For more than five years, Marc Jacobs International says it was the victim of a $20 million fraud. More details are emerging in the lawsuit and countersuit between Marc Jacobs, his business partner of more than 25 years Robert Duffy, and their former chief operating officer Patrice Lataillade. Lataillade alleged in his suit that Duffy created a hostile work environment by talking about and watching porn on company time (Lataillade specified, for some reason, that it was gay porn), using company funds for personal expenses, and forcing one employee to do a pole-dance for him. Well: Marc Jacobs International has responded with a countersuit alleging that Lataillade was embezzling the company to the tune of $20 million. MJI says Lataillade inflated the company sales figures and hid the true costs of expenses so that he could collect huge bonuses from MJI's parent company, Louis Vuitton Moët Hennessy. The suit says Lataillade perpetrated this fraud by "overstating royalty receivables, understating selling, marketing and administrative expenses, overstating raw materials inventories and failing to write off bad debts." The company also points out that Lataillade was given a salary of $1 million, free private school tuition for his children, an annual family vacation in Paris, and a $10,000 annual car allowance. MJI also allegedly lent Lataillade $60,000 in 2008, which he has yet to repay. The alleged fraud was uncovered after a new director of finance came onboard, and Lataillade was fired. Lataillade's lawyers deny the charges, and point out that the company was audited several times during the period in which he is alleged to have been cooking the books. Even if Marc Jacobs International's allegations against Lataillade are true, one still wonders what kind of financial condition a company must be in for an executive to get away with fraud on that scale for over five years. [WWD, NYPost]
Kinja is in read-only mode. We are working to restore service.