As American Apparel executives scrambled to pay vendors this spring, they frequently ran into a frustrating problem: Where were the checks? Many times, the answer was Chief Executive Dov Charney’s Los Angeles mansion. Starting early this year, Mr. Charney began signing all of the company’s checks—hundreds of them every month—one of several bottlenecks that plagued the fashion chain as its finances withered, people familiar with the situation said. Mr. Charney’s sexual antics have commanded the headlines, but beneath the salacious details was a business that had fallen into almost complete disarray, the people said. American Apparel, a major retailer with 10,000 employees and 249 stores, lacked seasoned executives, which often required Mr. Charney to dive in to fix problems. The general counsel was personally managing the company’s fleet of stores. This spring, the legal department was reduced to two people. And Mr. Charney was swimming in checks. They were delivered by assistants to his office or home, where they would pile up for weeks before resurfacing in the accounts-payable department, the people familiar with the matter said. Mr. Charney purposely held the checks while he investigated whether the amounts were correct, said a person familiar with his thinking. [WSJ]
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