Popular Bed-Stuy doughnut shop Dough is being sued for $5 million by its investors for not ponying up cash despite its success, according to a report from the Daily News. Investors Jeffrey Zipes and Steven Klein say that they invested $500,000 for a 40 percent stake in the doughnut shop to help it expand. They also took over business operations like branding and lease negotiations as part of the deal, the suit alleges. But the founders of Dough, which is known for its oversized yeast doughnuts with unusual flavors, have refused to pay Zipes and Klein profits in line with contract or open up its books, they claim.
Dough, owned by Thierry and Maya Cabigeos, Fany Gerson, and Nava Yellinek, opened in Brooklyn in 2010 and has since popped up in the food market circuit and debuted a Manhattan location. The bakery's yeast doughnuts, with flavors like hibiscus and dulce de leche, can also be found at a slew of coffee shops across the city. Zipes and Klein say that the founders pushed them out after the bakery blew up, the Daily News reports. "[They] have made it clear ... that they do not want the plaintiffs to be a part of the operation of the company and its business now that the company is successful," the suit says.
The investors are suing for $5 million in damages, for the founders to open up their financial books, and for the right to buy stock at a 50 percent discount of the market value if wrongdoing is found. "They have engaged in fraud, dishonesty, disloyalty or willful misconduct," the investors say. Dough told the Post in a response that the claims are not true.