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American Apparel board fired their CEO and founder over alleged sexual misdeeds

Last Wednesday, American Apparel’s Board of Directors gave company founder Dov Charney an ultimatum—either quit or get canned. Charney was terminated. The Washington Post reported today that American Apparel fired their founder and CEO for several reasons.

American Apparel founder and CEO Dov Charney was fired last week.
Photo by Handout/Getty Images

The board credited one reason for his termination because of many sexual misdeeds. Supposedly, his sexual discrepancies cost the company too much insurance money. The Buzzfeed website learned the company’s liability insurance had increased from $350,000 to $1 million. The board let Charney know that this was a direct result of his sexual misbehavior.

The board also blamed Charney for the loss of critical employees. Had Charney resigned, he could have stayed on as a consult for four years and received an annual $1 million per year salary. After four years, he would have then received a severance package.

The board also said he used unauthorized company money to pay off female employees to keep silent about misconduct. A former employee sued the company three years ago because she claimed Charney had made her a sex slave.

Other charges include Charney making derogatory comments about his employees’ gender, sexual orientation and religion. He also refused to attend sexual discrimination training. He isn’t accepting the firing without a fight. The ousted CEO said he owns 27 percent of the company and the board illegally fired him.

Charney has denied any wrongdoing. His attorney claims no one from the board ever discussed any allegations with him. According to the American Apparel website, Charney started American Apparel in 1989. After leaving college, he borrowed $10,000 from his father to start his own apparel company. He eventually moved his company to Los Angeles in 1997. He then took the company public in 2007. To his credit, Charney has earned several awards. Ernst & Young named him as the 2004 Entrepreneur of the Year, and American Apparel has been ranked as a trendsetter second only to Nike.