Former Aeropostale executive convicted of taking vendor kickbacks
NEW YORK (Reuters) - A former merchandising executive at retailer Aeropostale Inc (ARO.N) was convicted on Thursday of defrauding the company and taking more than $25 million in kickbacks from a key vendor, federal prosecutors in New York said.
Christopher Finazzo, 57, who was an executive vice-president and chief merchandising officer at Aeropostale, was found guilty following a three-week trial by a jury in Brooklyn, N.Y., of 14 counts of mail fraud, one count of wire fraud and one count of conspiracy.
Prosecutors said Finazzo, who spent 10 years as a top merchant at the trendy mall-based retailer, had entered into an illegal deal with Douglas Dey, the owner of South Bay Apparel Inc, which was at the time a major clothing supplier for the company.
Under the arrangement, Finazzo purchased more than $350 million in T-shirt and fleece items from South Bay on behalf of the company, in exchange for approximately 50 percent of South Bay's profits, prosecutors said.
Over the course of the scheme, Finazzo collected more than $25 million in kickbacks from South Bay, prosecutors said. Prosecutors accused Finazzo of concealing the transactions from Aeropostale and its investors, and prevented the company from seeking lower prices or better quality merchandise from another vendor.
"We have all heard the saying 'money does not buy happiness,' and today's verdict is case in point for that maxim," U.S. attorney Loretta Lynch said in a statement. "Christopher Finazzo had a great job that paid him millions of dollars, but this honest living was apparently not enough to satisfy his greed."
A lawyer for Finazzo could not be immediately reached for comment on Thursday evening.
Finazzo faces up to 20 years in prison on each of the fraud convictions and up to 5 years for the conspiracy charge. Dey, who was also charged, has pleaded guilty to conspiracy to bribe Finazzo and faces up to 5 years in prison.
The case is U.S. v. Finazzo et al., U.S. District Court for the Eastern District of New York, No. 10-457.
(Reporting by Jessica Dye; Editing by Chris Gallagher)