Former American Apparel CFO Under Scrutiny

Image via Flickr by Kris Cardenas

The Los Angeles based clothing brand, American Apparel, has recently been under fire for fraud, mismanagement, and other potentially illegal activities. Specifically, CFO John Luttrell is accused of unreasonably firing a finance employee, conspiring against the CEO, and violating certain financial regulations, among other offenses.

Luttrell left the company in September 2014. The finance director who was unfairly fired, David Nisenbaum, and the former CEO, Dov Charney, are at the forefront of the legal battle with American Apparel. Charney was ousted as the company’s CEO in June of 2014. At that point, Luttrell took over as interim CEO until he left the company three months later.

Nisenbaum alleges that he was dismissed as a result of speaking out against Luttrell’s unethical practices as chief financial officer. He also claims that any complaints regarding violations and religious discrimination during his time at the company were removed from his personnel file.

According to the attorney representing Nisenbaum and Charney, the lawsuit regarding the termination is only the beginning in a string of suits that will be filed against Luttrell for his actions during his time as CFO at American Apparel. Nisenbaum claims there were multiple rings of embezzlement in which vendors were compensated for work that was never performed.

The suit against Luttrell includes a secret memorandum to the company’s audit committee regarding the strategic removal of founder and CEO, Charney. While none of the parties involved in the lawsuit are currently working at American Apparel, the news comes in the wake of poor performance records and current employee dissatisfaction with the management team.

American Apparel recently suffered from a steady stream of loss over the last 5 years, and it is also facing lawsuits from employees who were laid off without being given 60 days’ notice. The company was founded in 1989 and specializes in the design and marketing of a line of clothing including t-shirts, leotards, vintage patterns, and accessories for adults, children, and pets. Currently, Hassan Natha is the acting CFO of American Apparel. Hassa has 20 years of experience in finance working in both executive and other management roles