Young designers feel cheated by the failed Gen Art.

This story first appeared in the May 12, 2010 issue of WWD. Subscribe Today.

In the weeks before the group — which supported emerging fashion talent — revealed it was closing its operations, the firm cashed checks and charged credit cards from handfuls of Chicago and New York designers who had purchased booth space for Gen Art-sponsored shopping events set for Thursday and May 19, respectively. And the designers aren’t getting that money back.

“They had to know about this for a long time,” said Chicago designer Kate Coxworth, who paid $550 for booth space she planned to share with a Chicago jewelry designer on Thursday. “My booth fee was cashed on April 22. It’s not like it was months ago. They used our money to float their company for another few weeks.”

It’s estimated that more than 20 Chicago designers lost money after paying to participate in Shop Chicago, an annual or biannual Gen Art shopping event in the city. Coxworth, who produces the line Kate Boggiano, said the event’s application claimed money would be refunded if Shop Chicago was canceled. Coxworth said she e-mailed Ian Gerard, who founded Gen Art with his brother Stefan, about a refund but has not heard back.

Particularly aggravating to Chicago designers was the fact that Gen Art representatives repeatedly called and e-mailed them in late April to encourage participation.

Veronica Martens, a Chicago jewelry designer, posted online earlier this month that after receiving e-mails and phone calls, “I finally caved in and decided to give it a try,” noting Gen Art cashed her check on April 28.

“They obviously knew when they cashed my check that they were closing the doors on the business, and it makes me sick to think that they stole money from me and my fellow indie designers who are already struggling to make ends meet,” said Martens.

The Gerards said on May 5 that Gen Art would close. Ian Gerard Tuesday said Gen Art had no intention of “milking money” from designers, a group Gen Art sought to support. “We needed to appear to the outside world and investors that Gen Art continued to be strong and a viable company for investment,” he said. “If we had started canceling programs and not accepting revenues, we would seal the fate of the company and surely go under.”

That philosophy proved sound when Gen Art skirted earlier financial setbacks, Gerard noted. “If we had done it [canceling events and stopping revenue] the first time we faced economic hardship, we would have gone under back in 2008,” he said. “As soon as we knew that our final deals were not going to materialize, we immediately closed down all receipt of revenues (including ticket sales, membership sales and booth sales),” added Gerard, who said he believed that happened on April 30.

“Everyone involved wanted a different outcome,” he said, adding he and his brother sustained substantial personal losses in the process. “It’s not like we’re walking out with a bag of money.”

Gerard also said that while he can understand the frustration of designers, he would hate for this to tarnish Gen Art’s 16-year effort to support emerging fashion, art and film.

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