A U.S. court has ruled that Abercrombie & Fitch must pay the legal expenses of former CEO Mike Jeffries, who faces criminal charges related to an alleged international sex trafficking operation.
Court Ruling Ties Charges to Corporate Role
Despite previously condemning Jeffries’ alleged actions as “appalling and disgusting,” Abercrombie & Fitch (A&F) is legally obligated to cover his defense costs due to a 2014 indemnity agreement signed when he resigned. The company argued that the charges—centering on accusations of prostitution and trafficking—were unrelated to his corporate role. However, a judge ruled otherwise, stating the accusations were directly tied to his position as CEO.
Potential Financial and Legal Impact on A&F
Legal experts estimate that A&F’s legal bill for Jeffries could amount to millions of dollars. This ruling follows a previous order requiring the company to cover legal costs in civil lawsuits filed by alleged victims.
A&F is currently defending multiple civil suits accusing the company of facilitating and funding Jeffries’ alleged misconduct. Although A&F is not a defendant in the criminal case, it must reimburse Jeffries’ legal fees dating back to 2023 and continue funding his defense.
Background on Mike Jeffries’ Charges
Jeffries, who led Abercrombie & Fitch for 22 years, stepped down in December 2014. Prosecutors allege that between 2008 and 2015, he used his corporate power and wealth to traffic men for sex, alongside his British partner Matthew Smith and middleman James Jacobson.
Both Jeffries and Smith have pleaded not guilty and are currently out on bail.
Abercrombie & Fitch’s Financial Standing Amid Scandal
Despite the controversy, A&F has reported record sales, with $4.95 billion in revenue over the past year. Legal experts suggest that the company has managed to contain reputational damage, with no apparent financial downturn.
Company’s Response & Independent Investigation
Following a 2023 BBC investigation exposing the allegations, A&F launched an internal review and suspended Jeffries’ $1 million annual retirement payments. The company maintains that new leadership has transformed its culture and upholds a zero-tolerance policy for abuse and harassment.
