‘Sex slave’ led to ouster of American Apparel CEO
By James Covert
American Apparel moved to fire CEO Dov Charney over allegations related to the 2011 case of Irene Morales, a former employee who accused him of making her his “sex slave,” The Post has learned.
The clothing retailer’s board, which said in a public statement earlier this week that it was investigating unspecified “alleged misconduct,” resurrected the case in its surprise move to fire Charney at a Wednesday meeting, sources said.
Specifically, the board this week accused Charney of allowing an employee at the Los Angeles clothing chain to post nude photos of Morales on a blog that was purportedly authored by Morales, insiders said.
The board’s concern, according to sources, is that the blog not only harassed and defamed Morales, but also ran afoul of certain California laws that forbid falsely impersonating others online, as alleged in a suit at the time by Morales’s lawyer Eric Baum.
By knowingly allowing the blog to be posted, the board charged that Charney exposed the company to liability, according to sources close to the situation.
The lawsuit brought by Morales, who had sought $260 million, was thrown out by a Brooklyn judge in 2012 and sent into arbitration.
The suit appeared to have been complicated after The Post revealed in an exclusive March 25, 2011, report that Morales had allegedly sent dozens of nude photos of herself to Charney after she stopped working for American Apparel, coupling them with saucy come-ons.
“Daddy’s got a little naughty girl waiting for him,” Morales allegedly wrote, according to Charney’s lawyer Stuart Slotnick.
This spring, however, the blog postings became a key sticking point in settlement talks, exposing American Apparel to damages, according to sources.
According to one source, a settlement was recently in the works for a dollar sum “in the low six-digits,” well short of the judgement Morales had sought. It wasn’t immediately clear whether a settlement has been finalized.
Nevertheless, the case has come back to haunt Charney, who was abruptly stripped of his chairman title and suspended from his CEO post for 30 days, pending a permanent ouster following the Wednesday board meeting in New York.
Reached Friday, American Apparel co-chairman Allen Mayer declined to discuss specifics of Charney’s alleged misconduct, but did say the board recently got new information that spurred the surprise coup.
“We have heard for years allegations and rumors in newspaper stories that were not sufficient to take action,” Mayer told The Post. “But what came to our attention was not allegations and rumors but established fact.”
On Friday, a Web video surfaced of Charney dancing nude in the presence of two alleged female employees.
The board also raised concerns about certain severance payments to former female employees that were authorized by Charney without the board’s consent, according to sources close to the case.
In addition, the board alleged that Charney improperly used company funds to pay for air travel for his mother, according to a source.