[amayausers.com] Re: American Apparel
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- Date: Wed, 12 Nov 2008 17:56:24 UT
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Guess what folks - another article about more sleazy dealings at American
Apparel. I'm not judging their clothes as I have bought from them before
because the customer asked for it, but these guys really need to clean up their
act.
BUSINESS NOVEMBER 12, 2008
Ex-American Apparel Accountant Sues
By NICHOLAS CASEY
A former accountant for retailer American Apparel Inc. has filed a wrongful
termination suit against the company alleging that he was fired after refusing
requests from Chief Executive Dov Charney to inflate figures on the company's
balance sheet.
The lawsuit, filed in Los Angeles County Superior Court last week, is the
latest in a string of cases against the retailer and its top executive. The
company has recently faced five sexual harassment cases that have been settled,
dismissed or placed in arbitration.
The latest case was brought by Roberto Hernandez, who handled accounts payable
and computer issues for the company. He alleges that in 2006 Mr. Charney
repeatedly "demanded that Mr. Hernandez pad the inventory" of the company in an
effort to lure investors. American Apparel, then a private company, was seeking
outside investment, according to Mr. Hernandez's complaint.
In the court papers, Mr. Hernandez says he "refused to participate in any
scheme to potentially defraud the investors," a position that he believes led
to his alleged termination on Nov. 9, 2006, about a week after he claims he
refused to cooperate.
The complaint, which names both the company and Mr. Charney as defendants,
alleges wrongful termination, breach of contract and the infliction of
emotional distress, among other charges.
On Tuesday, Mr. Charney, reached on his cellphone, declined to comment.
Earlier, a California appeals court criticized the company for planning to
issue what it called a "materially misleading" press release claiming a victory
in an arbitration proceeding in one of the sexual-harassment cases. In fact,
before the arbitration was to begin, American Apparel had signed a settlement
with the plaintiff agreeing to pay $1.3 million in exchange for a statement
exonerating Mr. Charney.
The plaintiff's attorney in that case, Keith A. Fink, also represents Mr.
Hernandez, whose suit differs from the others because of its allegations of
financial misconduct.
According to the complaint, tensions between Mr. Charney and his accountant
arose in October 2006, when, according to Mr. Hernandez, American Apparel was
seeking money from LaSalle, a firm that was interested in making an investment.
According to the lawsuit, Mr. Charney said LaSalle "ended up not putting money
in the company for several reasons: a failed audit and the inappropriate sexual
conduct of Mr. Charney." Bank of America Corp., which now owns LaSalle,
declined to comment Tuesday because, the bank said, the alleged deal was being
negotiated before it bought LaSalle.
The complaint continues: "Incensed over LaSalle's refusal to invest in the
company, Mr. Charney instructed Mr. Hernandez to manipulate the inventory in
order to lure potential investors to put up capital in the hopes that the
inflated inventory would pass an audit by another investor."
American Apparel eventually found capital later that year through a so-called
"blank check" initial public offering, in which investors create a shell firm,
known as a "special purpose acquisition company," that then acquires a private
concern.
Mr. Hernandez's complaint also contains unflattering allegations concerning
American Apparel's work environment that echo allegations in other recent
lawsuits. The complaint alleges that Mr. Charney discussed business with the
plaintiff while in the shower, kept naked pictures of female workers on the
company's computer server, and took employees to "strip clubs under the guise
of showing off T-shirts."
In an interview, Mr. Fink said that his client was an exemplary employee and
that his termination could not have been based on poor performance.
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