- Former Abercrombie & Fitch CEO Mike Jeffries was charged with sex trafficking on Tuesday.
- The federal indictment follows a history of controversy for Jeffries.
- Under his leadership, Abercrombie became a brand hit with a number of lawsuits.
Long before federal charges hit, there were concerns about former Abercrombie & Fitch CEO Mike Jeffries — and lawsuits that attacked the way he ran his company.
Then, on Tuesday, he was charged with sex trafficking and interstate prostitution.
This week's indictment alleges that Jeffries, his partner Matthew Smith, and a third man used the power of Abercrombie's brand to coerce dozens of men, many of whom hoped to become models for the brand, into "sex events." Prosecutors say the alleged sex-trafficking operation spanned from about 2008 to 2015; Jeffries was CEO from 1992 to 2014.
Attorneys for Jeffries and Smith told Business Insider in statements that they would respond "in the courthouse." Abercrombie & Fitch said it was "appalled and disgusted" by the allegations against its former CEO.
Jeffries, who is reportedly now 80 years old, was hired by Les Wexner — the former CEO of Victoria's Secret and Jeffrey Epstein associate — to lead Abercrombie. (removed date here as it's above)
He cut his teeth at department stores, eventually landing at Paul Harris, a now-defunct women's chain in the Midwest, where he worked in merchandising until it filed for bankruptcy.
Under Jeffries' leadership, Abercrombie became the version with which teens of the 1990s and early 2000s were well acquainted. He traded in its hunting and fishing garb and stuffy branding for low-rise jeans, logos everywhere, and tight tank tops. With its signature musky scent exuding from its stores, thumping dance music, and shirtless models who welcomed customers inside, the new Abercrombie oozed sex.
Sex and sexual attraction were "almost everything," he told Salon in a rare 2006 interview. "That's why we hire good-looking people in our stores. Because good-looking people attract other good-looking people, and we want to market to cool, good-looking people. We don't market to anyone other than that."
He was known as a perfectionist, paying attention to everything from how items were stacked to the layout of stores.
"This is very much a military operation," Jeffries told The Wall Street Journal in 1997. "It is very disciplined and very controlled."
That was especially true when it came to who the company hired. At the time, Abercrombie was known for its white, buff male staff, who were often shirtless. The company scouted college campuses to find the most attractive students to work as in-store sales associates. Models were shot by Bruce Weber, a photographer known for his images of naked men. Weber has since been accused of sexual assault by multiple male models; he has denied any wrongdoing and settled a number of the lawsuits.
Weber did not respond to a request for comment from BI.
The new look was popular, and Jeffries was able to raise prices without losing customers.
Sales skyrocketed, new stores opened, and the company went public in 1996. Revenue went from $353 million for the 12 months ending in 1997 to a peak of $4.5 billion for the 12 months ending in February 2013.
Jeffries, too, was rewarded financially. At the peak, he earned eight figures a year. He was called one of the five most overpaid CEOs by CNN in 2008 after earning $72 million. That compensation gave him a lavish lifestyle.
According to the federal indictment, Jeffries and Smith paid men to meet them at Jeffries' homes in the Hamptons and New York City, as well as at hotels in expensive destinations like St. Barts and on a luxury cruise ship.
"Jeffries and Smith spent millions of dollars to create a massive infrastructure that supported this operation," the indictment says, adding that they paid hundreds of thousands of dollars for commercial sex and "prolific amounts" on staff to "run Sex Events, domestic and international travel and hotel rooms," security, and more.
Jeffries was no stranger to controversy
While the money was flowing, Jeffries' management style and judgment calls also raised eyebrows.
There were protests about t-shirts that read "Gentlemen Prefer Tig Ol' Bitties." Thongs for tween girls that were branded with the words "eye candy" and "wink wink" caused a backlash.
"I still think those are cute underwear for little girls. And I think anybody who gets on a bandwagon about thongs for little girls is crazy. Just crazy!" he told Salon.
Employees had to follow a handbook that detailed what they should wear down to their underwear. Dreadlocks and gold chains weren't allowed.
By the early 2000s, the lawsuits started.
First, a group of former and prospective employees sued the company in 2003, alleging that it fired or refused to hire them based on their race. While Jeffries was not mentioned by name in the complaint, it lays out how much control the company's corporate office had over individual stores and their employees, visiting in what were known as "blitzes" to ensure that store managers had the "A&F look."
The next year, the company settled, agreeing to pay more than $40 million and hire a chief diversity officer, though it did not admit any wrongdoing.
A similar lawsuit, though, went all the way to the Supreme Court. In 2008, an Abercrombie store declined to hire an Oklahoma teenager because she wore a black headscarf, which it said violated company policy. The teenager argued that was religious discrimination, and the court agreed, ruling 8-1 against Abercrombie.
A 2010 lawsuit from a former pilot on Jeffries' executive jet alleges that Jeffries and Smith were as exacting out of the office. The pilot accused the CEO of enacting similar standards on board as in Abercrombie stores and firing him due to his age. Jeffries and Smith regularly made disparaging remarks about older people, and Smith, Jeffries' partner, was given the authority to hire and reject potential pilots based on "form" and "fit," according to the complaint.
An extensive airline manual is included in the case's evidence. The handbook listed Smith's six-step tea service — Fortnum and Nason Assam or Darjeeling, depending on the time of day, as well as the crew's uniform down to their underwear — boxer briefs — and the popped collar of their winter coats. Jeffries' dogs had their own seating arrangement.
The company settled without admitting fault.
Other lawsuits alleged Jeffries' compensation was excessive and that he misled shareholders about the company's profits. Both were settled.
By the time Jeffries stepped down in 2014, the brand had lost its luster, and the controversy was no longer resulting in growth.
"The logo is no longer cool unless you are a middle schooler in a rural middle school," Erik Gordon, an assistant professor at the University of Michigan's business school, told BI at the time.
But Jeffries still ended up on top — for a little while. In addition to a retirement package reported to be about $25 million, he received annual payments of $1 million, which came to an end last year, the company told the BBC, after the outlet published an investigation into how Jeffries and Smith allegedly exploited young men for sex.
Those payments — and his salary from his CEO days — likely helped him afford the $10 million bond he put up to get out of jail this week. Though Breon Peace, the US attorney for the Eastern District of New York, said Jeffries shouldn't get used to it.
"Prepare to trade that couch for a bed in federal prison," he said.
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