Former American Apparel worker accuses former CFO of conspiring against founder

Former American Apparel worker accuses former CFO of conspiring against founder

A former American Apparel worker is suing the Los Angeles company for wrongful termination and accusing its former chief financial officer of plotting against CEO Dov Charney, who was ousted last summer.

David Nisenbaum, who was hired in 2012 to upgrade the accounting and finance departments at American Apparel, said he was fired in retaliation for bringing to light mismanagement under John Luttrell, the retailer's chief financial officer who took over as interim chief executive after Charney was removed.

The lawsuit is one in a series of lawsuits plaguing the struggling clothing manufacturer.

Nisenbaum said Luttrell, who left American Apparel in September, fumbled a bond financing round and mishandled the opening of a distribution center in La Mirada, costing the company millions of dollars. Nisenbaum said he "continually" discovered "embarrassing deficiencies" in the way Luttrell ran the company.

After Charney was suspended as chief executive in June, Nisenbaum said he filed a complaint to the board of directors accusing Luttrell of violating accounting and disclosure requirements under federal Sarbanes-Oxley rules. The next day, he was fired, Nisenbaum said in the lawsuit.

Nisenbaum accused Luttrell of orchestrating both his firing and that of Charney in order to sell American Apparel and cover up "fraud in running a publicly traded company."

American Apparel said Tuesday that it does not comment on personnel matters, "especially those that precede the current management team."

But the suit contains a host of eye-popping allegations against the company.

During his time at American Apparel, Nisenbaum said, there were three embezzlement rings that involved "several hundred thousand dollars of vendor kickbacks." One contractor was paid, the suit says, but never actually performed any service.

Luttrell was also openly hostile toward Nisenbaum, the suit alleges. Sometimes the former finance chief would sneer, make rude hand gestures or pretend that Nisenbaum "smelled bad." Nisenbaum said he believed that Luttrell had a problem with his Jewish faith.

"Mr. Nisenbaum is informed and believes that his position and job duties and responsibilities were offered to and bestowed to less qualified non-Jewish individuals subsequent to his employment," the lawsuit says.

Nisenbaum said all references to Sarbanes-Oxley violations and his religious discrimination complaint were removed from his personnel file, which he request after his termination, the suit says.

Follow Shan Li on Twitter @ByShanLi

Copyright © 2016, Los Angeles Times