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OCT
18
1 years

Ari Emanuel Sues Over Clothing Store Investment Gone Bad

In a lawsuit filed Thursday, the Emanuels claim that Mark and Jill Freeman induced them into investing in a clothing store but misappropriated the company's revenues and inventory.

Ari Emanuel

WME superagent Ari Emanuel and his wife Sarah have sued the proprietors of a clothing store over an alleged misuse of their investment of more than $600,000.

In a lawsuit filed Thursday in Los Angeles Superior Court, the Emanuels claim that Mark and Jill Freeman induced them into investing in a trendy L.A. clothing store but misappropriated the company's revenues and inventory.

Read the full complaint here.

The Freemans, who own and operate the L.A.-based Jill Roberts stores, are alleged to have approached the Emanuels in early 2010 to invest in Seaton, another clothing store they intended to open. The lawsuit states that the Emanuels agreed to invest $200,000 for a 50 percent interest in Seaton and that they agreed to loan Seaton $200,000 and later agreed to a second $200,000 loan. 

But the Freemans allegedly told the Emanuels in September that the business was not profitable and that it would shut down at the end of 2012. So Ari asked for the books and records of the store, and he alleges in the suit that a financial review has revealed "extensive evidence that the Freemans perpetrated a major fraud against Plaintiffs," including "numerous acts of deceit, concealment, embezzlement, misappropriation, self-dealing and unlawful competition."

These acts allegedly include unauthorized loans from the company to the Freemans and Jill Roberts, as well as unauthorized sales of large volumes of Seaton merchandise to Roberts "at prices that were far below market, which severely impaired Seaton's financial position while simultaneously guaranteeing windfall profits to Jill Roberts on resales," according to the suit.

"As a result of the Freemans' fraudulent, unlawful and malicious actions, Plaintiffs have been deprived of their investment and of the profits they would have received from their investment if not for the Freemans' wrongdoing," the lawsuit states.

The suit, filed by attorneys Patty Glaser, Paul Salvaty and Brad Parr of Glaser Weil, alleges causes of action for fraud, conversion, breach of contract and breach of fiduciary duty.

Email: Matthew.Belloni@thr.com

Twitter: @THRMattBelloni