Former CEO of Fila USA to plead guilty to conspiracy

Epstein admits helping shoe chain rig books

December 19, 2003|By BLOOMBERG NEWS

BIRMINGHAM, Ala. - Former Fila USA Chief Executive Officer Jonathan G. Epstein will plead guilty to helping shoe-store chain Just for Feet Inc. overstate earnings by $1.4 million, federal prosecutors said yesterday.

Epstein, 48, admits he wrote a letter for Just For Feet auditors saying Fila USA of Sparks, Md. owed the retailer $1.4 million in 1999, U.S. Attorney Alice H. Martin said. The letter helped Just For Feet deceive auditors and file false reports to the Securities and Exchange Commission, Martin said.

Epstein, who resides in St. Louis, is the third person to admit guilt and cooperate in the investigation of Just for Feet, the second-largest U.S. athletic-shoe retailer before its 1999 bankruptcy.

Sport Brands International, which purchased Fila USA in June, announced Epstein's resignation for personal reasons on Dec. 5. An SBI spokesman did not immediately return a phone call seeking comment.

Footstar Inc. acquired Just For Feet in 2000. Epstein's role raises the amount of the alleged overstated earnings to at least $3.7 million. He conspired with a Just For Feet executive vice president who hasn't been named, Martin said.

"Mr. Epstein clearly crossed the legal line and entered into this conspiracy to submit false statements to the auditors," Martin said, adding that she expects more indictments in the case soon. Fila sportswear makes athletic shoes that have been endorsed by baseball's Barry Bonds, tennis star Jennifer Capriati and NBA star Grant Hill.

Epstein will plead guilty to conspiring to submit false statements to an auditor and falsifying books and records. He faces a maximum of five years in prison and a $250,000 fine. Martin will ask the judge to impose a lenient sentence on Epstein because he cooperated.

Just For Feet's former President Adam J. Gilburne pleaded guilty in May to helping inflate Just for Feet's income from December 1996 to November 1999.

Prosecutors said he conspired with then-Chief Executive Officer Harold Ruttenberg, who founded Just for Feet in Birmingham in 1977 and was chairman and CEO through 1999. Ruttenberg hasn't been charged.

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