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MajorsJul 26, 2019
Alex and Ani Sues Bank of America for Discrimination
The jewelry company accuses the bank of discriminatory lending practices against a women-led company and is asking for $1 billion in damages.
Alex and Ani founder Carolyn Rafaelian was featured in Bank of America advertisements highlighting its commitment to diversity in lending. The company filed a lawsuit against the bank Wednesday for alleged discriminatory lending practices.
New York—Alex and Ani LLC filed a lawsuit against Bank of America Corp. Wednesday, alleging lending discrimination against the women-led company and asking for $1.1 billion in damages.
According to the lawsuit, filed in federal court in New York, Bank of America granted the company a line of credit in 2016 to fund its operations but declared Alex and Ani in default in December 2018, allegedly without warning.
The suit claims that Bank of America breached the credit agreement by “fraudulently alleging a default that didn’t exist,” as Alex and Ani made timely payments and complied with the terms of the agreement.
Cutting its credit line cost the company more than $1 billion in expenses, lost revenue and reduced market value, as per the court filing.
The lawsuit claims the bank’s actions are “driving Alex and Ani towards bankruptcy and milking it for literally tens of millions of dollars in fees. The endgame is clear: Bank of America wants the women out of power at Alex and Ani.
“It wants to bring back the good old days, when a male Alex and Ani CFO [Bob Woodruff] let Bank of America charge whatever it wanted for BofA’s putative ‘services.’”
Initially, the suit states, Bank of America and Alex and Ani had a “comfortable” relationship, with the financial institution featuring Alex and Ani founder Carolyn Rafaelian in advertisements to showcase its commitment to diversity to the public.
Despite its “glossy marketing,” the suit alleges, the bank is “decidedly retrograde in its views toward women, toward people of color and toward other protected groups.”
The relationship allegedly began to sour in December 2017, when Andrea Ruda, a woman, stepped in as Alex and Ani chief financial officer after Woodruff left the company.
Under Woodruff’s year-long tenure, the bank allegedly took in millions of dollars in fees, consulting costs and other reimbursements from Alex and Ani, but he made financial and operational decisions for the company that were “unjustifiable--even reckless,” the lawsuit states.
Ruda, on the other hand, is described as “young, no-nonsense and driven to cut costs and trim the fat.” She slashed payroll costs and reviewed productivity to the benefit of then-struggling company’s bottom line, and by extension, the bank’s investment.
However, the lawsuit states, the company has been treated unfairly since Ruda’s appointment as CFO because the bank “has a gender bias problem,” pointing to the nearly $211 million in discrimination penalties that the bank has
paid to various companies since 2000.
The suit claims that as soon as Ruda started as CFO, Bank of America began advocating for the hiring of expensive outside consultants, specifically a male chief restructuring officer, to run Alex and Ani’s finances at the company’s expense.
As her tenure stretched on, she found the bank to be “increasingly uncooperative,” despite her "herculean--and objectively successful--efforts to shore up and turn around Alex and Ani’s finances.”
In the company’s statement on the lawsuit, Bank of America spokesman Bill Halldin said the loan is spread out across seven banks, including Bank of America, which also acts as an administrative agent.
“As the complaint itself notes, the company has faced serious financial challenges for nearly two years. The banks have worked closely with the company during this time,” he said. “Bank of America’s demonstrated record of support for diverse businesses is well-noted and widely recognized.”
In March, the bank announced that it had pledged $100 million to the Tory Burch Foundation Capital Program in 2019, a program that provides loans to women entrepreneurs.
Alex and Ani did not respond to National Jeweler’s request for further comment on the lawsuit by press time.
The company is represented by Harmeet Dhillon of Dhillon Law Group Inc., who has taken on several high-profile First Amendment cases.
The case is Alex and Ani LLC v Bank of America NA, 19-cv-6929, U.S. District Court, Southern District of New York.
The suit claims that as soon as Ruda started as CFO, Bank of America began advocating for the hiring of expensive outside consultants, specifically a male chief restructuring officer, to run Alex and Ani’s finances at the company’s expense.
As her tenure stretched on, she found the bank to be “increasingly uncooperative,” despite her "herculean--and objectively successful--efforts to shore up and turn around Alex and Ani’s finances.”
In the company’s statement on the lawsuit, Bank of America spokesman Bill Halldin said the loan is spread out across seven banks, including Bank of America, which also acts as an administrative agent.
“As the complaint itself notes, the company has faced serious financial challenges for nearly two years. The banks have worked closely with the company during this time,” he said. “Bank of America’s demonstrated record of support for diverse businesses is well-noted and widely recognized.”
In March, the bank announced that it had pledged $100 million to the Tory Burch Foundation Capital Program in 2019, a program that provides loans to women entrepreneurs.
Alex and Ani did not respond to National Jeweler’s request for further comment on the lawsuit by press time.
The company is represented by Harmeet Dhillon of Dhillon Law Group Inc., who has taken on several high-profile First Amendment cases.
The case is Alex and Ani LLC v Bank of America NA, 19-cv-6929, U.S. District Court, Southern District of New York.
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