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YouTuber Tati Westbrook's business partner is suing her and her husband over explosive fraud claims

INSIDER logoINSIDER 10/30/2020 ktenbarge@businessinsider.com (Kat Tenbarge)
Tati Westbrook et al. posing for a picture: Tati Westbrook (L) attends the 28th Annual Elton John AIDS Foundation Academy Awards Viewing Party Sponsored By IMDb And Neuro Drinks on February 09, 2020 in West Hollywood, California. Photo by Rodin Eckenroth/WireImage © Photo by Rodin Eckenroth/WireImage Tati Westbrook (L) attends the 28th Annual Elton John AIDS Foundation Academy Awards Viewing Party Sponsored By IMDb And Neuro Drinks on February 09, 2020 in West Hollywood, California. Photo by Rodin Eckenroth/WireImage
  • Beauty YouTuber and entrepreneur Tati Westbrook is being sued by her Halo Beauty business partner, court documents reveal. 
  • The complaint was filed on October 20, 2020, by Halo Beauty co-founder Clark Swanson against Westbrook, her husband James, Halo Beauty, and Tati Cosmetics.
  • It alleges the Westbrooks committed fraud, negligence, and breach of fiduciary duty as Halo Beauty owners. 
  • Swanson claims he and the Westbrooks initially split Halo Beauty 50/50, and that the Westbrooks convinced him to give them 2/3 ownership in exchange for Tati promising to launch her future cosmetics, skincare, and fragrance lines with Halo Beauty. 
  • However, Swanson then claims the Westbrooks went behind his back to launch Tati Beauty through a different company, causing Swanson to suffer financial loss he's now seeking damages for. 
  • The Westbrooks did not respond to Insider's request for comment and have not responded to the lawsuit yet, either. 
  • Visit Insider's homepage for more stories.

There's a new twist in the neverending YouTube beauty community drama. Tati Westbrook — the veteran beauty guru, entrepreneur, and hair vitamin scandal aggressor — is being sued by her business partner. 

Halo Beauty is Westbrook's flagship company, marketing nutritional vitamin supplements that include a "Hair, Skin, & Nails Booster" and a "Kiwi Skin Booster." Westbrook launched Halo Beauty in 2018, and while it was a successful indie beauty brand from the start, the company's popularity exploded in May 2019 after Westbrook accused fellow beauty YouTuber James Charles of disloyalty to her brand for marketing competing SugarBearHair vitamins. 

Now, a complaint filed on October 20, 2020, by Halo Beauty co-founder and co-owner Clark Swanson claims that Westbrook and her husband James committed fraud, negligence, and breach of fiduciary duty in their Halo Beauty ownership roles, causing the company and Swanson to suffer financially. He's seeking damages greater than $25,000.

Swanson sued the Westbrooks, Tati Cosmetics (which owns Westbrook's cosmetics line Tati Beauty), and Halo Beauty in the Superior Court of California in Los Angeles County, according to the 30-page complaint obtained by Insider.

Tati Westbrook's business partner claims she made a false promise that lost him millions in potential profits

Swanson's key claim is that he and the Westbrooks originally decided to launch a company split 50/50 between them, with Swanson owning half the company and Tati and James each owning 25%. The plan was to build a nutraceuticals company that would sell ingestibles with health benefits.

Notably, Swanson says he had to use his credit lines to establish the company since the Westbrooks previously underwent a personal bankruptcy. Swanson also says he patented Halo's first supplement.

On August 1, 2017, Swanson says he met with the Westbrooks at his home and that the two asked him to reconsider the company's future and ownership structure. Swanson says Tati and James promised to make Halo Beauty the umbrella brand for all of Tati's future product lines, including cosmetics, skincare, and fragrances. 

Swanson says he agreed to re-split Halo Beauty ownership with each of them holding 1/3, in part so that Westbrook could easily maintain a public appearance as the company's CEO. He claims that the Westbrooks touted Tati's celebrity YouTube status to convince Swanson that her brands would be profitable.

According to Swanson, Halo Beauty's supplements were profitable at first, netting him and the Westbrooks over $3 million, or over $1 million each, in 2018. In 2019, when Halo received a major publicity boost due to Westbrook's feud with Charles, Swanson says earnings were almost tripled. 

Throughout 2018, Swanson claims he met with cosmetics development companies and other members of the beauty industry, including with veteran beauty YouTuber Michelle Phan to discuss prospective business in China. Swanson claims the Westbrooks either showed no interest in his activities or actively asked him to "stand down" from expanding Halo Beauty.

Then, in April 2019, Swanson says James Westbrook told him Tati Beauty would be launching under a different company, Seed Beauty. Swanson claims that he was thus shut out from what he estimated was the $16 million launch of the first Tati Beauty eyeshadow palette. 

Swanson also says the Westbrooks blocked planned skincare product launches through Halo Beauty and forced the company to "coast" throughout the rest of 2019, after the launch of Tati Beauty in October 2019. In February 2020, Swanson says James Westbrook informed him that Tati would be launching a fragrance line separately from Halo. 

Swanson claims the Westbrooks' "neglect" of Halo Beauty has caused "severe damage" to the company and, when prompted to honor their 2017 agreement, Swanson says James Westbrook "distributed hundreds of thousands of dollars in operating income," which Swanson alleges is "a further attempt to devalue and destroy Halo Beauty by looting company coffers in advance of a lawsuit."

Within the claims, Swanson also alleges that Tati said she could sell a "s---" product to her fans and that they would still buy it, and Swanson claims James Westbrook told him that the Tati Beauty palette was a "turnkey" deal with Seed Beauty — which would imply Tati Westbrook had little creative control over the product, unlike she claimed on YouTube.

Claims about other beauty influencers in the complaint have renewed interest in Westbrook's feud with James Charles

Apart from the central claims in the complaint, Swanson also included tidbits about other beauty YouTubers that have caught the attention of the YouTube drama community. Swanson says Westbrook told him in 2017 that she could rely on her fellow beauty influencers like Charles to promote Halo Beauty — a claim that was undermined by Charles' now-infamous SugarBearHair endorsement in May 2019, the complaint says. 

At the time, Westbrook responded to Charles' SugarBearHair Instagram story ad with an explosive video titled "Bye Sister." While most of "Bye Sister" was about Charles betraying Halo Beauty, Westbrook also leveraged serious accusations, alleging that Charles used his money and fame to try and sexually manipulate straight boys. Charles denied the unsubstantiated claims, and Westbrook later apologized. 

Tati Westbrook, Tati Westbrook posing for the camera: Tati Westbrook said Jeffree Star and Shane Dawson fed her "lies and manipulation" to try and destroy James Charles' career. Screenshot YouTube/Tati © Screenshot YouTube/Tati Tati Westbrook said Jeffree Star and Shane Dawson fed her "lies and manipulation" to try and destroy James Charles' career. Screenshot YouTube/Tati

But the narrative that Charles was a predator caught on quickly, resulting in Charles losing millions of YouTube subscribers and dealing a serious long-time blow to his reputation. The pile-on grew when fellow beauty YouTuber Jeffree Star also accused Charles of being a "predator" and a "danger to society." Charles similarly denied Star's unsubstantiated claims, and Star also later apologized. 

In June 2020, Westbrook returned from an unexplained YouTube absence to release a new bombshell video. She claimed that Star and his frequent YouTube collaborator Shane Dawson "manipulated" her into releasing the claims and video against Charles. Afterward, Star apologized to Charles again, but didn't address Westbrook's claims. Both Dawson and Westbrook have yet to return to YouTube.

In light of Swanson's complaint, YouTubers like Katie Joy, AKA Without A Crystal Ball — the first YouTube channel to report on the lawsuit — have suggested that Westbrook's cryptic June 2020 video and unexplained internet hiatus before and since could have been an attempt to get ahead of Swanson's claims. In her last video, Westbrook shifted the blame for "Bye Sister" onto Star and Dawson, but Swanson's complaint draws a direct tie between Westbrook's fiduciary duties as Halo Beauty co-owner and Charles' SugarBearHair endorsement. 

Westbrook and Tati Beauty didn't respond to Insider's request for comment. Westbrook also has yet to respond to Swanson's complaint, although the Superior Court of California's website says a hearing for the case is scheduled for April 21, 2021, in Santa Monica, California.  

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