he put in the initial investment. Under an operating agreement, Freedom controls EWG and the board of the directors manages the company, he said. If the company is sold, the preferred stock would be redeemed first, he said.
Haart claimed on Tuesday that she owns 61,832 of the preferred shares — one share less than Scaglia — which he disputes.
When she learned that she had one less preferred share than her husband, she texted her accountant, Jeffrey Feinman, and he assured her that she equally owned half the company, she testified Tuesday.
“He assured me that the one share didn’t matter,” Haart said. “Both Jeffrey Feinman and Silvio had assured me 100,000% that we were equal in every way.”
Under cross-examination from Scaglia’s attorneys, when asked whether she ever got stock certificates for any of the preferred shares, Haart said she wouldn’t know.
Scaglia testified that he transferred 50 shares of common stock to Haart in July 2019 after they were married, and he had appointed her CEO of the agency — a move he described Tuesday as “a mistake.” He retained 50 shares of common stock.
He said he transferred the common stock so that she could share equally in the growth of the company.
But Scaglia insisted that he never appointed Haart as a director of the holding company and never gave her any of the preferred shares.
“I owned Elite for a long time,” Scaglia said. “I was willing to share with her the value created, but not what I owned before.”
Haart doesn’t own 50% of the voting shares, and she doesn’t own 50% of the preferred shares, he said.
The trial will continue Wednesday.
Haart is represented by Henry E. Gallagher Jr., Matthew F. Boyer and Scott E. Swenson of Connolly Gallagher LLP, and Thomas R. Ajamie, Wallace A. Showman, Ryan van Steenis and Lewis S. Fischbein of Ajamie LLP.
Scaglia is represented by Peter Bicks, Lisa T. Simpson, Marc R. Shapiro and Emmanuel Fua of Orrick Herrington & Sutcliffe LLP, and Rudolf Koch, Susan M. Hannigan, Travis S. Hunter, Kyle H. Lachmund and Sandy Xu of Richards Layton & Finger PA.
The case is Haart v. Scaglia, case number 2022-0145, in the Court of Chancery for the State of Delaware.
–Editing by Adam LoBelia.