Jeweler to the stars Harry Winston is suing defunct luxury ad agency Lipman and its parent, Revolate Holdings, for leaving it nearly $2 million out of pocket.
The Lipman agency, based in New York’s trendy Meatpacking District, abruptly closed up shop last week, stunning employees at its West 14th Street offices.
The sudden closure of the agency, whose roots date to 1927, has left several high-profile clients, models and photographers holding the bag.
The Harry Winston suit is the second filed against Lipman in the past month. Photo agency at JulyEight LLC also filed a suit for nonpayment of bills on Aug. 20.
Lipman still owes supermodel Kate Moss for work on a recent campaign, as well as famed photographer Mario Testino, according to sources.
David Lipman, son of the agency founder, recently shot an ad campaign for shoe brand Stuart Weitzman featuring Moss. Lipman’s work helped catapult designer jeans brand 7 For All Mankind into the mainstream.
Sources close to the agency blamed poor financial management and predicted that a bankruptcy filing could come as early as this week.
Meanwhile, the agency is facing accusations that it diverted client money earmarked for ad buys to parent Revolate, run by CEO Andrew Spellman.
Spellman, a former Goldman Sachs executive, took over Lipman’s books when Revolate acquired the firm in 2011.
Neither Spellman nor Lipman could be reached for comment.
Harry Winston’s suit accuses the agency and Revolate of fraud, saying more than $1 million it advanced to Lipman for ad buys instead went to Revolate.
“Lipman and Revolate actively and intentionally converted Harry Winston funds, the payment of the invoiced publisher insertion fees, for their selfish benefit, failing to remit such funds to the intended publishers,” according to the 28-page suit.
A host of upscale publications, including Vogue, Elle, New York Times, Wall Street Journal and Financial Times, carried Harry Winston ads that were placed by Lipman.
The payment delays at some outlets meant that Winston had to come up with an additional $1 million to ensure its ads ran during the critical holiday period last year.
The suit filed Tuesday in New York State Supreme Court seeks $1 million for unpaid media bills and a $200,000 agency fee plus additional legal fees.
The company is also seeking $5 million in damages to “HWI’s name and reputation in the fashion and jewelry trade.”
The lawsuit claims that Lipman and Revolate seized the media payments and never intended to pass them on to the publishers.
According to the complaint, Revolate’s chairman, Gregory Rayburn, and chief financial officer, Jacqueline McGowan, confirmed to Harry Winston that a Lipman “liquidity crisis” had been caused by “investment decisions at the Revolate level,” preventing Lipman from paying publishers.