The founder of Los Angeles-based luxury brand Rhude, Rhuigi Villaseñor, has been sued by a minority shareholder of the company. This is according to court documents filed with the US District Court in the Central District of California.
Villaseñor is facing a lawsuit from George Robertson. Robertson owns a 20 percent stake in Rhude and has worked with the designer in the past.
Among other things, Robertson accused Villaseñor of using much of Rhude’s funds for his own expenses under the guise of advertising. He was originally brought on to Villaseñor as a partner in 2016 after investing $50,000 to help develop the label.
Among other things, Robertson claimed that Rhude’s advertising spend was “excessive” and accused Villaseñor of using a large portion of the brand’s money for his own lifestyle.
It also said Villaseñor reported earnings of $30 million for 2020 and “over $30 million” for 2021. However, according to Robertson, Rhude’s tax returns totaled “$10 million in 2020 and $18 million in 2021.”
Tax returns show that Rhude spent nearly 27 percent of its revenue on “advertising” in 2020 — a significant jump from the 5 percent that brands typically spend on advertising.
Villaseñor is said to have received private sales proceeds
Villaseñor was also accused of pocketing the monies from “private sales” to “VIP customers” such as celebrities and musicians, with the monies said to have directly benefited Villaseñor’s holding company RMV and the designer himself.
An example cited in the lawsuit relates to a September 2020 sale in which Villaseñor allegedly sold $15,331 worth of Rhude products, but the money was settled through the company RMV.
Robertson also claimed Villaseñor tried to shut him out and reported the designer is jealous of the recognition the Rhude team gives him and his control over the brand’s designers. “Villaseñor sought to eliminate Robertson’s creative contributions to the brand, impose his own vision and keep all profits for himself,” the lawsuit reads.
Other allegations related to possible ventures aimed at completely dismantling the Rhude brand, including the brand’s collaboration with Zara under the name “Rhu”, which Robertson described as “an unlawful scheme to misappropriate and dilute the Rhude brand for his personal gain ” referred to.
The lawsuit follows the announcement that Villaseñor is stepping down as creative director at Bally. While the designer hasn’t definitively commented on the allegations, he did share the date and who in an Instagram post captioned, “Come my show if you want to talk.” Time of Rhude’s upcoming show at Paris Fashion Week.
This translated post previously appeared on FashionUnited.uk