How To Run Out Of Cash While Owning Half Of American Apparel

                                            <b>Dov Charney, the founder of American Apparel, told Bloomberg News that he&rsquo;s &ldquo;down to&rdquo; his last $100,000 and sleeping on a friend&rsquo;s couch.</b> How is that possible?                                                          

American Apparel founder Dov Charney made headlines today for telling Bloomberg News he’s down to his last $100,000 and sleeping on a friend’s couch on New York’s Lower East Side as he works to win his company back.

Charney was fired last week from his position as a paid consultant. He was suspended as president and CEO by the board on June 18 for “alleged misconduct and violations of company policy” and has been the subject of an internal investigation since July 9. Bloomberg/Bloomberg

But Charney is still American Apparel’s biggest stockholder, owning roughly 43% of the company, or about 75 million shares. The stock closed at $1.14 today, valuing the company at about $200 million.

American Apparel / Via

Until last week, he was also making about $800,000 a year as a consultant to American Apparel, similar to the base salary he was paid as CEO, according to a separate Bloomberg News report.

So how do you own 43% of a $200 million company and end up on your friend’s couch?

First up, his stake is complicated by a deal he cut with hedge fund Standard General this summer.

The deal boosted his stake in the company from 27% to around 43%. In exchange, he gave up his board seat, the right to buy more shares, and certain voting rights.

The New York Times reported in July: “In essence, he is not permitted to make any move unless Standard General consents, according to the terms of the agreement.”

It’s unclear whether the agreement precludes him from selling shares to raise money for himself. But given he wants to return to the company, he probably wouldn’t want to. Standard General didn’t respond to a request for more information on the deal.


Charney told Bloomberg Businessweek this summer: “They control the shares. I’m a bystander.”

“My first issue is to save people’s jobs, put the company into a stable financial situation,” he told the magazine. “And then we’ll evaluate whether or not I’ll be the janitor or the CEO or the consultant. … I believe Standard General will treat me fairly.”

Standard General told BuzzFeed it “supported the independent, third-party and very thorough investigation into the allegations against Mr. Charney, and respect the board of director’s decision to terminate him based on the results of that investigation.”


Here’s one hope for Charney: Private-equity firm Irving Place Capital reportedly proposed buying American Apparel for as much as $1.40 a share.

That offer would involve Charney returning to the company, according to Bloomberg News.

The New York Post reported last week that a potential private-equity acquirer had partnered with Charney.

Charney complained to Bloomberg News about being down to his last $100,000, which is a sizable sum of money for most people.

Certainly enough to afford a hotel or Airbnb in New York City. But perhaps he’s playing it safe without his salary and with his shares apparently locked up.

According to today’s report, he also said he was planning to “sue everyone.” So he may also be saving up for that.


Updates with clarification on Charney’s funds in last three paragraphs. BF_STATIC.timequeue.push(function () { document.getElementById(“update_article_update_time_4545770”).innerHTML = UI.dateFormat.get_formatted_date(‘2014-12-22 22:07:01 -0500’, ‘update’); });

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Headscarf Case Cements The Abercrombie “Look” In Legal History

                                            <b>Under former CEO Mike Jeffries, Abercrombie &amp; Fitch developed a hyper-specific look for its customers and its employees.</b> That look has now stumbled its way into the Supreme Court.                                                          

Samantha Elauf (center) her mother Majda Elauf (left), and Equal Employment Opportunity Commission General Counsel David Lopes leave Supreme Court Wednesday. Chip Somodevilla / Getty Images

Abercrombie’s famously stringent “Look Policy” for sales associates–which specified everything from the maximum acceptable number of earrings (2) to the maximum length of fingernails (1/4 inch)–was discussed by the nation’s highest court today.

This, of course, has a significance all of its own: It means Abercrombie’s hyper-specific, borderline absurd dress code, enforced by former CEO Mike Jeffries, has been cemented in U.S. legal history for as long as this nation stands.

It also contributed to a more narrow debate in the Supreme Court, related to the company’s decision not to hire a 17-year-old Muslim woman in 2008, after determining her headscarf failed to comply with its look policy. Samantha Elauf, who scored well enough otherwise to be hired as a “model” at an Abercrombie kids store in Tulsa, Oklahoma, was told her hijab precluded her from getting the job, as it was against policy for models to don headwear.

A snapshot from Abercrombie’s 2013 “Hairstyle Sketchbook” Obtained by BuzzFeed / Via

The Equal Employment Opportunity Commission won an initial religious discrimination suit against Abercrombie that was filed on Elauf’s behalf, but another court reversed the ruling in 2012, saying a job applicant “must present the employer with explicit details sufficient to give it ‘particularized, actual knowledge’ before an employer need consider accommodating the applicant’s religious practices.’

That court said it doesn’t matter if a company has more knowledge than an applicant about how its rules might conflict with their religious practices. In other words, they said Abercrombie can’t be held liable for failing to accommodate Elauf’s headscarf, as it wasn’t the retailer’s responsibility to ask about it and her ability to comply with the look policy. Instead, the court said, it was Elauf’s fault for never informing Abercrombie that she wore her hijab for religious reasons and thus needed an accommodation. The Supreme Court listened to arguments today about whether the burden of asking for such a religious exemption falls on an employee or the employer.

Abercrombie argued that employers should not be forced to stereotype applicants as requiring religious exemptions and that Elauf should have figured out her hijab might violate the Look Policy and brought it up prior to the hiring decision. The EEOC contended that applicants are at a big informational disadvantage regarding a potential employer’s policies and that if a problem is sensed, it’s a company’s responsibility to start a dialogue.

“If she had told him, this is for religious belief and I need an accommodation from the Look Policy, at that point, under the statute, there would be a duty to accommodate,” Shay Dvoretzky, the lawyer arguing on behalf of Abercrombie, said today. “What we want to avoid is a rule that leads employers, in order to avoid liability, to start stereotyping about whether they think, guess or suspect.”

“The point is to initiate the dialogue,” Deputy U.S. Solicitor General Ian Gershengorn said, arguing on behalf of the EEOC. “Had that happened here, then we would be talking about a different point in the process about whether there was a reasonable accommodation that could be done and whether it could be done without undue hardship. But that dialogue never happened here, and that is the problem with the case as we see it.”

“This is what makes this a very important case…unlike employees, who are in a position to go back and forth with their employer and understand the work rules, applicants are at a serious informational disadvantage,” Gershengorn said. “They don’t know the work rules. And in this case, it is undisputed that (Elauf) did not.”

The justices exhibited their knowledge of 2008-era Abercrombie and its preppy fashions and ban on the color black while asking about the circumstances under which an employer can reasonably consider the possibility of a religious exemption.

Justice Alito outlined a situation in which four people show up for a job interview at Abercrombie — a Sikh man in a turban, a Hasidic man in a hat, a Muslim woman in a hijab and a Catholic nun in a habit. (He noted that he realized this would sound like the start of a joke, to laughter in the courtroom.)

“Do…those people have to say, ‘We just want to tell you, we’re dressed this way for a religious reason, we’re not just trying to make a fashion statement’?” Alito asked.

“One can certainly imagine cases in which it is more obvious than others that a particular garb is likely worn for religious purposes,” Dvoretzky responded. “There are some circumstances in which it is certainly more likely than others, but the question before the Court is to devise a rule that’s going to apply across the board..”

Abercrombie argued that it would treat any applicant with a head covering similarly, whether it was a hijab, a baseball cap or a yarmulke, and that the company is entitled to make style judgments in job interviews that result in hiring decisions. That argument didn’t fly over so well, however.

“If I walked into an Abercrombie interview wearing a suit, presumably Abercrombie could tell me, ‘When you come to work, please don’t wear the suit, please wear our clothes,'” Dvoretzky said “But it would also be equally rational for Abercrombie to say, you know, if this person is coming in wearing a suit, that’s not compatible with our style. And likewise for the headscarf.. (The district manager’s) testimony…is that he would have taken the same action for somebody who came into an interview wearing a headscarf, a baseball cap, a helmet or another religious symbol.”

Chief Justice Roberts shot back: “That doesn’t work in a case like this. It’s not a question, are you treating everybody the same. You have an obligation to accommodate people with particular religious practice or beliefs, so to keep constantly saying, ‘Oh, we would have treated somebody with a baseball cap the same way,’ doesn’t seem to me is very responsive.”

Justice Kagan noted that stereotyping in order to ask a job applicant about religious accommodation, based on a hijab or other indicator, is better than cutting them out altogether.

“You’re essentially saying that the problem with the rule is that it requires Abercrombie to engage in what might be thought of as an awkward conversation, to ask some questions,” Justice Kagan said. “But the alternative to that rule is a rule where Abercrombie just gets to say, ‘We’re going to stereotype people and prevent them from getting jobs. We’ll never have the awkward conversation because we’re just going to cut these people out and make sure that they never become Abercrombie employees.'”

The court is expected to issue a decision in the case by the end of June.

An Abercrombie spokesperson emphasized in an e-mailed statement today that the company “consistent with the law, has granted numerous religious accommodations when requested, including hijabs.” A more recent copy of the company’s look policy, obtained by BuzzFeed News and included below, supports that.

“The narrow issue before the Supreme Court is whether an employee who wants a religious accommodation must ask for one, or whether employers are obligated to guess and speculate about an employee’s religion to ascertain the need for religious accommodation,” the spokesperson said.

Abercrombie, the hottest teen retailer in the late 90s and early 2000s, has been struggling in recent years, losing sales and shuttering stores. Jeffries, the company’s modern-day founder who ran the company since 1992, was ousted in December. The executive was famously specific about dress codes in Abercrombie stores, and even had a 40-plus page manual specifying the appropriate behavior for staff on the company’s corporate jet.

The company says its stores now have more than 50% non-white staff today, up from less than 10% in 2004.

Obtained by BuzzFeed / Via

Obtained by BuzzFeed / Via

From the Supreme Court’s website:

Supreme Court / Via

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American Apparel CEO Fights Back A Pro-Dov Charney Email Insurgency

                                            <b>The company&rsquo;s new CEO, Paula Schneider, recently responded to a series of mass emails sent to employees by an anonymous insider.</b> The emails were critical of American Apparel&rsquo;s new management and the hedge fund backing the company.                                                           

American Apparel

American Apparel may have fired its founder Dov Charney last year, but new management is learning that he’s far from gone.

A group of Charney supporters within the company, who operate behind the name and hashtag #TeamDov, have been rallying support for the founder and slamming American Apparel’s new executives and investors through a digital campaign that management is struggling to quell. One employee has been sending pro-Charney mass emails to American Apparel employees through a variety of anonymous addresses during the past two months, causing enough ruckus that CEO Paula Schneider was forced to address the messages in a staff-wide memo on Feb. 19, BuzzFeed News has learned.

Internal memo from American Apparel’s CEO about problematic emails.

Obtained by BuzzFeed News / Via Source

“Over the last couple of months, we all have received ‘blast’ emails from an anonymous outsider criticizing American Apparel, its management and its policies,” Schneider, who started as CEO last month, wrote in a message obtained by BuzzFeed News. “Some of the emails have even been designed to appear like they are being sent from inside the company. I have refrained from responding to these emails because I feel they do not deserve our collective attention.”

She continued: “That said, I cannot let today’s email — which stooped to personally attacking hard-working members of the American Apparel team — go without a response. As a company, we embrace free speech and social commentary by our employees. That is a valued part of our culture. But today’s email provides an opportunity for me to reach out to all of you. I encourage you not to be influenced by unfounded personal attacks or baseless threats about job security sent by outsiders who do not have the company’s best interests at heart.”

The specific email Schneider is referring to accused Standard General, the hedge fund with the most financial control of the company, of “draining” American Apparel and forcing cutbacks at the retailer. The email included a link to a New York Post story about a lawsuit against Standard General, in which unsecured creditors of RadioShack are accusing the hedge fund of timing its investment in RadioShack to maximize a payout from the company’s recent bankruptcy, raising concern that American Apparel could suffer the same fate. The email noted that Colleen Brown, American Apparel’s newly appointed chairperson, was brought on to the board last year by Standard General (though it incorrectly identified her as CFO) and that new General Counsel Chelsea Grayson was Brown’s pick.

“We need Standard General OUT,” the employee wrote in the Feb. 19 email. “We have a bunch of consultants draining our company sitting in a room all day making 6 figures a month. THAT IS NOT AMERICAN APPAREL.”

One of the anonymous emails described the campaign as being about more than just Charney, saying it is also a response to American Apparel “being taken over by corporate Wall Street guys who don’t care about the company or the brand or the image or its employees.”

The emails reflect concern among employees that as American Apparel tries to right itself under new management, it could lose sight of its core values that were championed by Charney. The founder was a vocal advocate for treating workers generously, paying a fair wage, and making high-quality items in America.

A source inside the company told BuzzFeed News that management has spoken of their commitment to the company’s principles, and says it will continue to focus on remaining sweatshop-free, paying fair wages, and manufacturing in the USA.

While Schneider wrote that the emails came from an outsider, BuzzFeed News confirmed they originated from a current employee, who requested anonymity citing fear of retribution. The employee said they have roughly 5,000 addresses and sent the messages in batches of 500; multiple employees have told the anonymous emailer that the messages have been deleted from their inboxes as American Apparel’s management works to stem the tide.

A spokesperson for American Apparel declined to comment.

The pro-Charney insurgency shows how tightly a founder’s personality can become entwined with a company. Emails prior to the Feb. 19 message centered around gaining signatures and statements for the Team Dov website, which says it’s “a statement of support for Dov Charney and his business vision at American Apparel from workers and executives at all levels of the company and around the world.” Hundreds have since signed the petition.

Charney, who founded American Apparel in 1998, was served with a termination letter in June for a long list of reasons including breaching his fiduciary duty, violating company policy, sexual harassment, and misusing corporate assets.

Charney was working as a paid consultant for American Apparel during an internal investigation that began in July, but was fired in December; the #TeamDov website was born almost immediately after. In a statement on Dec. 22, his lawyers described the investigation as “a complete sham” and said the decision to terminate him was “completely groundless.”

Charney pledged 43% of his stake in the company to Standard General this summer in a deal that apparently soured. He told Bloomberg News in late December that the hedge fund conspired with a board member to oust him after agreeing to reinstate him.

He told the news outlet: “I gave them my entire life’s work and they agreed to put me back in, but instead they used this investigation to fire me. They betrayed me.” Charney has not commented on the current round of anonymous emails and the response by management.

Standard General, for its part, said last December it “supported the independent, third-party and very thorough investigation into the allegations against Mr. Charney, and respect the board of director’s decision to terminate him based on the results of that investigation.”

A Team Dov email sent to employees on Feb. 19

Obtained by BuzzFeed / Via Source

Team Dov email sent to employees on Feb. 16

Obtained by BuzzFeed / Via Source

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Horseshoe Market: Business Incubator for Colorado Handmade and Craft

Horseshoe Market: Business Incubator for Colorado Handmade and Craft
BERKELEY – The Horseshoe Market, Denver's premier indie craft, vintage market, has quickly become a key business incubator for growing handmade and craft businesses in Colorado. Started in 2010, the seasonal outdoor market hosts over 120 local …
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Crews fight fire at north Denver business early Thursday morning

Crews fight fire at north Denver business early Thursday morning
DENVER – Firefighters fought a fire at a north Denver car repair shop early Thursday morning. The fire at the Mr Mazda repair shop on Logan Street, near 58th Avenue, started around 4 a.m.. The first fire crews on scene said they heard explosions inside …
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