Scott Brabson, a former Vans executive, and Jay Rosendahl, a former Columbia Sportswear executive who was consulting for Vans, pleaded guilty last week to four federal charges, admitting they obtained $4.7 million in bribes and kickbacks from Chinese factories that manufactured Vans product.
SEW reported in September 2004 that the pair were facing a 13-count federal indictment for bribery, money laundering, and mail & wire fraud stemming from allegations that, for a period between 1997 and 2000, they forced seven Chinese factories to pay 3% to 5% kickbacks on all Vans production orders. After leaving Vans, Brabson reportedly moved $3 million of that money to a Luxembourg bank and $1.3 million to Hong Kong accounts for Rosendahl. Each defendant withdrew hundreds of thousands of dollars in cash throughout the process.
Brabson pleaded guilty on February 7, 2005 to federal charges of conspiracy, conspiracy to launder money, foreign travel to promote commercial bribery, and wire fraud. Brabson has been held without bail since August 2004 because authorities considered him a “flight risk.” Rosendahl entered his plea later in the week, acknowledging his involvement in the matter and pleading guilty to the same four felony charges. Brabson, who was Vans VP of sourcing from November 1997 to December 2000, arranged for Vans to hire Rosendahl as a product development consultant in February 1999.
As part of his plea, Brabson also admitted that he fabricated e-mails in the spring of 2004 after he and Rosendahl lost an $8 million arbitration award in a suit that was filed against them by Vans, Inc. Those fake e-mails and other communications, which were also provided to an investigator who worked for Vans law firm, were created to look like Vans documents that exonerate him in the bribery scheme and implicate other Vans executives in allegations of inflated earnings made by shareholders in a class-action against Vans. Former Vans CEO Gary Schoenfeld and other senior executives were implicated in the original suit. VF Corporation acquired Vans in June 2004.
The two face sentencing on April 11, 2005. The four charges carry a maximum possible penalty of 35 years in federal prison, but the plea agreement calls for a prison sentence between 57 and 71 months.