Imogene + Willie investors accuse founders of fraud
Investors in high-profile Nashville-based denim retailer Imogene + Willie are accusing the company's founders of fraud and mismanagement of company money to fund their own lavish lifestyle.
Colorado residents Robert Lamey and Paige Heid, minority members and the largest creditors of Imogene + Willie, filed an emergency motion this week in U.S. Bankruptcy Court in Colorado to appoint a Chapter 11 trustee to take control of the company launched seven years ago by Carrie and Matthew Eddmenson.
According to the filing, Lamey and Heid invested $1.5 million in Imogene + Willie in 2013 for a 46.5 percent stake in the company, with the caveat the money would be used to manufacture more clothing, hire new employees, open additional stores and grow the business by expanding offerings beyond jeans and T-shirts.
The Eddmensons instead used the money on personal luxuries such as shopping trips to Barney's and Nordstrom, a motorcycle and a home renovation, the filing says.
“After the (company) received the money Lamey and Heid had lent it, the Eddmensons immediately began spending that money for their own personal enrichment while concealing from Lamey and Heid that they were taking the (company’s) money as their own,” the filing says.
An emailed statement from Imogene + Willie to The Tennessean called the filing "erroneous."
"The company is planning to sue Bob Lamey and Paige Heid for breach of fiduciary duties and to invalidate what Lamey and Heid contend to be a loan, which was in actuality, an equity investment in the company," the statement said.
The Eddmensons also own 46.5 percent of the company, and 41 Lyons Plain Road LLC owns the remaining 7 percent, according to court papers. The business entity Imogene + Willie LLC was registered in Colorado after Lamey and Heid’s investment in the company.
The latest financial statements provided to Lamey and Heid show 61 percent of Imogene + Willie’s roughly $224,000 in bills are 90 days past due, according to the filing.
In court papers, Celia Hughes, Imogene + Willie’s former chief financial officer, said the company’s accounting books contained many “red flags.”
She cited a $10,000 motorcycle, spa trips and home renovations such as a new bath, doors, furnishings and window treatments as examples of the Eddmensons’ mismanagement of company funds.
Hughes resigned from the company in January 2015.
The filing also alleges the Eddmensons relocated Imogene + Willie’s workshop to Los Angeles using company funds without notifying the other managers, including Lamey and Heid, as required under an operating agreement.
Lamey and Heid said Imogene + Willie’s brick-and-mortar stores have “suffered mightily under the Eddmensons' gross neglect.”
"The stores barely have sufficient merchandise because the Eddmensons have failed to ensure the Debtor’s manufacture of sufficiently finished goods ready for sale," the filing says.
Imogene + Willie, which manufactures its denim in the U.S., opened a retail store at 2601 12th Ave. S. in 2009. The company is often cited with helping to spur retail activity in Nashville’s 12South neighborhood, which has since emerged as a major shopping destination.
Imogene + Willie has an additional location in Portland, Ore., and its denim is sold at high-end retail stores across the country.
Reach Lizzy Alfs at 615-878-5766 and on Twitter @lizzyalfs.