Saks clients complained about stylist long before he was accused of $400,000 scam

About three years into the relationship, Haroutunian—who now runs a private investment firm—said he noticed charges on his account for items he had never purchased. Haroutunian said he confronted Kwatra, who told him it was an administrative error and blamed his assistant. The questionable charges kept appearing and eventually snowballed into hundreds of thousands of dollars, Haroutunian said.

Haroutunian said he took his concerns to the store’s management and even sent an email to Marc Metrick, the chief executive of Saks Global, the parent of the Saks and Neiman Marcus chains, but got no response.

“I raised very clear red flags, and they did nothing," Haroutunian said in an interview.

Kwatra’s spokesman, Joe Baerlein, called Haroutunian’s assertions false and said he was an out-of-control impulse shopper.

“He can call me anything he wants," Haroutunian said. “But this problem happened with more than one person, and there are only so many excuses he can make."

A Saks Global spokeswoman said it hasn’t reviewed all the incidents that The Wall Street Journal raised but said the company takes allegations of wrongdoing seriously. Metrick may not directly respond to all customer complaints, she added, but the company addresses all issues that are escalated to management.

For two decades, the 43-year-old Kwatra dressed some of the city’s wealthiest and most famous people at the Saks store in Boston’s Prudential Center. But in late September, Saks said its security officials got a tip that triggered an investigation, resulting in Kwatra’s termination and charges of fraud and larceny filed against him this month.

The probe turned up three incidents—two in September and one in November—in which Kwatra allegedly made fraudulent refunds worth more than $11,000, according to a criminal complaint the Boston Police Department filed this month with the city’s Municipal Court. The complaint said Kwatra then transferred the money from the refunds onto store gift cards and subsequently purchased merchandise with those gift cards.

The Saks officials gave police a letter they said Kwatra wrote, estimating total losses at more than $400,000. The amount included fraudulent refunds, mismanagement of promotional cards and giving unpaid merchandise to clients, according to the complaint, which said Kwatra apologized and promised to repay the money.

Kwatra denies the allegations. He said the accusations in the police report are an effort by Saks to retaliate against him for considering a new job with a competitor. “I have always strived to adhere to company policies and provide the very best service to my clients," he said in a statement earlier this month.

His attorney, Jennifer Furey, said he signed the note under duress and “after false promises that no criminal involvement or reputational harm would be brought against him."

Furey added that Kwatra’s supervisors condoned his distribution of gift cards and other perks to clients to entice them to continue shopping at Saks. “None of this was secretive, and all of it was aimed at benefiting Saks and the brands," she said.

Saks declined to comment on Furey’s statements.

The Journal has spoken with six of Kwatra’s current and former clients, who allege Kwatra’s mismanagement of their purchases and returns cost them thousands of dollars. They said they had reported some of the incidents to Saks as far back as 2013.

Other clients said they never had a problem with Kwatra and are baffled by the accusations. “He was always an advocate for his clients, upfront about the cost and terms of the transactions and a person of honesty and integrity," said Jennifer Clark, a lawyer, who has been a Kwatra client for more than a decade.

Deborah George met Kwatra roughly 20 years ago. She said she was walking through the Boston Saks store when Kwatra eyed her and said: “Your outfit is awful." He suggested she try some Dolce & Gabbana items.

“He changed my life," George said. Despite now living in California, she would go back to Boston every six weeks to shop with Kwatra.

The controversy surrounding Kwatra offers a rare glimpse into the world of personal shoppers and the rainmaking role they play for retailers. A stylist of Kwatra’s caliber could earn several hundred thousand dollars a year before taxes, according to people who work in the industry. Earlier this year, the fashion world was abuzz when Nordstrom poached uber stylist Catherine Bloom from Neiman Marcus in Beverly Hills.

The situation also raises questions over how responsive Saks—one of America’s last remaining luxury department stores—was to complaints about Kwatra. Saks is struggling financially and has missed payments to suppliers, some of whom have stopped shipping goods. It has an interest payment of more than $100 million due at the end of December.

Allegations like the ones Kwatra is facing have come up before at Saks and other retailers including Bloomingdale’s and Nordstrom. In 2017, a Saks clerk teamed with an acquaintance to steal more than $50,000 from the retailer by processing fake returns and turning them into gift cards. The clerk later pleaded guilty to petty larceny charges. The Saks spokeswoman said no Saks customers were affected.

Yacht parties and questionable charges

Amber D’Amelio met Kwatra in 2011 at Boston Fashion Week. She eventually became a client, and they became friendly.

She invited Kwatra to sit at her table at a Breast Cancer Research Foundation charity event. She threw him a birthday party on her yacht, where Kwatra and about 20 women cruised around Boston Harbour sipping Champagne and nibbling on bites prepared by a private chef.

Kwatra would order her designer clothes and accessories and charge them to her credit card. In 2013, she said she noticed a charge that she didn’t recall. When she questioned Kwatra, she said he told her it was a mistake and refunded the money.

But questionable charges kept appearing. She eventually complained to a Saks store manager, who issued refunds for thousands of dollars.

“I don’t know if I was truly made whole," said D’Amelio, who said she has become disillusioned with the fashion world because of the harm it does to animals and the environment. She is now an animal-rights activist and conservationist.

“Any issue about her request for a refund isn’t the responsibility of Mr. Kwatra," said Baerlein, Kwatra’s spokesman, explaining that Kwatra “expedited her request through the regular channels."

Fur jackets and an alligator handbag

In another situation, Kwatra was accused of exploiting a customer—Wendy Appel—who had suffered multiple strokes starting in 2012 and was later diagnosed with dementia.

Kwatra charged millions of dollars of designer clothes and accessories on her account, including Chanel suits, fur jackets, Van Cleef & Arpels jewelry and a $65,000 Louis Vuitton alligator handbag, according to people familiar with the situation.

“Suhail would pick out pieces for her and pay with her credit card," said Danielle Rodrigues, a client adviser in the Louis Vuitton shop at Saks’s Boston store from 2015 to 2016. “She never came to pick them up."

Baerlein disputes that Kwatra would have been able to handle transactions in that shop, though Rodrigues said it was common for Saks stylists to do so.

The items sat in the backroom for months. Eventually, Rodrigues said, Kwatra would return the merchandise, saying that Appel changed her mind.

Rodrigues said at one point Appel’s son Michael came into the shop and asked her about the charges. She said she told him she thought Kwatra was taking advantage of his mother.

Baerlein called the allegations regarding Wendy Appel “unsubstantiated and false." He supplied an email she sent to Kwatra and his supervisor requesting that they not discuss her account with anyone, including family, as well as a voicemail from Wendy Appel to Kwatra.

“I’m sorry about Michael’s phone call to you," Wendy said in the voicemail, which was reviewed by the Journal. “For some reason he thinks I don’t know what I’m doing. I said, ‘Michael, I can assure you I know exactly what I’m doing.’"

In 2016, Michael sent a cease-and-desist letter to Saks’s management explaining that his mother wasn’t of sound mind and that Kwatra was abusing his position. In 2017, he got a conservatorship over his mother’s estate, according to the people he told, and it was later dissolved. Michael Appel declined to comment.

Saks said it thoroughly investigated Appel’s claims and determined Wendy Appel’s purchases didn’t involve any wrongdoing. A Saks spokeswoman said it agreed to accept returns, some of them outside of its normal policy, “out of courtesy for the relationship."

A glamorous and cutthroat job

While outwardly glamorous, working at a luxury store can be cutthroat. Kwatra sometimes tried to steal his colleagues’ clients, according to some of the retailer’s customers and Lisa Amato, who worked as a Saks stylist in the designer department from 2010 to 2013.

Amato said she once saw dozens of bottles of Jimmy Choo perfume in Kwatra’s backroom section. It was during a promotion when stylists could get a $50 gift card for every three bottles they sold. But Amato said the customers never actually received the perfume.

She said a year later the bottles were still in the backroom, suggesting the sales were phantom transactions. When she questioned her manager, she was told: “You have to go along to get along."

Saks declined to comment.

Baerlein said Kwatra didn’t recall a Jimmy Choo event. He added that Kwatra worked with a team of people who were responsible for tasks like returning items, managing hold areas for purchases and processing gift cards.

“Anyone who thinks the highest producer at Saks is processing refunds and exchanges has no idea how a large retail enterprise like Saks operates," Baerlein said.

Hartounian, the private investment manager who noticed unauthorized charges on his credit card, said he broke off his relationship with Kwatra in 2018, after Saks failed to act on his complaints.

“I thought my relationship with Suhail would go on for years," Haroutunian said. “I never thought it would have ended like this."

Write to Suzanne Kapner at suzanne.kapner@wsj.com