NEW YORK — Friday’s showdown between Naeem Khan and his disgruntled former creative director Lionel Geneste stemmed from a wage dispute, but drug use, the gift of a fake Birkin bag and manic behavior were among the accusations hurled by witnesses in Manhattan Supreme Court.

This story first appeared in the August 12, 2013 issue of WWD.  Subscribe Today.

Geneste is seeking between $150,000 and $200,000 in unpaid commission, excluding interest for that sum, according to his attorney Bernard Daskal. After Friday’s court testimony, Khan said he was determined to see the legal dispute through without a preliminary settlement.

Khan’s lawyer, Edward Hayes, said the dispute comes down to numbers and is not a matter of likability. After Friday’s proceedings, Khan said he had given Geneste 18 months to take care of an identity fraud issue before he officially let him go. That allegation and no doubt many others will be readdressed today when both sides return to Manhattan Supreme Court.

Geneste worked for Khan from January 2003 through June 2006, said Daskal, before noting the designer claims Geneste was let go in March or April 2006. Khan told WWD that Geneste was terminated for identity fraud for using his boyfriend’s social security number.


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Earlier, Khan’s former executive assistant Jessica Hoy, who also held that post for Geneste, testified that she had seen Khan use cocaine on two different occasions at industry events that he hosted in his SoHo loft. Hoy worked for him from December 2005 until July 2006. She claimed that on one of those occasions, a party in honor of Neiman Marcus’ Ken Downing, Khan’s wife Ranjana was also doing drugs with the designer in a bathroom. After Hoy’s testimony, Khan told WWD he would testify this week that his wife was out of the country when that party was held, and that her passport is stamped to prove it.

Khan was joined in court by his wife and their two sons, Zaheen and Sharia, who both work at his company.

After crediting Geneste for dressing socialites and celebrities in the label, organizing events, greatly influencing the collection and putting in extra hours, Hoy painted a less flattering image of Khan, whom she said would arrive at work at 11 a.m. or noon and leave by 4 p.m. She said she was “terrified” of him and described his behavior as “manic.” In his own testimony, Khan noted a handful of his staffers have been with the company for more than 10 years.

Before leaving the courthouse, Khan described Friday’s testimony to WWD as “slander” and insisted he has always run his company like a family, noting that the parent company is named after his mother, Riazee. The designer was incensed by Hoy’s claim that he gave a fake Birkin bag that she claimed his wife had bought in Milan to Renee Prince Fillip when she worked at Neiman Marcus. Fillip returned the gift to the showroom herself and explained it would be bribery if she accepted it, Hoy said. Khan vowed he would disprove that suggestion. “I am part of the CFDA. Do you think a buyer from Neiman Marcus would take a fake Birkin bag from me?” he asked.

Testifying, Hoy described Khan and Geneste as “inseparable” and said Khan’s announcement that Geneste would be leaving the company appeared to be amicable on both parts. Hoy, who now lives in Maryland, said she was fired by Khan for having to reschedule an appointment with a socialite.

It is safe to say Manhattan Supreme Court Justice Barbara Kapnick doesn’t oversee many proceedings that reference friends and family discounts, runway show after parties, the ins and out of dressing socialites or the correct spelling and meaning of Proenza Schouler. Even the court reporter was talking Birkins during a break, chiding Daskal for not knowing what one was and musing how the Milanese knockoffs are probably better than the Canal Street versions.

Given all the well-heeled references, it was not surprising that Hayes asked another witness, Khan client Audrey Gruss, how she defines a socialite. She said, “Women who have the time to go to many events and who attend many charity events and other social events where they want to be photographed so that you can see they are wearing certain designer clothes.”

When Hayes made mention of Khan being “a well-respected designer,” Gruss asked, “How do you define well respected?” And Gruss was quick to correct the attorney’s reference that she had seen Naeem Khan’s clothes on young socialites with “I saw them on all-age socialites.”

But most of her lengthy testimony centered on how she recommended Geneste to Khan after he asked her if she knew any candidates. She also described how she thought Geneste’s input made the collection higher fashion and how he hoped to work for an American company that would sponsor his green card.

Gruss explained why she was not keen to buy sample sizes, which may work for women who are a size 2 or a 4: “I’m a 6 or an 8 and I did not want to appear that I was wearing clothes that I got for free.” She spoke of how Khan once asked her “to pay $2,000 for a reject dress,” which was “not a comfortable situation.” After that, Gruss stopped visiting the showroom and “actually bought some [Naeem Khan] at retail.”

Gruss testified that she did not know the particulars of Geneste’s and Khan’s parting other than there was a falling out. She was more clear about her approval of Susan Gutfreund, who had introduced her to Khan. Gruss assured Hayes of her well-dressed ways, telling Hayes, “My taste is quite similar but everyone has different style. Susan and I often buy the same things.”

On the stand, Hoy described Geneste as a mentor, not a friend, who trained her in the industry. Hughes asked her why she had never tried to find another job in fashion after relocating. “There are not many fashion jobs in Norfolk, Va.,” she replied.

And as for why she never worked in a clothing store, she told him, “I don’t work in retail.”

During a break in the testimony, there was a testy exchange between Hoy and Khan’s wife. When Hoy said hello while seated a row behind her, Khan said, “I’ve never met you. I don’t recognize your face so don’t say hello to me.”

Hoy later took the incident in stride, saying, “Whatever. I’m obviously not here to rekindle a friendship.”

Geneste is expected to take the stand when both he and Khan return to court on Monday.