News & Resources

Children's clothes manufacturer cooked books

Oct 13, 2011 Walt Wojoiechowski

Joseph Elles, former vice president of sales at Atlanta, Georgia-based children's clothing manufacturer Carter's, pleaded not guilty to 32 fraud-related charges earlier this week, The Associated Press reports. The charges included securities fraud, falsifying corporate records and filing false statements. Elles allegedly gave rebates worth "tens of millions of dollars" to Kohl's, the company's largest customer. He then hid the discounts, inflating the company's income and tricking investors into making poor credit decisions. Approximately $16 million in expenses were hidden as a result, and investors who bought the inflated stock suffered when it fell by more than 20 percent when the fraud was revealed in 2009, the Atlanta Constitution reports. According to attorney Sally Quillian Yates, Elles could face "decades" in prison and a fine of up to $5 million for "cooking the books and causing his company to falsely inflate its income." Elles' lawyer Joseph Burby denies any wrongdoing, saying that Elles was carrying out orders from the company's higher-ups and he intends to "vigorously defend himself against these charges."