OTTAWA COUNTY, Mich. — Two former executives of SHEFIT are suing the West Michigan company for sexual harassment and breach of contract, among other counts.
Michelle Zeller served as Chief Marketing Officer, and Angel Ilagan served as Chief Executive Officer for about a year for the online athletic apparel business.
Both say they are owed severance following their termination as agreed to in their contracts with the company.
"I started at SHEFIT on Nov. 1, (2021)," Zeller says. "I was the first chief marketing officer hired by the company."
When she was hired at SHEFIT last year, she says it was completely different.
"They really sincerely wanted us to help and to grow the company," Zeller says.
SHEFIT is based in Ottawa County, specializing in a fully adjustable sports bra and apparel line for women. Owners Sara Marie and Bob Moylan won an investment on Shark Tank in 2015.
"SHEFIT recently won the 2022 Growing Company of the Year for Western Michigan," Zeller says. "And that's very exciting. But underneath that, there are some nefarious activities that are happening."
She tells 13 ON YOUR SIDE, and details in her lawsuit, that she was told to fire a few women in the company based on their weight. She refused to do so because weight discrimination is illegal.
Zeller also says she faced harassment because of her sexual orientation.
"We had a person transitioning to a different gender and Mr. Moylan would refer to that person as 'It,'" she says. "He also referred to a gay woman, my wife actually, as 'One night with him could turn her straight.' So it became an environment that was intolerable."
She filed a complaint with human resources in August, and she was fired several days later.
"My termination was couched as we weren't hitting our numbers. And they blamed myself and the CEO," Zeller says.
She is suing for breach of contract in the amount of $236,250, representing nine months of severance pay that is owed based on her contract with SHEFIT, as well as other damages.
Zeller is also suing for sexual harassment and discrimination, and retaliation, in violation of the Elliott-Larsen Civil Rights Act.
Angel Ilagan was brought on as Chief Executive Officer last year too.
He says while things at work started off fairly smoothly, he began to closely monitor the company's finances as they were facing a lawsuit from a minority shareholder.
"One of the things that did bother me was that there was a lot of expenses that were being spent that were personal in nature that had nothing to do with the company," Ilagan says.
He says that includes personal vacations labelled as business expenses, and personal expenses were listed as debt to SHEFIT to avoid declaring taxable income.
Ilagan says he told someone at the company that he intended to report tax evasion to the Internal Revenue Service, and then he was fired.
"For a company that prides itself on being one of Western Michigan's fastest growing companies, you would think that they would go out of their way to do right by the employees," he says. "And they haven't done that."
Ilagan is also suing for breach of contract, in the amount of $900,000 of unpaid severance including bonus owed and 1.5% equity and unpaid paid time off, as well as other damages.
He is also suing for a violation of the Whistleblower Protection Act.
In a statement, a spokesperson with SHEFIT responded to these allegations:
"SHEFIT hired an executive team 12 months ago to help take the company to it's next level of growth. The two former executives making these ridiculous and unfounded allegations were released after 12 months of continuous business losses. The company does not comment on pending litigation. SHEFIT was founded in a basement, by a woman to empower all women to be their best. Any allegations of sexual harassment or discrimination are simply false. SHEFIT looks forward to vigorously defending itself and its employees against any baseless and predatory actions by disgruntled former executives."
Both lawsuits have been filed in the U.S. District Court in the Western District of Michigan.
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