Morris Charney, Former Director of the Canadian Division of American Apparel, Practicing Architect and City Planner, Montreal, QC Jan 27 2015

My history with American Apparel goes back to the very beginning when Dov was still a student and the business was being operated out of the basement of our home. I consulted with the company for more than 20 years and provided all the initial financing. As an architect I designed numerous stores, helped to select sites for them, continued to be available to store managers in regard to maintenance issues in all the countries in which stores were located and provided original artwork [at no cost] which was used in ads or on garments; that is up until the time I was terminated [June/2013] without warning, without any notice, no severance of any kind, no thank you letter, even my health insurance was canceled. All this, I believe because I am Dov’s father and the board was trying to punish Dov in the worst way possible.

1.0 CHUTZPAH
Why would anyone sitting on the board for whatever length of time think that they would know better than Dov how to run the company or that they could find someone who could run the company as well or better than him? No one on the board had started a comparable company with minimum financing and grown it to the point that it had 10,000 employees in 20 countries and sales that had reached at times $500 million in a year? Everyone, including the members of the board were willing to admit that the brand was well-known and accepted all over the world and, in itself, was worth a lot of money [and that was due to Dov]. The people on the board were chosen by Dov because they had expressed admiration of his accomplishments, not because they were outstanding entrepreneurs who had actually built a company the size of American Apparel. By taking the initiative of removing him from a position of leadership they have shown incredible chutzpah [in addition to a lack of gratitude] because, in effect, they are judging him saying that they know how to do things better or can find someone to do it better. He’s proven himself, they haven’t. Referring to the debt that the company has incurred has everything to do with the difficulties in getting financing from the very beginning and the speed with which Dov chose to grow the company. In particular, it was his youth and the fact that Canadian banks can be really conservative [e.g. financing was cut off using his sale of gay magazines at stores as an excuse]. He had to turn to private financing where he was paying 18% interest. That’s where the profits have been going for some time now. The company is now carrying a lot of accumulated debt because of those reasons, not because of mismanagement or the lack of sales.

2.0 UNDERSTANDING AMERICAN APPAREL
American Apparel became what it is because of Dov and all his idiosyncrasies. Most creative endeavors involve the uniqueness or craziness of the author/the artist/the scientist. To accept the American Apparel trademark and sing its praises while condemning Dov’s behavior shows a total misunderstanding of how things are created. One should not be too judgmental even in regard to the sexual harassment suits or Dov’s liberal attitude regarding social matters in an office environment. At least he is open about it. Deception is a much worse sin. I believe that the youth of today [who are after all the major clientele of American Apparel] are a lot less bothered by the type of sexual harassment [as defined by California laws] than the generation to which the board members belong…..who like to moralize about impropriety but can be full of deception when it comes to sexual behavior. The upper management of American Apparel has always been mostly female and Dov showed a lot of respect for their abilities which is the very opposite of the impression created by all the malicious falsehoods spread in the media. Everyone should be aware of the extent that celebrities are pursued by young admiring women; why would it be any different for Dov? The newspaper articles and social media picked-up on all the falsehoods spread by the board itself. Nothing arouses interest like sleaze. Those who have been following sexual harassment cases against celebrities in California understand what Dov has been caught up in. It doesn’t take much to claim that the workplace environment is contaminated be it because of the language [use of expletives] or the photos/visuals [scantily clad models]. What is the company or its brand without Dov’s idiosyncrasies? Even all the bad publicity at his expense may have been beneficial.

3.0 FALSEHOODS
The case of my termination at American Apparel is an excellent example of the type of falsehoods which were spread in order to justify Dov’s termination. After a lengthily and expensive investigation following his initial dismissal [costing several millions], the board determined that he was [after all] dismissed “with cause”. One of those causes [as mentioned in press releases] had to do with the misappropriation of funds in regard to Dov’s parents. What a painful and disrespectful “cause” [falsehoods] to have publicized. The truth is just the opposite. I have just gone through a most detailed six-month financial tax audit covering the years [2011 – 2013]. The audit happened to have started soon after the day of my dismissal from American Apparel [no doubt just a coincidence]. The falsehoods were all over the papers! The audit included both personal and business transactions. The conclusion of the auditors in regard to American Apparel is that I provided significant interim financing during those years [$1 million worth] by allowing company employees to use my personal credit cards and this was done without charging interest or receiving any other financial benefits. All professional fees paid to me during those years were incurred either for doing legitimate work as a professional architect or as the sole Canadian director of the company [paid an amount not unlike what the US board members were paid]. How’s that for a dose of reality/the truth vs. spreading malicious falsehoods.

4.0 LOYALTY/RESPECT
How could the board have treated Dov so disrespectfully? His immediate effective dismissal involving his being locked out of his office and not even able to take his e-mails reminds me totally of someone who is accused of a criminal offense and the feds swooping in and making a big scene [in time for the late-night news] removing the offender in handcuffs and putting him into a police car etc. He is being prejudged. It shows incredible disloyalty and disrespect from members of the board most of whom were appointed by Dov himself. They should be ashamed of themselves. I am convinced, judging the way they have handled this matter so far, that they are capable of destroying the company in short order, a company which Dov has devoted the better part of his life to build. We now have a second betrayal which has taken place with Standard General. Dov turned to them after being dismissed back in June, trusting them with all his shares so as to be able to return to American Apparel. Instead they are acting like investment vultures, ready to break up the company and sell off its assets. American Apparel requires a creative environment in order to carry on its design activity. The new regulations which have been set out regarding employee fraternization will do nothing to enhance that kind of environment.