Rhude founder Rhuigi Villaseñor sued by stakeholder for allegedly mishandling funds

The founder of Los Angeles luxury brand Rhude, Rhuigi Villaseñor, has been sued by a minority stakeholder in the business, as revealed in court documents filed at the US District Court in the Central District of California.

Villaseñor is understood to be facing a lawsuit from George Robertson, who holds a 20 percent stake in Rhude and has previously collaborated with the designer on past collections.

In the suit, Robertson alleged that Villaseñor had mishandled Rhude’s money, using much of it for his own personal expenses under the guise of advertising, among other shocking claims.

He was initially brought on as a partner to Villaseñor in 2016 after having invested 50,000 dollars to help develop the label.

Among his claims, Robertson alleged that Rhude’s advertising expenses were “bloated”, and suggested that Villaseñor was using much of the brand’s money to back his own lifestyle.

It was also claimed that Villaseñor had reported a revenue of 30 million dollars in 2020 and then “over 30 million dollars” in 2021. However, according to Robertson, Rhude’s tax returns were “10 million dollars in 2020 and 18 million dollars in 2021”.

The tax returns suggested that Rhude had spent nearly 27 percent of its revenue on “advertising” in 2020, a significant leap up from the 5 percent typically spent by brands on this division.

Villaseñor believed to have pocketed private sales

Villaseñor was further accused of pocketing the funds of “private sales” to “VIP clients”, such as celebrities and musicians, the funds of which are said to have directly benefited Villaseñor’s holding company RMV and the designer himself.

One example cited in the lawsuit was in reference to a September 2020 sale, when Villaseñor was believed to have sold 15,331 dollars worth of Rhude products, only for the funds to be invoiced to RMV over Rhude.

Robertson additionally claimed that Villaseñor had attempted to cut him out, reporting that the designer was jealous of the credit the Rhude team attributed to him and his control over the brand’s designers.

The suit read: “Villaseñor sought to eliminate Robertson’s creative contributions to the brand, assert his own vision and keep all profits for himself.”

Other claims centred around possible venture’s that looked to cut Rhude as a whole, including the brand’s collaboration with Zara entitled ‘Rhu’, which Robertson said was an “unlawful scheme to misappropriate and dilute the Rhude trademark for his personal benefit”.

The suit closely follows the announcement that Villaseñor was stepping down as creative director at Bally. While the designer has not made a definitive comment on the accusations, he did share the date and time of Rhude’s upcoming Paris Fashion Week show in an Instagram post with a caption stating: “Come to my show if you want to talk.”