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REUTERS

Former Aeropostale exec gets 8 years in prison over kickbacks

August 21, 2014 - 2:10pm


(Reuters) — A former merchandising executive at teen apparel retailer Aeropostale Inc. was sentenced to eight years in prison on Wednesday after being convicted of defrauding the company and taking more than $25 million in kickbacks from a key vendor.

Christopher Finazzo, a former executive vice president and chief merchandising officer at Aeropostale, was also ordered by U.S. District Judge Roslynn Mauskopf in Brooklyn, New York, to forfeit more than $25 million and pay the company $13.7 million in restitution.

Following a three-week trial, Mr. Finazzo, 57, was found guilty in April 2013 of 14 counts of mail fraud, wire fraud and conspiracy.

Brooklyn U.S. Attorney Loretta Lynch, who announced the sentencing Wednesday in a statement, said Mr. Finazzo "abused his position of power at Aeropostale and betrayed the trust placed in him by the company, its investors, and its employees by lining his own pockets at his employer's expense."

Prosecutors at trial said Mr. Finazzo entered into an illegal deal with Douglas Dey, a movie producer and the owner of South Bay Apparel Inc., a firm that was once a major clothing supplier for Aeropostale.

Under the deal, prosecutors said Mr. Finazzo from 1996 to 2006 caused the company to buy more than $350 million in T-shirt and fleece items from South Bay on behalf of Aeropostale in exchange for about 50% of the vendor's profits, prosecutors said.

Prosecutors said the scheme enabled Mr. Finazzo to collect more than $25 million in kickbacks from South Bay. The executive hid the transactions from Aeropostale and its investors, prosecutors said, and prevented the retailer from seeking lower prices or better quality merchandise from another vendor.

Mr. Dey, who in 2012 pleaded guilty to conspiring to violate the Travel Act, acted as an executive producer for several movies including "Blue Valentine," a 2010 drama starring Michelle Williams and Ryan Gosling. Mr. Dey, 57, was sentenced Aug. 6 to 3˝ years in prison.

Robert Zito, a lawyer for Mr. Finazzo, said his client planned to appeal. Aeropostale declined comment.

The case is U.S. v. Finazzo et al., U.S. District Court for the Eastern District of New York, No. 10-457.

 



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