The founder of clothing chain American Apparel has been accused of sexual abuse by a former employee who is seeking £160 million.

Dov Charney, who comes from a Canadian Jewish family, created the popular and edgy clothing chain in 1991 when he was 22. Still its CEO, the brand now has stores worldwide including eight in the UK.

The woman who made the allegations said that when she was 18 Mr Charney, forced her to have sex with him a number of times and effectively “held her prisoner” in his New York home.

In the lawsuit Irene Morales said she left her job “on the verge of a breakdown” after being subjected to “extreme psychological abuse and torment".

However Ms Morales said the alleged incidents took place three years ago after she visited him at his home, and that she visited Mr Charney after the first incident including on a trip to Los Angeles.

She did not mention the alleged sexual abuse to police at the time.

Mr Charney has been subject to five other sexual harassment charges before, although none of them were proven.

A spokesman for the company told the New York Post that when she left her job Ms Morales had agreed not to sue the company. He said: "We are confident that Ms Morales' claims will be…resolved fully in favor of the company.”