Neil Cole, the founder and former CEO of Iconix Brand Group Inc., has been acquitted on two charges of conspiracy, according to a report from Law360.
A Manhattan federal jury decided the partial verdict on Monday and is still deliberating eight other counts.
Cole was arrested by federal prosecutors in 2019 and charged with exaggerating revenue and earnings for Iconix. The company’s former COO Seth Horowitz was also named in a separate charge. The allegations pertaining to both former executives were related to fraud, as per federal prosecutors.
According to allegations, Cole and Horowitz “devised a fraudulent scheme to create fictitious revenue” and misrepresented the company’s net income by hundreds of millions of dollars between 2013 and Q3 of 2015. This allowed the company to meet or meet or beat Wall Street analysts’ consensus estimates in the Q2 and Q3 of 2014.
Iconix licenses brands to leading retailers and manufacturers around the world. The company owns Starter, Candie’s, London Fog, Umbro, Zoo York, Ocean Pacific and other brands. This year, Lancer took the company private in an all-cash deal for $3.15 a share, which totals $585 million including debt.
The SEC began investigating Iconix in 2015. Cole served as founder, chairman & CEO of the company until his resignation in August of that year. Horowitz had resigned in April 2015 just two weeks after CFO Jeff Lupinacci exited in March.
According to Law360, Cole still awaits a verdict on six counts related to creating false SEC filings and false press releases. He is also facing one count of securities fraud and one count of attempting to influence Iconix auditors.
Cole has maintained that he acted in good faith while at Iconix. Horowitz previously pled guilty to the charges.
Footwear News has reached out to Cole’s attorneys, Lorin Reisner and Richard Tarlowe of Paul Weiss Rifkind Wharton & Garrison LLP, for a comment.
In a statement to FN in December of 2019, Reisner and Tarlowe referred to Cole’s charges as “completely baseless.”
“Neil Cole acted lawfully and properly in all respects, and this case should not have been brought,” the attorneys said. “All of the transactions at issue were fully reviewed and approved by Iconix’s legal, finance and accounting professionals, and Mr. Cole reasonably relied on those professionals. Mr. Cole has had a distinguished career as a brand management innovator and pioneer, and he acted in the best interests of Iconix and its shareholders at all times. Good faith business conduct by a senior business executive should not be criminalized.”