American Apparel CEO Charney Ousted

The board of directors of apparel supplier American Apparel (asi/35297) voted in June to oust CEO Dov Charney from the clothing company he founded, citing multiple instances of alleged misconduct. Charney is accused of using company funds to pay for flights for his parents, as well as providing corporate apartments for friends and staying in them himself when he wasn’t on business, according to news reports.

Reports suggest Charney is purported to have known about – but done nothing to prevent – a blog put together by an employee that skewered American Apparel’s culture, while including nude photos of Irene Morales, who sued Charney over alleged sexual misconduct in 2012. Charney is alleged to have used company funds to provide undeserved severance payments, salary increases, bonuses and commissions to induce employees to sign release agreements aimed at protecting him from personal liability for alleged misconduct. The board says quality employees left American Apparel because of Charney, adding that some financing sources have refused to become involved with the supplier as long as he was involved with the company.

Charney is threatening to sue American Apparel unless he is reinstated. His attorney, Patricia Glaser, said her client was illegally fired, without giving him time to consider a proposed $4 million severance package.

American Apparel’s board named John Luttrell, formerly, CFO, interim CEO, and Allan Mayer and David Danziger as co-chairmen.