Jon Epstein, the former CEO of Fila USA and Filas new parent company, Sport Brands International, was sentenced Friday by U.S. District Judge Karon O. Bowdre to 5 years probation, 6 months home detention, and a $10,000 fine in the Just for Feet fraud case.
The sentencing stems from Epstein's guilty plea deal in December in the case that has impacted a number of industry executives as well as three former Just for Feet executives, including Don Ruttenberg.
Epstein could have been sentenced to a maximum of five years in prison and fined $250,000. He was charged with one count of conspiracy to provide false statements to auditors and falsify books and records. U.S. Attorney Alice Martin said Epstein has admitted to conspiring to submit false statements to Just for Feet auditors, who were led to believe Fila owed Just For Feet $1.4 million more than it really did.
The government contends the overstatements were part of a scheme to inflate Just For Feet's earnings for three years starting in 1996, alleging more than $8 million in overstatements from a number of companies. Epstein had reportedly agreed to help prosecutors build their case against others associated with the actions that brought the company down after rapid growth and an IPO in the late 90s. A motion to depart was filed on Epsteins behalf, citing his “substantial assistance to authorities”.
Epstein must still contend with a SEC suit in the case.
The action marks the second sentencing in the governments probe into the activities surrounding JFF. Tim McCool, a former national sales director of adidas America, agreed to plead guilty in August and received an eight month sentence in March, half of which is to be served in a federal facility in Oregon.
Gilburne and Dodge Sentencing Hearings Scheduled For This Week…
Former Just For Feet stores president Adam Gilburne reached a plea deal in April 2003 and has a sentencing hearing scheduled for this Thursday, May 27, 2004. He could receive up to five years in prison and a $250,000 fine on the charges of conspiracy to commit wire fraud and securities fraud.
Don Ruttenberg, who has figured prominently in each of the transactions with the vendor executives, pled guilty in his case and is scheduled for sentencing July 27, 2004. Ruttenberg agreed to plead guilty to two criminal counts.
The conspiracy charge against Ruttenberg carries a maximum penalty of five years in prison and a fine of $250,000 and the charge of making false statements to the auditors of a publicly traded company carries a maximum penalty of 10 years in prison and a fine of $1 million.
Steven Davis, the former director of advertising for JFF, agreed to plead guilty to making false statements to federal agents. He will also be sentenced on July 27.
Steve Dodge, the former vice president of U.S. Sales for the pre-Nike Converse, Inc., also agreed to plead guilty to conspiracy to submit false statements and to falsifying the books and records of JFF. Dodge pled guilty in February and is scheduled for sentencing tomorrow, May 25. A motion to depart was filed on Dodges behalf similar to the one filed in Epsteins case.
Tom Shine, former president of Logo Athletic, Inc. and currently Reeboks SVP for Sports & Entertainment Marketing, pled guilty to conspiracy to submit false statements and to falsifying the books and records of JFF. Shine's sentencing hearing is scheduled for June 26.
>>> Could it be that others have learned a lesson from McCools sentence and are cutting better deals? By all accounts, most saw the Epstein charges as more severe due to his position as a corporate officer
