The industry has been buzzing ever since new Fila parent, Sport Brands International, made it public last week that CEO Jon Epstein had resigned for “personal reasons”.
The former CEO has agreed to plead guilty in a fraud investigation of the Just For Feet retail chain, federal prosecutors said Thursday. Epstein could be 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.
Epstein “clearly crossed the legal line and entered into this conspiracy to submit false statements to the auditors,” said Martin.
He has reportedly agreed to help prosecutors build their case against Harold Ruttenberg and others associated with the actions that brought the company down after rapid growth and an IPO in the late 90s.
The action marks the third big hit in the governments probe into the activities surrounding Just for Feet prior to the bankruptcy filing. Tim McCool, a former national sales director of adidas America, agreed to plead guilty in August, and former Just For Feet president Adam Gilburne reached a plea deal in April.
Gilburne is scheduled for sentencing on January 7 and McCool is scheduled to be sentenced in March.
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.
Martin said her probe into the Just for Feet collapse is continuing.
You only have to close your eyes and remember the faces present at the numerous JFF grand openings and you could imagine the people that could be caught up in this mess. The “interviews” with numerous sales executives for a number of footwear and apparel companies continue. The only people that feel safe at this point are those that can swear they never signed a thing.
The shame here is that these people arent Martha Stewart or Dennis Kozlowski. They have been friend and peer to many of us for many years and the universal reaction has been one of disbelief. We doubt very much that anyone that knows the two guys caught up in this thing so far would think for a minute that they had intentions to bilk investors.
>>> No doubt there will be more of these soon
