Luxury Jeweler Paul Morelli Settles Sexual Harassment Lawsuit

Left: Paul Morelli (Neilson Barnard/Getty Images). Right: Accuser Kathryn Hanegraaf (Lauren Carey Photography)

Paul Morelli isn’t just any Philadelphia jeweler. His high-priced designs turn up in the style pages of the New York Times, which also heralded the opening of his Madison Avenue location in 2014 by declaring him “no longer fine jewelry’s best-kept secret.” And his pieces, which can cost upwards of $150,000, can sometimes be found in places like Neiman Marcus, Harrods of London, and Bergdorf Goodman, where thieves made off with hundreds of thousands of dollars in Morelli jewelry in a daring 2012 heist. (“That thief obviously has good taste,” a Morelli rep told the New York Post.) Remember Rihanna’s see-through dress? Jewelry by Paul Morelli.

In other words, Morelli is a bona fide luxury jeweler. But according to a young woman who once worked for him, Morelli wasn’t a very good boss.

Morelli, who owns homes in Society Hill and New Hope, and his company, Paul Morelli Design Inc., just settled a sexual harassment and retaliation lawsuit filed against both last year by Kathryn Hanegraaf, a 28-year-old woman who worked at his eponymous boutique on the 1100 block of Walnut Street from September 2012 until March 2013.

The settlement, under which Morelli and his company agreed to the court entering judgment against them, includes a $125,000 payment to Hanegraaf, inclusive of all attorney fees and costs, and it specifically states that there is no admission of liability of wrongdoing on the part of Morelli or the company.

The front door of the Paul Morelli jewelry store on Walnut Street. (Photo by Claire Hoffman)

In her complaint, Hanegraaf outlined a series of allegations against the 67-year-old jeweler. In court papers and again in a statement to Philadelphia magazine, Morelli denies all of the allegations.

Hanegraaf claimed in her complaint, filed in federal district court, that the jeweler made sexual comments about her body and repeatedly got “abnormally physically close to her.” She alleged that he “pressured her to have sex with him” while they were in Tucson together for a trade show, and that while on the trip, he smacked her buttocks and initiated a game of “dirty hangman” where the word to be discovered was “pussy.” In a court filing, Morelli and his company disputed those claims, and said her allegations did not rise to the level of sexual harassment.

On some occasions, Hanegraaf maintains that she told Morelli that he was being inappropriate. Other times, she just stayed silent.

“This was my first full-time job,” Hanegraaf tells us. “My first reaction was just to ignore what was happening and not make a big deal out of it, because I really liked ‘the job’ part of my job. It was the first time having an income I could count on, and I had benefits. I thought I could just handle it. But I couldn’t.”

She alleged in her court filing that, two days after the Tucson trip, she complained to a manager at the shop, who happened to be Morelli’s son-in-law, John Winkler. Hanegraaf also alleged that Winkler apologized to her and told her he did not forewarn her about Morelli. “I didn’t want to freak you out,” is what Winkler is alleged to have told her.

In the company’s response to those allegations in court, it admitted that Hanegraaf spoke to Winkler about the trip, but denied that Winkler’s response was as she characterized it — and stated that she told Winkler “that she did not want him to do anything” about Morelli.

In March 2013, the month after the Tucson trip, Hanegraaf claims that Morelli slapped her buttocks again and that he intentionally hit her there with his gym bag one week later.

Hanegraaf says she complained again to management and that she was fired a few days later — the retaliation part of her allegations.

Looking back on her time at the shop, Hanegraaf says she remembers going home to her South Philly apartment in tears on many occasions. One of her roommates at the time, Megan Slattery, remembers one night in particular when she sat with Hanegraaf, who was beside herself over what she said was happening at work. Slattery says that she gave Hanegraaf advice on how to deal with the alleged sexual harassment.

“I told her to document everything that happened to her,” Slattery says. “Because after a while, her memory might get foggy.”

And Christine McCarthy, who has known Hanegraaf for 15 years, says that her old friend would call her regularly in California to talk about Morelli.

“She was always so charismatic and outgoing and lighthearted,” says McCarthy. “But then something changed. I could tell something was wrong. And soon, she told me that her boss was doing all these inappropriate things. She said he grabbed her ass. She was really distraught.”

After leaving the company, Hanegraaf bounced around in the service industry before opening her own photography studio in Chestnut Hill. Meanwhile, her attorney filed a complaint with the Equal Employment Opportunity Commission, which eventually issued Hanegraaf a “right to sue” letter, enabling her to file her action in federal court.

She says that after receiving Morelli’s offer to settle, she wasn’t sure that she wanted to. Half of her wanted to confront Morelli in a court of law. The other half of her just wanted it to be over.

“Before everything was finally and officially over, I couldn’t even talk about this without getting emotional and crying about it,” Hanegraaf says. “Now, I feel empowered, and if talking about it means that I warn another woman about this sexist fucking scumbag, well, it’s more than worth it.”

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