Kylie Jenner was shockingly removed from Forbes’ Billionaire List on Friday after the outlet claimed she had “ blown up the size and success of her business for years. ”
“Kris and Kylie are going crazy and fear this will harm their brand, and worse, they could get into trouble with the government,” an insider revealed The sun.
The source also claimed that Kylie and Kris are “ absolutely concerned ” about the potential legal and social consequences of this controversy “ tarnishing ” their family’s reputation.
Freaking out: “Kris and Kylie are going crazy and fear this will harm their brand, and worse, they could get into trouble with the government,” an insider revealed to The Sun on Friday; Kris and Kylie in the picture in 2016
Top financial fraud attorney Jan Handzlik told DailyMail.com on Friday that Kylie could face criminal charges for alleged exaggerations.
“I suspect the SEC (Securities Exchange Commission) will at least initiate an informal investigation and perhaps elevate it to a formal investigation, giving them a subpoena,” said Handzlik.
He added: “In this matter you have a mix of things that can lead to both civil and criminal investigations at an early stage: of course the celebrity aspect, the large amount of the alleged exaggeration and the very public nature.
“All of this is like catnip for a prosecutor or the SEC because it will lead to very heavy coverage of what is happening.”
Impressive: In 2019, Kylie was hailed as the ‘youngest’ self-made ‘billionaire for the second year running (pictured on the 2018 cover)
After the bomb report was released on Friday, Kylie took to Twitter to beat Forbes.
Jan Handzlik, who served as a federal prosecutor in LA for five years and now defends celebrities and big companies in financial fraud cases, said the alleged exaggerations could put Jenner in a world of legal troubles.
The 22-year-old reality star was taken aback by the article and tweeted, “What am I even waking up to? I thought this was a reputable site. all i see are some inaccurate statements and unproven assumptions lol. I have never asked for a title or tried to lie there EVER. period.’
She followed with a quote from the Forbes report accusing the Jenners and their accountant of producing false tax returns. Even creating tax returns that are likely to be faked is that your proof? So you thought they were faked? like actually what I read, ”Kylie tweeted incredulously.
In another post, she added, “but okay, I’m blessed after my years, I have a beautiful daughter and a successful business and I’m fine.”
Forbes put Kylie on the cover of her female billionaires in 2018, calling her the world’s youngest self-made billionaire in 2019 and again in 2020.
Handzlik, who has more than 100 lawsuits under his belt, said that after a possible quirk by the SEC, Kylie could also be under criminal investigation by the Justice Department (DoJ).
“Those things could very well cause the U.S. law firm, and especially the Southern District of New York, to jump faster than usual,” he said.
“If the Justice Department decides to make this a criminal case … if there were a conviction, it could include jail time for all those responsible.”
“Inaccurate Statements”: After the bomb report was released on Friday, Kylie took to Twitter to beat Forbes. The 22-year-old reality star was taken aback by the article and tweeted, “What am I even waking up to? I thought this was a reputable site. all i see are some inaccurate statements and unproven assumptions lol. I have never asked for a title or tried to lie there EVER. period’
Not to worry: Kylie responded to a tweet asking why she cared with so much news in the news
Jenner, the youngest brother of the Kardashian family, started her makeup line with lipstick kits in 2015. Kylie Cosmetics signed a deal with Ulta Beauty Inc to put her products in all 1,163 US retailer’s stores (above)
The controversy exploded around a $ 1.2 billion deal for Kylie Cosmetics, in which Kylie sold a 51 percent stake to makeup giant Coty for $ 600 million in January.
Back then, Wall Street suspected that Coty may have paid too much for the majority stake. The concerns were fueled by new financial disclosures from the publicly traded company, which revealed that Kylie Cosmetics’ earnings were much lower than Kylie previously claimed.
As part of a brutal campaign to get Forbes to put Kardashian-Jenner’s relatives at the top of their richest list, the celebrity family had said Kylie Cosmetics magazine was making $ 360 million in revenue for 2018.
But Coty’s SEC documents revealed that the figure was in fact about $ 125 million – less than a third of their claims.
The magazine reported that Kylie representatives told them that her new skincare line, launched in May 2019, was making $ 100 million in revenue in the first month and a half.
But Coty’s numbers show that the product line is “on track,” generating just $ 25 million in sales for the year.
Forbes claims that since 2016, representatives of the reality star family have invited the authors of the list to Kylie’s mansion and hosted meetings with their accountants in an effort to convince the magazine to put them on the rich list.
In August 2018, the family got what they wanted: Kylie was on the front page under the heading “America’s Women Billionaires.”
Kylie is not a billionaire, Forbes claimed Friday. They accused the ‘homemade’ makeup tycoon, 22, of running ‘a web of lies’ over company figures and ‘falsifying tax returns’
The controversy exploded around a $ 1.2 billion deal for Kylie Cosmetics, in which Kylie sold a 51 percent stake to makeup giant Coty for $ 600 million in January. Back then, Wall Street suspected that Coty may have paid too much for the majority stake. The concerns were fueled by new financial announcements from the publicly traded company, which revealed that Kylie Cosmetics’ earnings were much lower than Kylie previously claimed
“I’m SO proud of it,” Kylie’s mastermind mom Kris Jenner wrote in an Instagram post in response.
In Forbes’ bomb article that lowered Kylie’s net assets from over $ 1 billion to just under $ 900 million, the magazine claimed that the family likely showed them “false numbers” tax returns.
“While we cannot prove that those documents were fake (although it is likely), it is clear that Kylie’s camp lied,” the report said.
Handzlik told DailyMail.com that the disclosures are an obvious target for a possible SEC investigation, and would likely attract federal prosecutors’ attention as well.
“Part of the purpose of investigations and enforcement measures is to deter others. So if a case comes out with a lot of high profile individuals and a natural appeal to many members of the public, this would be a good way to do it – whether justified in this case or not, “he said.
‘In the field of entertainment and perhaps even advertising, exaggeration, puffery if you like, is a time-honored tradition. But here a private company was sold for a lot of money to a large listed company. That entails much more control.
The claims may sound good if you’re on Instagram or Facebook. But when you talk that into dealing with a publicly traded company, you find yourself in a situation where you are accused of not only exaggerating, but also fraud with financial statements. ‘
All change: Coty, struggling with declining sales, saw a 5 percent share rise after Jenner’s announcement last year. The share price was $ 12.32
Friday, after Forbes dropped the bombshell news, shares fell slightly to $ 3.60
The top attorney said if a federal investigation showed that Kylie had committed financial fraud, she could face jail time and fines of “staggering amounts” to “make Coty whole again” in the $ 1.2 billion deal.
“We don’t know if there is something here that doesn’t stand out. But if we consider the allegations at first glance, there is certainly a basis to investigate and perhaps continue with an enforcement action or criminal prosecution, “he said.
“If it leads to a formal investigation and that formal investigation concludes that there was fraud in the financial statements or other aspects, then the tools at the SEC’s disposal are quite powerful.
In fact, if the court rules that the Jenners or Jenner companies received ill-gotten profits, benefited from a financial statement, fraud, or financial wrongdoing, these rather staggering sums of money paid or distributed within the Jenner job , order those that are returned. In other words, they would try to make Coty whole again. ‘
Ranked as one of the top 100 lawyers in California according to leading law publication The Daily Journal, Handzlik is known for defending high-profile financial fraud cases with large clients.
He has represented Steven Seagal, the owner / producer of Girls Gone Wild, Joe Francis and other celebrities, and multinational historical business ventures.