Neil Cole, who reworked his household enterprise into the branding powerhouse Iconix Manufacturers Group solely to be convicted final yr of inflating the books, was sentenced to 18 months jail in Manhattan federal court docket on Tuesday.
Whereas Cole’s attorneys had requested for probation, U.S. Lawyer Damian Williams pushed for a jail sentence of six-and-a-half to only over eight years, pointing in court docket filings to “the calculated, long-running and complicated nature of Cole’s fraudulent scheme” in addition to “Cole’s abuse of his place of belief because the highly effective CEO of a publicly traded, multibillion-dollar firm.”
“From 2014 to 2015, Cole engaged in a scheme to falsely inflate Iconix’s reported income and EPS by inducing a Hong Kong-based JV companion, World Manufacturers Group Asia Restricted, to buy JV pursuits at artificially inflated costs primarily based on Cole’s promise to reimburse GBG for the overpayments,” Williams mentioned.
However whereas Decide Edgardo Ramos mentioned he believed Cole was untruthful throughout trial, he additionally described the 2 transactions, which briefly inflated Iconix’s revenues by $11 million, as outliers within the firm’s historical past. He additionally took into consideration Cole’s long-standing charitable endeavors.
Cole will stay free on bail pending attraction.
“Initially, the court docket has continued Mr. Cole’s launch on bail pending attraction,” mentioned Cole’s authorized crew in an announcement after the ruling. “That call and at the moment’s sentence comes after the federal government charged Neil Cole with taking part in a fraud scheme with others, and he was compelled to go to trial twice to defend these fees. The jury within the first trial acquitted Mr. Cole of all conspiracy counts. Though the second jury convicted, we’re assured within the power of Mr. Cole’s attraction of that verdict and stay up for the chance to current our arguments to the Second Circuit.”
Whereas the influence of the transactions in query are tough to quantify, the federal government mentioned the events within the case estimated that they inflated Iconix’s share value by 2 % and subsequently netted Cole practically $1 million in further income as he offered roughly $40 million of the corporate’s inventory.
Seth Horowitz, former chief working officer at Iconix, beforehand pled responsible for his involvement within the case and testified at Cole’s trial.
“Neil would threaten me that my profession was over and that I might not be capable of work at a public firm,” Horowitz mentioned, in line with the federal government’s submitting. “He mentioned one thing to the impact that he knew in regards to the transactions however that he might cross a lie detector take a look at saying he didn’t however he knew I might, too, primarily constructing a he-said-versus-he-said situation.”
An preliminary trial in 2021 ended with Cole acquitted of two conspiracy counts and a hung jury on eight different counts, together with making false filings with the Securities and Change Fee, improperly influencing the conduct of audits and securities fraud. He was then discovered responsible on the eight counts in a retrial final yr.
Cole’s attorneys mentioned the 2 transactions in query modified his life, in their very own court docket submitting on his behalf.
“These two transactions — which occurred months aside and characterize a tiny fraction of the numerous transactions Iconix has been part of over Neil’s lengthy profession — led to Neil’s eventual departure from Iconix, and subjected Neil to inside investigations, a civil regulatory investigation, a felony investigation and indictment, and two trials over the course of two years,” the submitting mentioned.
The submitting particulars how Cole labored on the household shoe enterprise underneath the exacting eye of his father, left the enterprise, got here again and finally reworked it into Iconix, which borrowed in opposition to the mental property of manufacturers to go on a dealmaking spree, shopping for Badgley Mischka and Joe Boxer, inking a licensing with Madonna for her Materials Lady model, linking up with Jay-Z on Rocawear and extra.
“By 2014, the enterprise was price $3 billion on Nasdaq and employed 150 folks throughout a number of continents,” the submitting famous. “The one firm on the planet doing extra licensing was Disney.”
However the fall was exhausting. By the subsequent yr, the corporate was underneath investigation and Cole was out. In 2019, Cole spent practically a month in a lodge so his daughter wouldn’t must see him arrested, in line with the submitting. And the day he was convicted, his spouse mentioned she was divorcing him.
“As he awaits the end result of this sentencing, and the conclusion of his attraction, Neil has stuffed his days by serving to his sons plan a brand new enterprise enterprise, to interchange the careers they misplaced on account of his trial and conviction, and spending as a lot time along with his household as he can, with the likelihood looming that his time with them could quickly be minimize quick,” his attorneys wrote.
A sequence of high-profile relations and associates wrote letters to Ramos on Cole’s behalf.
His brother, designer Kenneth Cole, pointed to Cole’s work with the Candies Basis to deal with teen being pregnant, different philanthropic endeavors and the ordeal he has already been by means of. “Sadly, Neil’s profession and private life have been suspended the final seven-plus years throughout the course of those proceedings,” Kenneth Cole mentioned. “He has misplaced the enterprise he constructed and beloved, and alongside along with his youngsters (who additionally misplaced their jobs,) have been compelled to reside underneath a shadow making it virtually unimaginable to search out various employment.”
Cole’s brother-in-law, former New York Gov. Andrew Cuomo, mentioned: “I started working with Neil throughout my first administration and appointed him to the Sage Fee. Right here we did our greatest to assist streamline authorities, which was not a simple problem. Over the subsequent few years Neil was a part of two missions to Israel, assembly with authorities and exhibiting our assist throughout the Hebrew College bombings and in addition throughout the Gaza Battle in the summertime of 2014.”
And Sam Edelman, a very long time buddy and former colleague of Cole’s, attested to his “character and contributions.”
“I began my profession reporting on to Neil Cole, when Neil was a vp at his father’s firm known as Candies,” Edelman mentioned. “Neil was attending regulation college on the time, and I had taken over his obligations on the firm. I had Friday conferences with Neil to carry him updated on the enterprise and every little thing we have been engaged on. I’ve all the time discovered him to be sensible, delicate and I had loved our working relations a lot that we turned shut associates and have been very a lot part of one another’s lives for over 4 a long time.…Neil has touched me and my household in essentially the most significant methods. I really love Neil. I imagine in him, and I imagine that he has nice issues to proceed contributing to society.”
