A Massachusetts executive search firm has promised to find a new CEO for Hudsonville-based Shefit Inc. through “proprietary, data-driven technologies and industry-lauded consulting techniques” and a “transparent, fact-based” search.

Three years ago, at the recommendation of ZRG Partners LLC, sports bra marketer Shefit hired a new CEO.

The person didn’t work out, and Shefit “had no choice but to terminate him in September 2022.” The former CEO then filed what Shefit called a “frivolous lawsuit” and was eventually settled.

Now Shefit wants ZRG Partners to refund the $112,500 fee charged for the CEO search and much more.

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In a federal lawsuit filed this week in Grand Rapids, Shefit’s lawyers claim the executive’s “brief tenure as CEO has been a disaster” and accuse ZRG Partners of negligence in the search.

“He was not qualified for this job and in fact was not suited for this job,” according to court records. “His (Shefit) failure to fulfill his duties as CEO cost him millions of dollars.”

In a lawsuit filed this week alleging negligent performance and breach of contract, Shefit’s attorneys claim that ZRG Partners failed to conduct a thorough background check on its CEO candidate and “hired him before and it was easy to reinstate him.” According to the lawsuit, which alleges that the company’s work was “performed in a materially incomplete and negligent manner”, ZRG Partners did not fulfill any of the steps it committed to during the search processes.

When Shefit later looked into the CEO’s background, he “found that there were red flags in his employment history that (ZRG Partners) needed to explore.”

“Had (ZRG Partners) taken these steps, Defendant would have discovered the truth about the candidate’s background and would not have recommended him and/or recommended other candidates for (Shefit’s) consideration,” according to the lawsuit.

Court documents do not explain how Shefit connected with and retained ZRG Partners in 2021 to conduct the CEO search. Shefit is a sports bra company founded in 2013 by former Miss Michigan Teen USA and competitive bodybuilder Sara Moylan and her husband, Bob Moylan.

Sara Moylan did not immediately respond to an inquiry. Crain’s Grand Rapids Business.

The court documents also do not include details of “red flags” or problems Shefit later learned about the CEO’s past.

Court documents allege that when Shefit asked for files related to the CEO search, the company “learned that (ZRG Partners’) business was materially deficient and had been performed negligently.”

The lawsuit, filed in the U.S. District Court for the Western District of Michigan, seeks a jury trial on the claim and seeks full refund of fees paid for the CEO search and reimbursement for financial losses.

Frank & Frank Law PC of Bloomfield Hills is representing Shefit in the case.

So far, Shefit has been on the receiving end of previous lawsuits filed by former employees, including the CEO, whose tenure coincided with the timeframe of the lawsuit against ZRG Partners.

Shefit’s former CEO, Angel Ilagan, filed a lawsuit against the company and the Moylans in October 2022, alleging breach of contract and violations of the Whistleblower Protection Act. Ilagan claimed that he was fired in retaliation on September 7, 2022, after learning that the Moylans planned to report allegations of tax evasion by the company to the Internal Revenue Service.

In a separate lawsuit, Shefit’s former marketing manager Michelle Zeller sued the company for sexual harassment, discrimination and retaliation in violation of the Michigan Elliott-Larsen Civil Rights Act.

Court records show Ilagan’s case was dismissed with prejudice in October 2023. The Zeller case was dismissed in March 2023. The court database did not indicate whether there was an out-of-court settlement in either case.

Separately, the Aronsson Group, owned by Detroit native Jeffry Aronsson, a New York-based fashion investor, sued Shefit in Kent County’s 17th Circuit Court in February 2022 over a shareholder dispute. The case was dismissed with prejudice in October 2022.

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