Multimillionaire Carolyn Rafaelian sues Bank of America and seeks $1.1 billion

YEREVAN, July 30. /ARKA/. Alex and Ani, the Rhode Island-based jewelry company founded by multimillionaire Carolyn Rafaelian, has filed a suit against the Bank of America, one of its lenders, saying it is violating federal law by engaging in gender discrimination against the women-led company, Forbes reports.

According to the report, The lawsuit, filed on Thursday, seeks $1.1 billion in damages and claims that Bank of America’s “gender bias and greed” poses an “existential threat” to Alex and Ani’s business.

According to the lawsuit, Bank of America falsely declared in December 2018 that Alex and Ani defaulted on its $170 million loan, which it took out to buy a factory, and then cut off its access to a $50 million revolving line of credit. Alex and Ani did default a few times, but Bank of America waived the default and amended their agreement, the company says. (A lender and borrower can come to an agreement to avoid a default.)

“For more than six months now, Bank of America has been both driving Alex and Ani towards bankruptcy and milking it for literally tens of millions of dollars in fees,” the lawsuit is cited by Forbes. “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 let Bank of America charge whatever it wanted for BofA’s putative ‘services.’”

Bill Halldin, a spokesperson for Bank of America, denies the gender discrimination allegations. He says that BoA served as administrative agent on the company’s credit facility for a group of seven banks, which have taken the appropriate steps to enforce the terms of that agreement.
Alex and Ani alleges in the complaint that after cutting off its revolving line of credit, Bank of America started charging the company for an unused revolver fee every month, increased the interest rates on all the loans, and required the company to hire and pay for a chief restructuring officer, who is male. This cost Alex and Ani over $1.1 billion in expenses, lost revenues and lost market value, the company claims.  

The suit also puts forth an additional theory for its financial troubles that feels like it was cooked up by a conspiracy theorist: Warren Buffett, whose Berkshire Hathaway is the largest shareholder in Bank of America, allegedly invested, the complaint says, in a Chinese jewelry company that makes Alex and Ani knockoffs. Warren Buffett could not be reached for comment at press time.

Rafaelian, 52, started spiritual bracelet company Alex and Ani from her father’s jewelry factory in Providence, Rhode Island, in 2004. The jewelry firm, which is named after Rafaelian’s two older daughters, employs 1,500 people and distributes through 100 of its own brick-and-mortar stores, plus department stores like Neiman Marcus and Nordstrom.

The lawsuit claims that the relationship between Alex and Ani and Bank of America was “comfortable” between January 2016 and December 2017, which is when the company’s CFO was a man. Under the male CFO, who lasted only a year, Bank of America “raided” Alex and Ani by charging bloated fees and “nonsensical” consulting arrangements and gave extensions on its credit lines, the lawsuit says.

The complaint filed by Alex and Ani alleges that Bank of America has “two time-tested” values: “greed and sexism.”

Bank of America spokesperson Hallidin is quoted by Forbes as saying  that as the complaint itself notes, the company has faced serious financial challenges for nearly two years, and the banks have worked closely with the company during this time. Bank of America’s demonstrated record of support for diverse businesses is well-noted and widely recognized.

Alex and Ani’s lawyer, Harmeet Dhillon, disagrees, claiming the company’s executives were treated differently because they are women. -0---

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13:46 07/30/2019