Salon supplier claims companies diverted products from casinos
By Steve Green (contact)

Wednesday, Aug. 12, 2009 | 3:13 p.m.

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See L'Oreal's lawsuit
Beauty salon supplier L'Oreal USA claims high-end hair care products intended for sale to Las Vegas hotel-casinos instead were diverted without authorization through a nationwide gray market to mass marketers like Target and CVS Pharmacies.

L'Oreal, based in New York, filed a lawsuit Monday in U.S. District Court in Las Vegas against two Las Vegas companies it claims were involved in the alleged scheme: Hair Casino Venture LLC and Nevada Hair Ventures LLC.

Neither of the defendants could be reached for comment Wednesday.

L'Oreal says it sells products through distributors under the Matrix brand for the professional hair care market. These include colorings, dyes, shampoos, conditioners and styling products and are generally sold to professional salons.

L'Oreal charges in its lawsuit that the Las Vegas defendants and others illegally diverted Matrix products to Cadeau Express Inc., a Las Vegas company headed by Ramon DeSage.

Cadeau is described in the lawsuit as a wholesaler of gifts and specialty items -- including exclusive hair products -- to hotels, casinos and other hospitality venues around Las Vegas. The hotels provide Cadeau products to selected guests as gifts and complimentary room amenities, the lawsuit says.

In 2005, a company called Armstrong McCall, LP (AMLP) and Cadeau negotiated a "covert distribution agreement" for Cadeau to acquire Matrix and other products from AMLP for resale to casinos and other hospitality venues, the lawsuit charges.

A company called Hair of Nevada LLC -- sharing common ownership with the defendants -- was AMLP's Las Vegas-area franchise and was involved in the deal, the suit says.

Cadeau paid kickbacks to executives of AMLP and Hair of Nevada in exchange for the deal involving deep discounts on Matrix products, the suit charges.

Millions of dollars of Matrix products were sold to Cadeau by L'Oreal through AMLP, Hair of Nevada and related company Hair Casino Venture, the suit charges.

"Substantially all of the Matrix products sold by AMLP, Hair of Nevada and defendants to Cadeau were diverted into the gray market for resale by mass-market retailers," the suit charges.