Former Aeropostale Executive VP and Chief Merchandising Officer Christopher Finazzo was sentenced to eight years in prison on Aug. 20 after being convicted of defrauding the company and pocketing more than $2 million in kickbacks from a key vendor.
The ex-executive was ordered by U.S. District Judge Roslynn Mauskopf in Brooklyn, New York, to turn over more than $25 million and pay the company $13.7 million in restitution, according to Reuters. Finazzo was convicted of 14 counts of mail fraud, wire fraud and conspiracy after a three-week trial in April 2013.
Prosecutors accused Finazzo of colluding with Douglas Dey, movie producer and owner of South Bay Apparel, in an illegal deal. Dey's apparel company was once a major clothing supplier for Aeropostale (NYSE:ARO), and the deal awarded Finazzo 50 percent of vendor profits gained from a $350 million T-shirt and fleece purchase from Dey's company.
The deal meant Finazzo was able to collect more than $25 million in kickbacks from South Bay. Finazzo allegedly hid the transactions from Aeropostale and its investors, preventing the company from seeking a lower price for better quality merchandise from another vendor.
Dey pleaded guilty in 2012 to conspiring to violate the Travel Act. He was sentenced on Aug. 6 to three and a half years in prison.
Aeropostale has been closing stores and shuffling executives in attempt to navigate a turnaround.
-See this Reuters story
Aeropostale's ex-CEO Geiger returns
Aeropostale's P.S. launches in Mexico
Aeropostale to cut jobs, close 125 PS stores in malls
Aeropostale sues H&M for 'Love Love Dream' theft
Aeropostale is weighing sale options