Leonard Norman Stern is the Chairman and CEO of the privately owned Hartz Group based in New York City. Additionally, he oversees operations of the extensive Hartz real estate portfolio owned and operated under its Hartz Mountain Industries subsidiary company, of which he also serves as Chairman and CEO. Under his forty plus years of leadership, Hartz Mountain Industries, which began as a hobby for Stern, acquiring land in New Jersey's Meadowlands during the 1950s and 60s, has built and currently owns over 38,000,000 square feet (3,500,000 m 2 ) of office, industrial, hotel and retail properties in over 200 buildings, including major developments on the New Jersey Hudson River waterfront, and across northern New Jersey. Based in Secaucus, NJ, Hartz Mountain Industries has added property in Manhattan, Westchester, NY, Long Island, NY, and Maryland. In addition to its property operations through its 'Industries' subsidiary, The Hartz Group has an active and growing financial operation.
Wealth development
Inheritance
Stern's initial wealth was inherited from his father, Max Stern, who died in the early 1980s. Max Stern was the German-born vice-chairman of the Board of Trustees of Yeshiva University for whom its Stern College for Women was named. He had emigrated from Weimar Germany to the U.S. in the 1920s after his textile business proved unprofitable, bringing along 2,100 canaries from Germany to sell on the U.S. market. By selling caged birds, bird cages and other pet bird supplies to U.S. pet owners through Woolworth's stores over the next thirty years, Stern's father built up the family business: Hartz Mountain Corporation (HMC), also headquartered in Secaucus, NJ. HMC would later grow to become the flagship subsidiary of The Hartz Group. The business was named after the Harz Mountains of Germany.
Control and growth of Hartz Mountain Corporation (HMC) -- (the pet products side of the business)
Leonard Stern graduated from New York University (NYU) in 1957, purchased his brother's and sister's share of the family business and, by the early 1960s, exercised absolute control of Hartz Mountain Corporation (HMC). Hartz Mountain Corporation then began to use monopolistic techniques to capture the pet supply market that catered to both dog and cat owners and parakeet and canary owners. He rapidly broadened Hartz' distribution channels from variety stores into more than 30,000 supermarkets and mass merchandisers. Under his leadership, the "Hartz" trademark became the most widely known and respected pet supply brand in America, and America's leading manufacturer of pet supplies.
By 1984, Hartz Mountain Corporation (HMC) controlled 75% to 90% of the U.S. market for most U.S. pet supply goods. Its pet supply business was estimated to be worth $400 million and was earning $40 million in annual profits.
Real estate and finance
In 1966, he began a major diversification of his business interests by going into active real estate development. Today the Hartz Mountain Industries (HMI) subsidiary has become one of the largest privately held real estate companies in the United States.
Stern began Hartz Mountain's real estate operations in 1966 when he started to purchase land in New Jersey's swampy Meadowlands at $20,000 per acre. By 1987 Meadowlands' real estate was selling for $500,000 per acre. The value of Stern's Meadowlands property had jumped from $10 million in the late 1960s to over $1 billion by the late 1980s. According to a September 1987 Fortune Magazine article, Stern "made a killing building industrial parks" in the Meadowlands and "attracting companies with low rents." Gene Heller, the well-known President of Hartz Mountain Industries up until the 1990s, was the man with the grand vision and ability to broker the mega-deals during the company's heyday. He left Hartz in 1991 after a difference of opinion with Leonard Stern as to which direction the company should go, and has since started his own real estate firm.
Among the companies that moved their corporate offices from Manhattan to Stern's Meadowlands commercial office buildings were The Equitable Life Assurance Society, UBS/Paine Webber, Panasonic's U.S. headquarters, and WWOR-TV. Stern also made money from Hartz's Meadowlands real estate by building the Harmon Cove Towers high-rise apartments and condo village.
In 1987, the Hartz Mountain Industries subsidiary also completed a 24-story luxury office tower in Manhattan on Madison Avenue and 61st Street to which it relocated Stern's corporate offices, The Hartz Group. According to Business Week , 2004 rents were as high as $120 a square foot, second only to the General Motors building.
In order to concentrate on the management of his growing real estate and financial interests, Mr. Stern sold the Hartz Mountain Corporation (HMC) pet products company in December 2000, thus ending the family's 76 years of ownership. The 'Hartz' brand name (goodwill) was included in the sale of that subsidiary. To outsiders, there has always been some degree of confusion between the once flagship Hartz Mountain Corporation, which dealt exclusively with pet products, and that of the more glamorous business of Hartz Mountain Industries' real estate concerns. Currently, the pet products "Hartz" operation, still maintains a presence, but now as a regular tenant, at the same headquarters building as Hartz Mountain Industries (HMI) in Secaucus, NJ. Leonard Stern currently serves on the Board of Governors of the Real Estate Board of New York.
Publishing
From 1986 through 1999, Stern successfully built Stern Publishing, publishers of the Village Voice, the LA Weekly, the Seattle Weekly, the Cleveland Free Press, and City Pages in Minneapolis, into America's leading publisher of alternative weekly newspapers, with a total weekly circulation of more than 900,000. Mr. Stern sold his publishing interests in March 2000.
Other businesses
Over the years, he also built, and sold numerous other businesses including:
- SM/Cork, the United Kingdom's largest "non foods" service distributor
- Harmon Homes which published 180 free circulation local "Homes" magazines
- Carpet Magic Company which manufactured and serviced carpet cleaning machine rental centers in 20,000 retail stores
- Currently has an ownership interest in a nearby Chart House Restaurant location
- SoHo Grand Hotel and the TriBeca Grand Hotel both in New York City (among others establishments)
Legal and image problems
1970s and 1980s
The methods of Stern's privately owned corporation created both legal and image problems for Stern. As Cynthia Green noted in an article titled "The King of Hartz Mountain Polishes His Image" that appeared in "Business Week" shortly after Stern bought "The Village Voice" in 1985, "Stern knows he has an image problem...Over the past 20 years, Hartz Mountain Corp. has been the subject of more than a dozen antitrust suits and of investigation by the Federal Trade Commission and the Justice Dept."
Officials of Stern's company committed a variety of white collar crimes to which they pled guilty in March, 1984. In 1979, Hartz Mountain had also agreed to pay $42 million to A.H. Robins Company, whose subsidiary sold Sergeant's pet supplies, after Robins filed a suit which charged Stern's company with bribery, perjury and antitrust violations such as strong-arming distributors and offering stores special deals to induce them to sell only Hartz Mountain products. Among the illegal business practices used by Hartz Mountain was the providing of free prostitutes to distributors of pet supplies.
According to the first count of the criminal information to which Hartz Mountain pled guilty , "in or about September 1978, at New York City, New York, an un-indicted co-conspirator instructed another un-indicted co-conspirator to testify falsely in a deposition that women in attendance of the Hartz hospitality suite at the annual January Chicago housewares trade show were hostesses and not prostitutes."
The American Lawyer magazine deduced in an article by Connie Bruck that appeared in its October 1984 issue, titled "The Hartz Mountain Corporate Officers' Guide To Committing Perjury, Suborning Perjury, Obstructing Justice, Locking Up The Market, and Paying a $20,000 Fine," that the "unindicted co-conspirator" who "instructed another unindicted co-conspirator to testify falsely" was Leonard Stern.
1990s
According to the unsigned cover article, "Dynasty In Distress" in the February 9, 2004 issue of Business Week , Stern was "intensely engaged" as a board member of Rite Aid in the mid-to-late '90s when the drugstore chain admitted to overstating net income by $1 billion over two years.
Stern was named in several class action suits in which investors claimed that he and other directors had breached their fiduciary duty to shareholders. A separate lawsuit, filed by Kevin Mann, the son of the original founder and former executive vice-president, alleged that Stern used his influence to increase shelf space in Rite Aid stores for Hartz's pet products at the expense of competitors. Rite Aid settled that suit in 1999 for $11 million.
Stern resigned from the board in late 2001. According to the article, he "brushes all of this aside: 'We saved that company from bankruptcy. We threw out the old management and brought in the new and set it on its turnaround' ".
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