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Fashion label Ralph & Russo may face criminal probe over ‘£176,000 pension fund raid’

The founders of the luxury fashion label that designed Meghan Markle‘s £56,000 engagement dress have been reported to the Serious Fraud Office over the collapse of the company, The Mail on Sunday can reveal.

Ralph & Russo’s administrators last night confirmed they had alerted the SFO to allegations of financial wrongdoing, including claims that the company’s pension pot was raided before it collapsed last March.

The MoS last week revealed sensational court documents that claimed that Tamara Ralph and Michael Russo had been accused of plundering millions of pounds from the fashion house to bankroll their jet-set lifestyles. 

Ms Ralph has denied the allegations, calling them ‘misconceived and demonstrably false’. She is yet to file her response with the court, but has confirmed she is defending the claim.

The MoS last week revealed sensational court documents that claimed that Tamara Ralph and Michael Russo had been accused of plundering millions of pounds from the fashion house to bankroll their jet-set lifestyles

The documents also included an extraordinary claim that, on Ms Ralph’s watch, about £176,000 was ‘appropriated and/or diverted from the company pension scheme’ between October 2020 and March 2021. 

It was also claimed that when it collapsed, the firm owed the taxman £2.8 million after money was deducted from staff pay packets but not passed on to HMRC.

In a statement to the MoS, the administrators said they had reported the case to both the SFO and the Pensions Regulator, which has its own prosecution powers.

The revelation comes as a former employee hit out at the company, claiming that:

  • Staff urged the company’s human resources department to ask Ms Ralph to stop posting selfies of herself on private jets on Instagram as it was angering suppliers who were owed large sums in late payments;
  • One Italian supplier was so furious at being owed money that he flew to the UK, arriving unannounced at the company’s opulent London headquarters to demand immediate payment;lSalaries were paid late for at least five consecutive months.

After its launch in 2010, Ralph & Russo enjoyed a meteoric rise to become one of Britain’s most celebrated luxury fashion houses. 

As well as Meghan Markle, its A-list clients included Angelina Jolie, Beyoncé, Penelope Cruz, Nicole Kidman and Gwyneth Paltrow.

The label, however, was plunged into administration earlier this year, with debts of £23 million.

Glamorous Ms Ralph, 39, blamed the pandemic, but the court documents allege that vast sums were raided from the firm. Mr Russo is accused of extracting £2.6 million from the firm in so-called directors’ loans, while it is claimed Ms Ralph received £195,436.

One former employee, who asked to remain anonymous, last night spoke of his anger at the way the company was managed in the years before it went bust. ‘Everybody is frustrated and angry, he said.

‘Their lavish behaviour was too much. I have never seen people in their position live life like they did. It was all ‘let’s just create fashion, let’s spend all this money’. There was no control about what was going in and out, or how the company was really performing. It was spend, spend, spend all the time.’

It was claimed in court documents that Ms Ralph and Mr Russo ‘extracted substantial sums’ from the firm. Ms Ralph, who had an annual salary of £225,000, is alleged in court documents to have spent company funds on ‘luxury hotels, business class flights, expenses related to her pets, utility bills, yoga classes, lingerie, a housekeeper, beauty expenses and hair care’. Mr Russo is alleged to have withdrawn more than £151,000 from a cash machine that administrators believe is in a Mayfair casino.

The former employee said staff were supposed to be paid on the 27th of each month, but payday was repeatedly delayed for between three and six days. Staff who were in financial difficulty were advised to talk to HR, he said.

Fashion label Ralph & Russo may face criminal probe over '£176,000 pension fund raid'

After its launch in 2010, Ralph & Russo enjoyed a meteoric rise to become one of Britain’s most celebrated luxury fashion houses 

Suppliers across Europe were also not being paid, including one owed more than £170,000, it is claimed. 

‘One supplier who flew from Italy to the main office unannounced, burst into the door and said ‘I need my money today’,’ the former staff member said.

As the chaos deepened, it is claimed that more than 50 staff sent an email to HR demanding to know what was going on.

The former employee said that in 2019, suppliers would question why they were still waiting for their money when Ralph & Russo was opening an extravagant store in Monte Carlo, which is believed to have cost more than £3 million. 

It is also claimed staff approached HR over Ms Ralph’s posts on social media. ‘She was taking Instagram selfies on private jets. We even said to HR ‘Can you ask them to stop posting pictures?’ because we received calls from suppliers.’ 

Forensic investigators are trying to discover what happened to about £60 million pumped into the company by investors, including a £17 million loan from a firm belonging to property developer Nick Candy, between 2018 and 2020.

Sources close to Ms Ralph have denied that she was responsible for the company’s financial difficulties. 

They also deny that staff were paid late and say she has no knowledge of staff approaching HR about the company’s financial health or her use of private jets. Nor, they say, has she knowledge of a supplier being owed more than £170,000, or that a supplier arrived in London demanding payment.

US investment firm Retail Ecommerce Ventures bought the company earlier this month, although Ms Ralph and Mr Russo will no longer be involved.

Sources close to Ms Ralph say the allegations in the court documents are only one side of the story and these allegations are wholly denied, as will be clear when her defence is served. Mr Russo did not respond to a request for comment.

Private flights for couple’s pampered pet chow-chows – called Beluga, Money and Caviar

Cuddled by its glamorous owner on a private executive jet, Beluga the pet chow-chow appears to be enjoying the high life, writes Mark Hookham.

But the pampered dog, owned by fashion designer Tamara Ralph, could now be dragged into a sensational High Court legal claim.

Court documents allege that Ms Ralph spent money from her luxury fashion company Ralph & Russo on ‘expenses related to her pets’.

Sources close to the company say it is believed this relates to alleged spending on Beluga, her beloved pet dog, which is understood to have been named after the type of caviar.

Ms Ralph, 39, has strenuously denied the allegation.

Former employees say Ms Ralph acquired Beluga after starting a relationship with Anglo-Indian billionaire and Liberal Democrat donor Bhanu Choudhrie.

At the time, Mr Choudhrie, 43, also owned two chow-chows named Caviar and Money. One picture, posted by Ms Ralph on Instagram, shows Ms Ralph and Mr Choudhrie, who live together in Monte Carlo, flying on a private jet with two of the dogs.

Cuddled by its glamorous owner on a private executive jet, Beluga the pet chow-chow appears to be enjoying the high life

Cuddled by its glamorous owner on a private executive jet, Beluga the pet chow-chow appears to be enjoying the high life

There is no suggestion that Mr Choudhrie used any Ralph & Russo money to pay for his dogs’ expenses.

A former employee, who asked to remain anonymous, said that Beluga would often accompany Ms Ralph to the fashion label’s offices in White City, West London. It is claimed, however, that the dog was not completely house-trained.

‘Beluga was sometimes in the office,’ a former staff member said.

The former employee claimed that Beluga would regularly be taken to a grooming parlour and at one stage was sent to a training school.

Caviar died in November 2020. In emotional comments on Instagram, Ms Ralph paid tribute to the dog and posted nine pictures featuring the couple’s pets.

She wrote: ‘Our hearts are broken losing you so young and so suddenly, you were the most beautiful puppy with the warmest heart, our home has a huge emptiness in it today.

‘You brought so much warmth and happiness into our lives, we will miss you so so much our baby Caviar. RIP our angel.’

Known for its dense double coat, chow-chow is a dog breed originally from northern China, where it is referred to as Songshi Quan, meaning ‘puffy-lion dog’.

A source close to Ms Ralph said the claim that she used company money to pay for expenses related to her pets was wholly false.

Ralph: ‘Smear campaign designed to bully me’

Designer Tamara Ralph last night denied she was responsible for the collapse of her luxury fashion company and claimed she is the victim of a ‘smear campaign’.

In a furious broadside, Ms Ralph, 39, claimed she had raised her concerns at how Ralph & Russo was being financially managed but was ‘met with abuse and contempt’.

Vowing to ‘fight to clear my name with every breath in my body’, Ms Ralph, whose haute couture gowns have been worn by a string of Hollywood celebrities, declared: ‘I am ready to stand up for myself.’

Last week, sensational legal papers revealed by The Mail on Sunday blamed the fashion label’s financial woes on Ms Ralph’s ‘serious wrongdoing’, which ‘stripped’ the fashion house of cash.

But in a statement to the MoS, Ms Ralph said the claims were ‘demonstrably false’ and ‘designed to discredit me and stop me speaking out about what really happened at Ralph & Russo’. She said: ‘There is a smear campaign aimed at destroying my name and my career. I did everything in my power to save the company but was hindered at every turn by bullying and intimidation – sadly, these are tactics which will be recognised by many women in the workplace.

‘In my resignation letter, I set out many of my reasons for leaving the business to all shareholders and directors, so they would be aware of what happened to me.

‘I resigned when I could no longer take the abuse and I will be taking my case to an employment tribunal if this is not resolved.’

Ms Ralph added: ‘The fact that this behaviour is rife in an industry that celebrates women is disgusting.’

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