The feds got the first of the Just for Feet gang on Monday, with former president Adam Gilburne pleading guilty to charges of that he and others devised a scheme to artificially inflate Just for Feet’s financial condition.
Gilburne was the retailers former president and functioned as the “circus barker” at many of JFFs infamous grand openings, where the retailer would give away cars and throw money from the top of buildings. He rose from franchise owner in Arizona to sales head at corporate to president of the “Superstore” division by the age of 35.
According to the government, between late 1996 and 1999, Gilburne and others devised a scheme involving a rebate from Rogers Advertising of its commissions for the upcoming year which would be recorded by Just for Feet as a receivable due in the current fiscal year.
The scheme resulted in income being overstated by $3 million in 1997 and $5.3 million in 1998, federal prosecutors alleged.
Former JFF chairman and CEO Harold Ruttenberg was not mentioned by name, but the feds alleged that as part of the conspiracy: “The CEO instructed Gilburne and others, if asked about the Rogers rebate, to respond that the rebate was based on services already performed during the current year.”
As part of the plea in U.S. District court in Birmingham, Gilburne is cooperating with the ongoing probe into Just for Feet’s finances, prosecutors said. 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.
JFF sold 102 stores and other assets to Footstar Inc. in February 2000 for $72 million. The stores kept the Just for Feet nameplate and are now part of the Footstar Athletic unit along with Footaction at FTS.
