Finazzo Trial Continues

Prosecutors are likely near the end of their presentation, after which the defense team will get their shot at presenting their case.

NEW YORK — Perhaps the big surprise in the Christopher Finazzo criminal trial Wednesday was what seemed to be an abbreviated cross-examination of Julian Geiger, given the length of the initial questioning by prosecutors.

This story first appeared in the April 18, 2013 issue of WWD.  Subscribe Today.

Finazzo, former chief merchandising officer at teen retailer Aéropostale Inc., is fighting mail and wire fraud, as well as conspiracy charges alleged to be part of a multimillion-dollar kickback scheme in a Brooklyn federal court.

Geiger, the former chief executive officer of Aéropostale, took the stand Tuesday in the U.S. government’s case against Finazzo. And while Geiger spoke of how he at the time trusted the man on trial, the former ceo also said he never knew there was any relationship between Finazzo and his friend Douglas Dey, the owner of South Bay Apparel, one of the retailer’s key vendors for graphic Ts.

There is no contest between the government and the defendant that Finazzo received money from South Bay, said to be 50 percent of South Bay’s profits from orders from Aérospostale, as a shareholder in a company called C & D Retail Consultants Inc. that Finazzo set up.

Robert Zito of Carter Ledyard & Milburn, Finazzo’s lead defense counsel, questioned Geiger on whether he recalled stating to FBI investigators that Finazzo and Dey had “average minds,” trying to emphasize that Finazzo was unsophisticated, having only graduated from high school.

Zito also zeroed in on Geiger’s past drug use. While Geiger was consistent in stating that it was only every other period, and not during the week when he was at the office, Zito did get an admission from Geiger that he frequently did work on the weekends when needed. And while not stated directly, that left open the idea for the jurors to conclude, if they choose, that perhaps Geiger might have been “under the influence” during one of the weekend “work” conversations with Finazzo.

Other witnesses who testified for the government include former Aéropostale merchandising executives Thomas Carberry and Mary Epner.

Carberry testified on how difficult it was to negotiate prices for graphic Ts, which impacted the graphic T department’s ability to garner higher margins, and in turn impacted buyers’ ability to earn bonuses. He also said that when he worked at Abercrombie & Fitch, the gross margin goal was 80 percent, although typically buyers were able to hit the 75 percent range and then the 65 percent range when items were marked down. In comparison, at Aéropostale, the goal was 55 percent and usually margins were in the “low 40s.”

Epner said she knew Finazzo was “extremely close to the owner of South Bay,” but wasn’t aware of any financial relationship between the two. She testified on several instances in which the prices charged by South Bay were higher than what she and others she worked with thought they could get elsewhere. Those challenges went nowhere as Finazzo continued placing orders with South Bay. Epner testified on how Finazzo’s demeanor changed on some occasions when he was being pushed to take a small part of the graphic T business overseas, something that Geiger said earlier in the trial he wanted to do to get better prices and improve margins. In one incident, Epner said Finazzo remarked that he wished people would “stay out of my underwear drawer or stay out of his business because he was the chief merchant.”

As the trial gets closer to the midway point, prosecutors are expected to rest their case in the next day or two. After that, the defense will get the chance to present its case.

Finazzo, presumed innocent of all charges, has no obligation to take the stand.