Thursday, June 11, 2009

Madonna's Trainer May Need to Ask for a Loan (or to borrow her accountant)

Personal trainer to the likes of Madonna and Gwyneth Paltrow, Tracy Anderson is lousy with her personal and business finances.

In an Indianapolis Monthly magazine exposè, Tracy has been sued by creditors six times in 27 months, her studios have closed, the 12 "Hybrid Body Reformer" machines she would eventually use to convince Gwyneth and Madonna to become her clients were repossessed. And that's just the tip of the iceberg.

Here's a small sampling of her financial mess:

Tracy and husband Eric bought a four-bedroom, 2 1/2-bath home in the Oakmont subdivision of Noblesville, where they settled into life with their new baby boy, Sam. In July 2001, the Andersons opened a business together—the Young Artists & Athletes Development Center, a gym and dance studio housed in a 7,000-square-foot Fishers warehouse facility near 121st Street and Cumberland Road. It seemed like life was on the right track.

Soon, though, the Andersons began struggling financially. The first sign of trouble, in 2001, looked innocuous enough: The Oakmont Homeowners Association assessed a lien on their home after they failed to pay a $480 assessment. Then came a court judgment for failing to pay a public-relations professional in Zionsville who had helped them publicize their first business, and another for failing to pay for advertising in a fitness magazine.

Over the following months and years, the city of Noblesville assessed several liens for unpaid sewer bills. Meanwhile, Tracy went from driving a minivan to cruising around in a luxury car, and her neighbors took notice. “Neighbors wondered how she could drive a Mercedes SUV, having never paid for homeowners-association dues,” recalls Bob Lutz of Kirkpatrick Management, which oversees the Oakmont subdivision.

Financial matters were not any better at work. According to court documents, the Andersons were several months behind in rent for their Young Artists & Athletes studio. Facing mounting debts, they closed their first business and opened a second, called Hardcore Pilates, in the Village Square shopping center in Fishers.

But they fell behind in rent there, too. In March 2004, 17 months after Hardcore Pilates opened, the Andersons’ landlord sued them for back rent; shortly after that, their former landlord at Young Artists & Athletes also filed a lawsuit.

On February 9, 2005, a judge ordered the Andersons to pay their first landlord $84,375. The next day, another judge ordered them to pay $250,000 in missed rent payments to their second landlord. The same day that judgment was issued, Tracy formed a new company with a new business partner, Deana Grabill. The business they opened together, East of LA, had two locations—Fishers and Los Angeles, where Grabill was based.

Then, in April 2005—two months after East of LA was formed—Eric and Tracy Anderson filed for Chapter 7 bankruptcy.


In London, Madonna became Anderson’s second high-profile client. But shortly after Anderson and Barber returned to Indiana, the fitness instructor’s history of ignoring bills finally landed her in jail. For all the hundreds of thousands of dollars’ worth of debt in her past, the warrant for her arrest was issued on a $271.32 claim from a chimney sweep. On December 21, 2006, Anderson was arrested and held at the Hamilton County Jail. That same day, Barber posted bond and paid the chimney sweep, and she was released.


Anderson’s emerging success hasn’t ended her money troubles in Indiana. In July, the same month Harper’s Bazaar touted Anderson’s methods, the Oakmont Homeowners Association—owed thousands of dollars in overdue assessment fees—took ownership of the Noblesville home the Andersons shared. And in November, the Ford Motor Credit Company sued the couple, alleging they still owe $5,014 for a Mazda MPV they bought in September 2005.

If you recall, she and Gwyneth were going into business together, Gwynie may want to reconsider.

Tracy, who opened $900-a-month workout studio in New York City earlier this year, admits to being a poor businesswoman.

"I know that I am not a great businesswoman and have made many mistakes in the past," she says. "The most painful part of this is that no one knows the entire truth," she says. "Clients and the public don't see what goes on behind the scenes."


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