This Week In Blunders – Aug. 16-22
“When justice sleeps, justice is canceled.” – Babylonian Talmud
The pervert who ran Abercrombie & Fitch from 1992 to 2014 has finally been ordered to stand trial for alleged sex trafficking offenses that began 18 years ago.
Michael Jeffries is 82 years old. He’s been diagnosed with dementia and a brain injury. A judge ruled he was incompetent to stand trial and committed him to the Federal Medical Center at Butner, N.C. for further evaluation.
So guess what he had to say in recorded prison conversations?
“You better find me incompetent,” he reportedly told one of his prison mental-health examiners.
And on a recorded phone call, he warned his romantic partner and co-defendant Matthew Smith, “we’re screwed” and “we’re in big trouble” if he is deemed fit to stand trial.
Jeffries also complained about his confinement, adding, “That’s why we got to pull this off.”
Defense attorneys argued it was just his filter falling off because of his impairment. On Thursday, a judge nevertheless set a trial date of Oct. 26.
Prosecutors charged Jeffries in October 2024 in sex trafficking and international prostitution. He has pleaded not guilty as has Smith.
Read More: CEOs Gone Wild (Business Blunders)
I’ve avoided getting into the the sordid details contained in the indictment against Jeffries, Smith and a third man, James Jacobson, a.k.a. “Mrs. Cook.” But let’s just say Jeffries used the same MO as Jeffrey Epstein, only with young men: So You want to be a model? Come to my sex party in the Hamptons.
No surprise both Jeffries and Epstein were long connected to billionaire retailing magnate Lex Wexner, whose name appears in the Epstein files more than 1,000 times.
Read More: Double Duped (Business Blunders)
Wexner, who founded L Brands, hired Epstein as an advisor to Victoria’s Secret and he hired Jeffries to run Abercrombie. Both stand accused of using their positions to sexually abuse fashion models.
Allegations aside, Jeffries was demented before he suffered dementia. He was way out in the open about the hyper-sexualized marketing he used to build Abercrombie – mostly aimed at teenage mall rats and even children.
Amid public outrage he defended selling thongs with phrases like “Eye Candy” and “Wink Wink” to pre-teen girls. He sold offensive T-shirts with lines like, “Female Students Wanted for Sexual Research” and “Gentlemen Prefer Tig Ol’ Bitties.” He published A&F Quarterly, a “magalog” featuring frolicking, mostly naked boys.
Jeffries left Abercrombie in 2014 with a $25 million exit package. His alleged crimes ran from 2008 to 2015, according to prosecutors. He wasn’t charged until late 2024. And now that his federal hospital stay is over he remains free on a $10 million bond.
It’s nice to be on the top tier of our two-tiered justice system.
As Jeffries reportedly remarked: “If the judge knew who I was, she would know that there's no way that I could be found guilty.”
A $283 million headache
A brain injury can go a long way in our federal court system, if you can afford a defense team skilled enough to make the case.
CaaStle founder Christine Hunsicker pleaded guilty to defrauding investors of $283 million. Prosecutors called her another Elizabeth Holmes. She faced up to 20 years. Federal prosecutors wanted 12½ years. On Thursday, she got five.
Hunsicker’s lawyers successfully argued that her behavior was influenced by a traumatic brain injury she suffered in 2017 when a 30-pound mirror fell on her head.
Read More:
A Billion-Dollar Fashion Startup Laid Bare (Business Blunders)
The Empress’s New Clothes (Business Blunders)
Hunsicker had promised to build her startup, CaaStle into $1 billion “Netflix of fashion.” But she lied about its revenues and profits, fabricating audits and bank records, and forging signatures. For instance, she told investors CaaStle generated nearly $440 million in revenue in 2023. An audit later found just $15.7 million.
For a fraud that prosecutors said warranted 12½ years, she got one hell of a discount.
This Week’s Ponzi
Edward Zimbardi, 59, claimed he had discovered a business model that could generate guaranteed returns of 25% a month.
He called it The Crypto Program, and promised fat profits from investing in advertising programs. He raised $165 million from 6,000 investors who paid him in crypto.
Business Blunders readers know the drill from here because Ponzi schemes are America’s favorite fraud. Zimbardi didn’t put the money into advertising programs, according to prosecutors.
Instead, he allegedly put more than $34 million into risky foreign-currency trading, losing substantial sums, while using money from new investors to pay earlier ones.
Meantime, at least $10 million allegedly went toward personal expenses, including luxury vehicles, a house for his son and alimony payments to his ex-wife, prosecutors charged.
When Zimbardi, of Flowery Branch, Ga, got wind of a federal investigation, he fled to Fiji. But now he’s back in the U.S. after the island nation deported him back to face charges, prosecutors announced on Monday.
Somehow his credulous investors apparently didn’t know about his 1997 guilty plea to in Georgia to eight felony counts of theft, for which he went to prison, but was later pardoned by the state.
Sometimes past performance really is a guarantee of future performance. That’s what Business Blunders is all about.
Never mind those pesky skeptics
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