Neil Cole – My Nearly Eight-Year Ordeal Proving My Innocence
Neil Cole, Founder of Iconix Brand Group, writes about his ordeal and clearing his name.
In November 2021, after a four-week trial in Manhattan, the jury found me innocent of the false claims that I conspired to engage in accounting fraud and destroy documents at Iconix Brand Group, the brand licensing company I founded. The government’s decision to re-try the remaining charges (even after the jury was deadlocked in my favor on those counts, too) has limited what I’ve been able to talk about, but in response to questions from friends and former colleagues, I decided to put in writing some thoughts about this nearly eight-year experience proving my innocence.
In 2005, I founded a company called Iconix Brand Group. This new business model sought to buy and then license well-known consumer brands, which ultimately included Umbro, Danskin, Peanuts, Starter, Joe Boxer and London Fog. Over the ensuing decade, the business thrived beyond my wildest dreams, as Iconix brands were sold all over the globe. By 2014, Iconix had become the second-largest licensing company in the world, behind only Disney. Our 35 brands generated close to $14 billion in sales, which provided Iconix with $460 million in royalties. Our company was valued at over $3 billion. I could not have been more proud of what our team had created.
That dream was destroyed in 2015 when a disgruntled employee set out to hurt me and the company. He claimed that he had entered into two improperly undisclosed, oral agreements that increased Iconix’s annual revenue by approximately 2 percent — with no impact at all on free cash flow or profit.
Years later, in 2019, I was criminally charged in connection with the accounting for these two transactions that occurred in 2014 and one other that occurred in 2013, all with the same joint venture partner. The first transaction transparent to all professionals related to $2 million in revenue and $2 million in expenses for transactions that were initiated by the joint venture partner, who did business this way. The second related to $5 million that was received by Iconix but allegedly offset by a roughly equivalent marketing expense in a later quarter. And the third was for a contemplated but never consummated cancelation of a $6 million license.
While the amounts sound large in the abstract, for a company with $460 million in annual revenues, none were material based on accounting standards. Iconix’s investors — most of which were the most sophisticated institutional investors imaginable — were never misled.
Nonetheless, the government brought a misguided case alleging that I personally engaged in these transactions in order to meet certain expectations of Wall Street analysts. The government also claimed — falsely — that I destroyed documents.
The government’s case should never have been brought. Over the last nearly eight years, I have been subjected to three separate government investigations, followed by a four-week trial in Manhattan. In connection with the trial, there were close to 140 subpoenas issued and literally millions of documents produced in discovery. Iconix was required to spend millions — many multiples of the alleged bad accounting — to help me defend myself. Iconix was recently sold for barely more than its debt, and almost 100 people there have lost good jobs over this period.
Of course, even false allegations can destroy reputations and careers. I wasn’t able to confront the government’s case until a trial last October where I testified, even though I did not have to. Criminal defendants often don’t testify at trial — in fact, if you’ve ever watched any legal show, you probably know that lawyers often advise their clients not to testify. But I did. And I answered all of the government’s questions under oath.
After four long weeks — the longest of my life — the jury found me innocent of the lead charge of conspiracy to engage in accounting fraud. The jury also rejected the government’s false claim that I destroyed documents.
As to the remaining charges of accounting fraud, the jury couldn’t reach a unanimous verdict, but a poll of jurors found that a strong majority favored finding me innocent of those counts too. The jury’s verdict felt like vindication, and I finally regained hope that I might be able to rebuild my career and reclaim my reputation.
But, to my surprise, the government decided to re-try the charges for which the jury was divided (heavily in favor of innocence). They seek to examine again transactions that occurred, now, almost a decade ago. Transactions that were legitimate and in any event wholly immaterial to a company of Iconix’s size. To do so, they must rely yet again on the testimony of the same former, disgruntled employee who, by now, is locked in to his false testimony and has no choice but to try to curry favor with the government. The government is, quite literally, pursuing a “win at all costs” mentality.
I am fortunate to have the resources to continue fighting to clear my name these many years later. The vast majority of those facing trumped up charges are quickly bankrupted, even when they are ultimately exonerated.
I look forward to clearing my name. When I do, I hope there will be a serious reexamination of the government’s actions in this case and others where a jury rejects the government’s case.
Because this isn’t justice.