On June 18, 2014, American Apparel publicly suspended Dov Charney, its founder, chief executive, and public face, announcing that it intended to terminate him for cause after alleging repeated conduct that exposed the company to claims involving harassment, discrimination, and assault. Paula Schneider, who later became chief executive, said Charney had violated sexual-harassment and anti-discrimination policies and misused corporate assets. Charney called the removal a “coup” and argued that the investigation had been shaped by executives and directors who benefited from pushing him out. His attorneys alleged that he had been maneuvered into a settlement that stripped him of control despite his position as the company’s largest shareholder.
The ouster ended the era in which Charney’s personal persona and American Apparel’s identity were nearly inseparable. The company had expanded from a Los Angeles factory into a global retailer with 281 locations by 2009 and reported $634 million in sales in 2014, but critics said Charney had failed to build the mature management structure necessary to sustain that growth. He was formally terminated in December 2014; by then, he told Bloomberg Businessweek that he was sleeping on a friend’s couch in Manhattan and had only about $100,000 left. His attempted comeback through a partnership with Standard General failed, and American Apparel later entered bankruptcy in 2015. Charney continued to deny wrongdoing, emphasizing that he had never been criminally charged or found liable for the accusations, but the scandal permanently transformed the brand’s corporate and cultural legacy.
