eBay to Riches

There are 104,872 emails on Holli Pahlen’s phone. By the end of the day—pick a day, any day—the 33-year-old thrift-store junkie who runs an eBay resale boutique from her remote northern hometown of Warroad, Minnesota (pop. 1770), will receive a couple hundred more. Some will be inquiries. Many will flag a new sale: to a celebrity here (Kim Kardashian and country singer John Prine are past clients), a Russian oligarch there, a doctor on Lake Shore Drive, perhaps, or a housewife in Latvia who just can’t live without, oh, say, a Louis Vuitton dress Pahlen picked up, like all her finds, for pennies on the dollar. “My dad always told me, ‘Buy low, sell high,’” says Pahlen, who made her first resale profit at age 10 by selling a Beanie Baby.

Since then, her wares have grown to include vintage collectibles, furniture (including a cache of bright-yellow Herman Miller chairs she bought off a farmer for $20 each), and the category she is best known for: couture clothing. A few years back, Pahlen begged, borrowed, and maxed out her credit cards to buy thousands of seized designer items from a U.S. government auction. Today, a nearby warehouse is filled with neatly stacked boxes of Chanel, Yves Saint Laurent, Gucci, and other coveted names that she sells at up to 70 percent off retail to frugal fashionistas around the globe. Total sales for 2012: $648,000. Last year: $858,000. This year? Well, let’s just say she isn’t worried about having traded in the hand-me-down beater she used to drive for a brand new GMC Denali last year. (“It’s my one indulgence,” she says.)

That and watching her sales come in. Recently, Pahlen shipped out four items to Kerry Taylor Auctions in London: a skirt, jacket, bag, and pair of boots by British designer Alexander McQueen, whose couture has been shown at the Metropolitan Museum of Modern Art and gained collector status after his 2010 suicide. Though she usually sells directly on eBay, Pahlen partners with Taylor to sell her most special acquisitions. Last year, a McQueen dress that she bought for $50 (identical to one worn by Lady Gaga) sold for $13,000. On June 24, bidding begins on the McQueen quartet. She paid $1,000 for the set; it will likely bring in 15 times as much.

Alexander McQueen Set
The four-piece set Pahlen bought for $1,000 is likely to bring in $15,000.

“I’ll get up early to watch,” says Pahlen—just as she and her dad, Scott, did for the sale of the so-called Lady Gaga dress. (Recalls Scott: “We whooped at every bid.”)

And so goes another chapter in Holli’s thrift-store-rags-to-runway-riches story, one that links the rarified world of haute couture with a small-town hockey mom who drives her boys to the rink in jeans and a T-shirt—she’d love to wear cutting-edge fashion, she says, but “I’d get funny looks at the rink”—and gets a little richer every time another sale makes her phone go ka-ching. (Literally; it’s an app.)

“Holli always had an eye for items that were collectible, unusual, or undervalued,” says Scott, who owns Pahlen Realty in Warroad (where Holli’s mom, Carolyn, and older brother, Bryan, work). When Holli and Bryan were teenagers, Scott says, he took them to wealth-management seminars and urged them to use their savings to buy rundown properties on the cheap, put in sweat equity to renovate them, then flip them for a profit: “We made them work for things and told them the world is full of opportunity.”

As a kid, Holli begged her brother to take her to yard sales, where she picked up plates, glasses, LPs—anything that felt retro cool. While a student at the University of Minnesota in Duluth, she rented a booth in Canal Park and started selling her vintage collectibles. After she graduated with a degree in business marketing, she moved to Seattle for a year before returning to Minneapolis. Unable to find a steady job, Holli supplemented her meager income by $500 or so a month by hitting garage sales and reselling her purchases on eBay.

In her free time, she listened to motivational CDs by the likes of Donald Trump and Wayne Dyer. “For years I didn’t allow myself to listen to music,” says Holli. “My friends were like, ‘You are so weird. Why do you listen to this stuff?’ But honestly, it changed the way I think. I discovered I like risk. I thought, ‘Why are you so afraid? Just do it!’”

It was in just that mindset that in 2011, acting on a tip from a Star Tribune reporter, Holli looked into the mind-boggling shopping habits of a convicted corporate embezzler named Sue Sachdeva. By then, she had made a successful career with Edina Realty, fallen in love with Wayzata native
Bobby Brellenthin, and moved with him back to Warroad to raise their young sons. In between changing diapers, she parked herself in front of her computer and researched Sachdeva.

Once a well-respected wife, mother, and CFO at a family-owned headphone manufacturer based in Milwaukee, Sachdeva was arrested in 2009 for embezzling $34 million and spending it on art, vacations, home renovations, and mostly couture clothing. To hide her purchases from her family, she hired staff to unpack and store the items—new, with tags, and often in multiple sizes of the same style—in an enormous warehouse. After she was caught, Sachdeva was diagnosed with bipolar disorder and began serving an 11-year sentence in federal prison. In 2011, the government announced it would auction off some 22,000 items from Sachdeva’s stash to help repay her victims, including company shareholders and assembly-line workers who benefitted from profit sharing.

In November 2011, the first items were listed on the auctioneer’s site and Holli—with a list in hand of what she wanted—began bidding.

At first, in the weekly auctions, the pieces were sold individually or two at a time for $200 to $500. Holli bought what she could, often doubling or tripling her money by re-selling on eBay. Soon, however, the items were bundled in packages of 10, 20, even 100 items, with winning bids up to $10,000. The opportunity was immense, but so was the risk. “I knew I could sell this stuff, but I didn’t know how long it would take,” Holli recalls. She received a $50,000 line of credit from one bank and borrowed $50,000 against her

home from another. She used credit-card advances for another $50,000 and blew through her savings. Her brother invested $5,000. Her parents cleaned out their retirement fund—an act of faith that made her mom nervous.

“Carolyn is not as much of a risk-taker as I am. She had her reservations,” Scott explains. “But there was no hesitation on my part. Holli was 100 percent sure this was going to work out.”

Well, maybe 98 percent sure. Over the course of eight months, she bought a semi truck full of Sachdeva loot. “I got really scared,” says Holli. “I owed everybody.” She hired six employees to help her process and post the items online. “I put up a huge poster in my office that said DEBT,” she recalls. “It started at more than $400,000. Every week, I would cross it off and put in the new number. Within a year, it was down to zero.”

Today, Holli sells about 25 pieces a day—a rate that will keep her in business selling her Sachdeva stash for at least a couple more years. After that, who knows? “Everyone says I will find another embezzler,” she jokes. More and more, women who first bought Sachdeva pieces from Holli now ask her to sell their own unwanted treasures, which she does for a fee. In all this time, despite her love of fashion, she hasn’t kept a single thing for herself. “I’d feel too guilty,” she says. “I’d rather sell something and use the money to take care of my family.”

Instead, Holli writes checks to her dad for half of anything she sells that he helped buy (meaning, Scott notes, he gets to spend less time chasing real-estate deals and more time “chasing fish”). She checks her never-ending emails, hits garage sales, and spends time on the lot she bought near her parents’ cabin on Lake of the Woods, where she likes to hunt and fish with her family. When the land is paid off, she and Brellenthin plan to build their own place. “We love it there,” Holli says. The only drawback: terrible cell reception. “That bugs me,” she admits with a laugh. Odds are, opportunity will still find a way to ka-ching.