The FBI and New York police executed the search warrant, said Nicholas Biase, a spokesman for the US Attorney’s Office for the Southern District of New York.
Nygard’s spokesman Ken Frydman said authorities executed search warrants on Nygard’s offices in New York and California, and he said his client is “not surprised” by the raids.
“Nygard welcomes the federal investigation and expects his name to be cleared,” Frydman said. “He has not been charged, is not in custody and is cooperating with the investigation.”
He later announced Nygard will step down as chairman and will divest his ownership interest.
While there are no publicly filed charges against Nygard, the fact that the FBI searched his office suggests the existence of a federal criminal investigation.
“The wonderful Nygard employees who rely upon the companies for their livelihoods must now be the priority,” Frydman’s statement reads. “Peter Nygard thanks his employees for their years of dedicated service.”
The businessman allegedly used his ties to the fashion industry to entice young women with drugs, money and hopes of a successful modeling career.
The suit also accuses Nygard of sex trafficking at Lyford Cay, a 150,000 square-foot compound in the Bahamas.
The lawsuit says some of the young women were held at one of his properties, where they were not allowed to leave without his permission and were forced to perform sex acts. They were also forced to recruit new victims, the suit says.
Nygard also kept a database of potential victims through his company’s corporate server that had information on more than 7,500 underage girls and women, the lawsuit alleges.
A spokesperson for Nygard has told CNN the lawsuit was “expected” and intended to damage Nygard’s reputation through false statements.
CNN has reached out to an attorney representing the victims.
Nygard is chairman of Nygard International, a privately held company he founded in 1967.
“Nygard created a standard of excellence for the Canadian women’s fashion industry by having the #1 recognized label in the Canadian marketplace,” the company’s website says.
Nygard’s brands include SLIMS, Bianca Nygard and TanJay.
Following the raid, department store Dillard’s announced they were refusing deliveries, canceling orders and suspending future purchases from Nygard, a statement from the company said. The decision came “in light of the serious allegations” concerning Nygard, the company said.
CNN’s Sheena Jones and Madeline Holcombe contributed to this report.