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Dreams for Princess Diana's gowns die with bankruptcy

TAMPA — The princess was gone, but her dresses were supposed to travel the world, keeping her legacy alive.

They were going to inspire girls, help raise money for charity and honor the memory of Princess Diana.

After Tampa entrepreneur Maureen Rorech Dunkel bought 14 of Diana's evening gowns in 1997, she talked about international exhibits, museum showings, a series of children's books. She even planned a $35,000-per-couple champagne fundraiser at Britain's Kensington Palace.

But her fairy tale fell short.

Some of the dresses — which had toured India, danced with John Travolta, dined at the White House — wound up being displayed in Downtown Disney. Others were exhibited in Branson, Mo., and at a former furniture store in Hyde Park Village. Two years ago, to get a $1.5 million loan for a real estate development, Dunkel used the gowns as collateral.

On Thursday, they will go to the highest bidders. A Toronto auction house will offer Diana's dresses to the public. Opening offers are expected to range from $175,000 to $1 million a gown. More than enough, Dunkel's attorney said, to pay off her debts.

• • •

Dunkel, 50, a former vice president of an executive staffing company she helped form in Tampa, paid $670,000 for 14 of Princess Diana's dresses at a 1997 charity auction at Christie's in New York. The outfits included the blue velvet gown Diana wore to meet President Ronald Reagan; the one she wore on the cover of Vanity Fair; the pink silk one that toured India.

Two months after Dunkel bought the dresses, Diana died in a Paris car crash — making the gowns practically priceless.

Dunkel formed the People's Princess Charitable Foundation to take the dresses around the world.

"The organization intends to perpetuate the charitable objectives supported by the late Diana, Princess of Wales," according to the group's IRS form. Income from exhibits would help fund treatment for people with cancer and AIDS and victims of land mines.

Expenses soared that first year. Dunkel paid more than $1 million for legal fees, public relations consulting and design and construction for exhibits, according to tax documents. Grants and allocations totaled $144,000. Dunkel loaned the foundation more than $1 million to keep it afloat.

• • •

For a few years, the gowns toured Canada, Britain and New Zealand. By 2001, Dunkel said the foundation had raised more than $1.5 million. It had made contributions to Metropolitan Ministries and the Boys and Girls Club.

But costs continued to climb; and revenue fell.

"Insurance on the dresses during transportation was very high, and attendance and retail sales at each venue were well below projections," said the group's 2001 tax filing. "The exhibit was shown at three venues, however none provided a profit."

Dunkel kept bankrolling the foundation. By 2002, she had loaned the Diana dresses to Kensington Palace, Diana's home in London from the time of her divorce from Prince Charles until her death. In exchange for the dresses, the royal family told Dunkel she could hold charity fundraisers at the palace.

"Next year, she will become the first commoner permitted to use one of Britain's royal palaces for a private event," the Times reported in December 2003.

Dunkel had big plans: a reception at the Tower of London, dinner in the room where Queen Victoria was christened, a champagne toast in the Queen's Gallery. She donated tickets to local charity auctions. She estimated the event would raise $3 million.

Because of sponsorship problems, the event fell apart. The foundation spent $115,878 preparing for the gala. Then it had to refund $47,250 in tickets.

Dunkel promised to reschedule the event. "So the charities benefit and Princess Diana's memory is honored."

Instead, 2004 tax documents show, the Princess foundation borrowed $38,000 from the Bank of Tampa and $50,000 from Patricia Sullivan, former wife of Outback Steakhouse founder Chris Sullivan.

• • •

Dunkel began to dabble in real estate development a couple of years later, investing in a planned upscale housing project called the Enclave at Palma Ceia. Developer Thomas Everett Lamb wanted to refurbish an old mansion and subdivide its land into seven lots. New houses, he said, would include at least 3,600 square feet of space and start at $1.2 million.

When costs started climbing, and the real estate market collapsed, Dunkel used the princess dresses as collateral to secure a $1.5 million loan from a corporation called HRH Ventures, which is managed by Patricia Sullivan.

Like the party at the palace, the housing project never happened.

HRH Ventures sued Dunkel and her Princess Foundation in October 2009 — and asked for five of the Diana dresses. In January 2010, Dunkel filed for bankruptcy. Court records show that besides the $1.5 million she owed HRH, other claims included a total of more than $1 million to Sumter Homes, Northstar Bank, Bank of Florida, Holland & Knight, Bank of America and others.

"A lot of her money was spent on that real estate development that went sour," said Dunkel's attorney, Jeffrey Warren. "But she worked out a plan to pay all her creditors in full. After these dresses are sold, her creditors will be paid first. And the dresses are far more valuable than what she owes."

Dunkel's dreams for the gowns may have died, but once again Diana is coming to the aid of someone in trouble.

Times researcher Natalie Watson contributed to this report.

More information

For more information about the auction of Princess Diana's dresses, go to www.waddingtons.ca/auction/23june2011f.

Dreams for Princess Diana's gowns die with bankruptcy 06/21/11 [Last modified: Wednesday, June 22, 2011 9:16am]

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