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Aeropostale's Ex-Merchandising Chief Finazzo Charged With Wire, Mail Fraud

Aeropostale Inc.’s former merchandising chief, Christopher Finazzo, was accused by federal prosecutors of conspiring to overcharge the teen clothing retailer on purchases from a vendor and sharing in the proceeds.

Finazzo, 54, acted with Douglas Dey, the owner of South Bay Apparel Inc., a company based in Calverton, New York that sold clothing to Aeropostale, according to an indictment by the U.S. attorney in Brooklyn, New York. They were charged with mail and wire fraud and money laundering conspiracy. Finazzo was also charged with making a false statement in a regulatory filing.

Aeropostale had no knowledge of the scheme, according to the indictment, which was unsealed June 11 and made public today.

“Finazzo’s lies and material omissions prevented the SEC and Aeropostale’s shareholders from learning the full extent of Finazzo’s compensation from the undisclosed related party transactions,” according to the indictment.

Finazzo pleaded not guilty to the charges on June 11 and was released on $3 million bail, his attorney Robert Zito said in a telephone interview. “We are hoping to get a speedy resolution with the government,” he said.

A lawyer for Dey couldn’t immediately be reached for comment.

Aeropostale said it fired Finazzo in November 2006 for violating his employment contract and the company’s code of ethics by not disclosing his affiliations with South Bay.

Aeropostale spokesman Kenneth Ohashi didn’t immediately return a call and e-mail seeking comment.

The case is U.S. v. Finazzo, 10cr00457, U.S. District Court, Eastern District of New York (Brooklyn).

To contact the reporter on this story: Carlyn Kolker in New York at ckolker@bloomberg.net

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