August Meyer was arrested in St. Petersburg Thursday, suspected of perpetrating a large-scale fraud.

The American-born businessman with Russian citizenship is charged with two counts of fraud amounting to a total amount of about 2.5 billion roubles ($34 million). He denies the charges and is facing up to 10 years in prison.

According to Russian media outlet Kommersant Meyer, and his wife and business partner Inna Meyer are suspected of improperly receiving loans from Russian bank Sberbank, received shortly before another of their retail ventures, electronics chain Yulmart, ran into cashflow problems.

In February 2020, the St. Petersburg Arbitration Court declared Yulmart bankrupt and began bankruptcy procedures.

Rive Gauche, a domestic rival to Sephora, informed the RBC media outlet when contacted about the Meyers’ case that the company’s daily routine would not be affected by the arrest of its co-owner. Finstar Investment Group, another Rive Gauche backer, also told RBC the legal case has nothing to do with the business of the Rive Gauche company.

Rive Gauche, which was founded in 1995, operates over 200 stores across Russia. Last year, its revenues dropped by 19.2 percent to 30 billion roubles ($400 million), according to information agency Infoline.

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