U.S. Attorney's Office
Eastern District of New York
(718) 254-7000
August 6, 2014

Douglas Dey, Owner of Former Major Supplier of Aéropostale Inc., Sentenced to 42 Months in Prison in $25 Million Bribery Scheme

Douglas Dey, the owner of South Bay Apparel, Inc. (“South Bay”), a former major supplier of t-shirts and fleece merchandise for national teenage clothing retailer Aéropostale, Inc., was sentenced today in federal court in Brooklyn, New York, to 42 months in prison, to be followed by three years’ supervised release. Dey and was also ordered to forfeit $7.5 million to the government, and pay $13,690,822.94 in restitution to Aéropostale, a publicly traded company on the New York Stock Exchange.

On September 27, 2012, Dey pled guilty to conspiracy to violate the Travel Act through commercial bribery for paying more than $25 million in kickbacks to Christopher Finazzo, Aéropostale’s former Executive Vice President and Chief Merchandising Officer, to obtain over $350 million in business. Finazzo was convicted on all 16 counts of fraud and commercial bribery for his role in the scheme following a three-week jury trial in April 2013, and is scheduled to be sentenced on August 20, 2014.

Dey’s sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).

“For over a decade, Dey used bribes and kickbacks to gain an unfair and illegal advantage for his t-shirt and fleece business. By doing so, he fleeced Aéropostale and its investors out of tens of millions of dollars and damaged the financial well-being of a publicly-traded retail company. Today’s sentence sends a strong message to those who commit corporate fraud that they will be held accountable for their crimes,” stated United States Attorney Lynch. Ms. Lynch thanked the FBI and the Securities and Exchange Commission for their assistance.

Shortly after Finazzo was hired by Aéropostale in July 1996, he and Dey entered into a fraudulent scheme whereby Finazzo directed Aéropostale’s graphic t-shirt business to South Bay in exchange for splitting South Bay’s profits with Dey. From 1996 to 2006, Finazzo caused Aéropostale to buy more than $350 million in t-shirt and fleece merchandise from South Bay, often for significantly higher prices and lower quality than was available from other suppliers. In exchange, Dey paid Finazzo more than $25 million in bribes and kickbacks, equaling approximately 50% of South Bay’s profits. In 2005 alone, at the peak of the business between Aéropostale and South Bay, Dey paid Finazzo more than $13 million in kickbacks. The kickbacks from Dey to Finazzo were paid through C&D Retail Consultants, a shell consulting corporation set up by Finazzo, and through companies jointly-owned by Finazzo and Dey.

The sentence was imposed by United States District Judge Roslynn R. Mauskopf.

The government’s case was prosecuted by Assistant United States Attorneys Winston M. Paes and Claire Kedeshian.

This prosecution was the result of efforts by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants. For more information on the task force, visit http://www.StopFraud.gov.

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