Neil Cole, the founder and former CEO of Iconix Brand Group, was sentenced to 18 months in prison, after his second trial in a criminal case. Last November, Cole was convicted of securities fraud and other charges for misleading investors about the company’s earnings.
Jurors found Cole guilty on eight charges, including securities fraud and improperly influencing an audit and six counts of making false filings with the US Securities and Exchange Commission. He was also charged in 2019 with fraudulently inflating Iconix earnings from 2013 through August 2015.
According to a statement from The United States Attorney for the Southern District of New York, Cole engaged in a scheme to falsely inflate Iconix’s reported revenue and EPS by orchestrating a series of “round trip” transactions in which Cole and a senior Iconix executive induced a JV (joint venture) partner, a Hong Kong-based international apparel licensing company, to pay artificially inflated buy-in purchase prices for JV interests, with the understanding that Iconix would then reimburse the partner. The U.S. attorney’s office statement read, “Through the scheme, Cole caused Iconix to report fraudulently inflated revenue and EPS figures to the investing public. Cole did so, in part, to ensure that the reported figures met analyst consensus and to fraudulently convey the impression to the investing public that Iconix was growing quarter after quarter, as Cole had touted to the investing public.”
In addition to his prison term, Cole was sentenced to three years of supervised release and ordered to pay forfeiture in the amount of $790,200.
Cole will remain free on bail pending appeal.
“First and foremost, the court has continued Mr. Cole’s release on bail pending appeal,” said Cole’s legal team in a statement after the ruling. “That decision and today’s sentence comes after the government charged Neil Cole with participating in a fraud scheme with others, and he was forced to go to trial twice to defend those charges. The jury in the first trial acquitted Mr. Cole of all conspiracy counts. Although the second jury convicted, we are confident in the strength of Mr. Cole’s appeal of that verdict and look forward to the opportunity to present our arguments to the Second Circuit.”
Cole stepped down in August 2015 after leading New York-based Iconix for a decade. Later that year, the company restated financial results and disclosed it was under investigation by the SEC.
Iconix, which went private in a deal with Lancer Capital in 2021, is a brand management company. Owned brands include Candie’s, Bongo, Joe Boxer, Rampage, Mudd, Mossimo, London Fog, Ocean Pacific, Danskin, Rocawear, Cannon, Royal Velvet, Fieldcrest, Charisma, Starter, Waverly, Zoo York, Umbro, Lee Cooper, Ecko Unltd., Marc Ecko, Artful Dodger, And Hydraulic. Iconix also owns interests in The Material Girl, Ed Hardy, Truth Or Dare, Modern Amusement, Buffalo, and Pony.
