SANDS, PERISCOPE SETTLE SEVERANCE DISPUTE
Byline: Vicki M. Young
NEW YORK — Periscope and its former chief executive officer, Glenn Sands, have settled their legal differences, allowing Sands to continue working in the fashion industry. But his troubles may be far from over.
Court testimony in the legal dispute has raised potential criminal and civil liabilities for Sands.
Sands had been fired by Periscope and initiated the legal action to find out why, but in doing so, he set himself up for increased scrutiny.
Prior to Friday’s settlement, a Manhattan federal district court judge had granted Periscope’s request for a preliminary injunction to temporarily bar Sands from competing in the women’s apparel business. According to a transcript from a hearing on July 6, Judge John Martin said in a bench ruling: “The evidence indicates that in operating Periscope there is evidence of perhaps criminal violations of the internal revenue code, the securities law, the customs law, the law dealing with obstruction of government investigation and, in this courtroom, perjury, all of which, as I indicated earlier, I intend to refer to the United States attorney in this district.
“This courtroom is not a place to come forth and perjure yourself and attempt to put forth a false story. I will not tolerate it, and I will do all in my power to see that [it] is not permitted in this courthouse.”
An assistant U.S. attorney for one of the districts in New York told WWD that, “A civil settlement between the parties would have no bearing on any possible action by the government, which has its own interests to protect in enforcing the laws.”
A well-placed government source said Martin has, in the past, made good on his promises to refer matters to the U.S. attorney in Manhattan.
As first reported in these columns, Sands filed a lawsuit in May against Periscope, alleging wrongful termination from the company he founded and seeking unspecified punitive damages. Periscope, owned by Giant Group Ltd., countered in June with counterclaims alleging “systematic embezzlement of Periscope’s funds.”
Andrew Rossman, an attorney at Akin, Gump, Strauss, Hauer & Feld, counsel for Periscope, who confirmed the settlement late Friday, said, “As part of the settlement, the case will be dismissed and the injunction will be lifted.”
Terms of the settlement were not immediately available, but is believed to include a cash payment by Sands, who could not be reached for comment.
Martin also stated in his bench ruling that, “The facts are clear that Mr. Sands had repeated notices that he was not to use funds of the company to pay his personal expenses. Not only did he continue to do it, but into March of this year was threatening employees of Periscope that if they disclosed what he was doing to Giant, their jobs would be in jeopardy.”
Sands denied any wrongdoing in court papers and, in testimony, said he “never” wrote checks on the company’s account. Sands also testified that an executive from the company should have paid the bills from his personal bank account.
As for Sands, the judge continued: “He engaged in destruction of documents in response to a customs investigation. He engaged in prebilling. He engaged in other frauds as detailed in the affidavits set forth in support of this motion for a preliminary injunction.”
Sands also lost on his bid for a preliminary injunction to bar Periscope from incurring any further debt with its factor. The former ceo said in court papers that he put up his own money to help the company get financing in connection with his reacquisition of stock in the company. Martin concluded in his bench ruling, “It seems to me the dispute is one between the factor and Mr. Sands.”