Dr Lookgood and an ugly fight over $2m

Something rather ugly has happened to Dr Steven Victor, the beauty guru whose clients include some of the world's most attractive women. Dr ­Victor — known in his native Manhattan as Dr Lookgood — is being chased for more than $2 million by investors who claim he misused their money.

The news will probably come as a ­surprise to Sarah Ferguson, one of his most devoted clients, and Sharon Osbourne, another fan.

Dr Victor charges thousands of pounds for his treatments and has always been perceived as the highly ­successful head of his own multi-million dollar beauty empire. Harvey Nichols sells an exclusive range of his products, including small jars of "Bio-Nutritive" cream at £250.

He has operated from consulting rooms in Marylebone and Knightsbridge and he and his wife, Anna Rhodes, a New York socialite, were often seen on ­London's party circuit.

But the tanned and quintessentially charming Dr Victor (he unfailingly greets famous women clients with the words: "You are so much more beautiful than your picture") has not been around of late. He has been spending a lot of time with his legal team after being hit with a lawsuit that threatens to change significantly his carefully cultivated public persona. Indeed, his difficulty may amount to more than an image problem.

An Evening Standard investigation into Dr Victor's beauty corporation reveals a rather shaky edifice with a history of debts and accusations of ­broken promises. And, according to US court documents seen by the Standard, there are allegations that while investors were lending him money to build his business, he and his wife were using it to fund a lavish lifestyle.

One claim suggests that after a group of Texan investors handed over $1.3 million, Dr Victor and Ms Rhodes used $49,000 of the investment to pay off their American Express bill. Then, it is alleged, they jumped on a plane to Europe and checked into some of the finest hotels in London and Paris.

The doctor's many clients in London will find it hard to reconcile the beauty genius they know with the man being accused of financial chicanery in New York. Author and fashion writer Plum Sykes has credited Dr Victor, a dermatologist, with helping her create the flawless look for which she is known. She said he injects her skin with a vitamin solution.

"I see him every four months or so," Ms Sykes said. "Your skin is pricked all over by these tiny needles, like acupuncture, which injects vitamin C just below the skin's surface. It's wonderful — and addictive!"

Ms Sykes is thought to have based Dr Fensler, the beauty consultant in her novel Bergdorf Blondes, on Dr Victor. Like Dr Victor, Fensler says he is in the "happiness business" and one of the book's characters, Julie, a department store heiress, says "dermatology is the new therapy".

"Shrinks make people unhappy," Julie argues, while after treatment with Dr Fensler, "you look pretty, you feel great".

It seemed the point was proved in real life by Sarah Ferguson who astonished photographers with her youthful look two years ago when she appeared at a book signing in London. In contrast to her rather tired and wrinkled appearance witnessed in New York a few months earlier, the Duchess of York — then 46 — appeared radiant and youthful. She told people she had been seeing Dr Victor. He confirmed she was a patient but added discreetly: "I cannot discuss her treatment."

He hardly needed to. That summer of 2006 saw women beating a path to his door. In London, he worked from a clinic near Harrods, specialising in something called SmartLipo. It was basically liposuction using less invasive techniques than those generally employed.

One of his patients was writer Helena Frith Powell who asked him to remove what she called her "pot belly". After the procedure she wrote: "I am wearing low-cut jeans with a fairly short top — and my tummy looks great. I only wish I'd done it years ago."

Dr Victor charged his London patients around £2,000 for similar work. He appears to have severed his link with the Knightsbridge clinic, however, and his New York office now suggests ­London patients ring a mobile telephone number in the UK. When the Evening Standard tried the number, it failed to connect.

Dr Victor's range of products was taken up by Fenwick in Bond Street and Selfridges in Oxford Street and was already a bestseller at Saks on Fifth Avenue. He and his wife — described by a friend as "incredibly tall and Barbie beautiful" — became celebrities in their own right. They were invited to some of the best parties and they became familiar faces at New York charity functions, mingling with Hollywood stars and tycoons.

Their apartment at 845 UN Plaza — for which they paid $13,000 a month rent with a $78,000 security deposit — was the scene of many smart gatherings. But there was a gloomy flaw in the dazzling life the Victors appeared to lead. They were running out of money.

While they were socialising with some of the wealthiest people in America, they were having problems paying their bills. One of their lawyers sued them for his fees and an accountant quit, complaining he hadn't been paid. There was an insight into their financial plight when Stewart Rahr, the pharmacy billionaire, handed the Victors $200,000. Rahr, a friend of Donald Trump, says he gave them the money because they wanted a loan. Dr Victor claims the money was an investment in his ­business which was demanded back.

Whichever version is correct, it all became rather unpleasant. Rahr, 62, claimed he couldn't get his money back from the doctor and his wife. So he hit on an unconventional way of persuading them to pay up. He hired a group to picket Dr Victor's practice on the Upper East Side with placards that read: "Dr Steven Victor, Dermatologist. May Make Your Skin Crawl." The demonstration was called off when Dr Victor wrote a cheque.

At the time, Dr Victor and his company, Victor Cosmeceuticals, was being sued in New York for more than $1.1 million for alleged unpaid debts. In July that year, 2006, he was being asked to return — with interest — the $1.3 million paid by the Texan investors 12 months earlier.

The $1.3 million is at the heart of a raft of allegations against Dr Victor. The investors want 18 per cent interest every year for the past three years. With expenses and fees, the sum being claimed is well over $2 million.

The most disturbing allegation is that Dr Victor attempted to avoid paying back the money by re-inventing his beauty company. This, according to the court papers in New York, has led to an allegation of attempted fraud.

Among the documents is an affidavit sworn by an executive who tried to recover the Texan investors' cash. The affidavit states: "Instead of making payment, Victor Cosmeceuticals engaged in a scheme to hinder collection efforts by continually providing false assurances that Victor Cosmeceuticals was on the verge of sourcing financing to pay off the debt, while secretly engaging in fraudulent conveyances of the ­company's assets."

This refers to a transfer, in March last year, of assets in Victor Cosmeceuticals to another company, Victor Products. According to the Texan investors, the switch was made in an attempt to ­frustrate their efforts to get their money. The affidavit states that Dr Victor's wife, Anna Rhodes, who was president of ­Victor Cosmeceuticals, was "unable to articulate a valid business rationale for the transfers". It adds: "Clearly, because none exists."

The investors claim the movement of the assets was an attempt to prevent them making a claim on them. But the question now is — what assets does Dr Victor have left? His beauty products are still sold in high-end stores but Dr ­Victor told the Evening Standard he has been trying to manage shortfalls in cash flow. The money has come from his ­successful "Rejuvenation Center" and dermatology practice in New York, he said. When he completes his current funding operation, he added, he plans to roll up the centre and the products line into one.

He is contesting claims that he ­misused investors' money. He said the money was spent on legitimate business expenses and the alleged jaunt he and his wife are said to have taken to Europe was a ­promotional tour.

"The allegations that have been made simply aren't true," he said. "This was a loan to one of my companies. A rather small business thing, really."

Down in Texas they don't seem to see it in quite the same way.