A former licensing mogul who is the brother of fashion designer Kenneth Cole — and a former business partner of rapper Jay-Z — has been arrested and charged with fraud and obstruction of justice.
Manhattan US Attorney Geoffrey Berman on Thursday charged Neil Cole with cooking the books at his former licensing empire, Iconix, which owns labels like London Fog, Joe Boxer and the Rocawear clothing brand created by Jay-Z in 1999.
Cole, who was released on a $1 million bond Thursday, faces up to 20 years in jail if he’s convicted.
The feds say Cole, who is Iconix’s founder and former chief executive officer, goosed the Big Apple-based company’s earnings and revenue by inducing several brands to overpay Iconix in royalty fees. Iconix would then repay those companies, but not before falsely reporting the pumped-up income as revenue, court papers said.
The “illegal secret agreements” allowed Iconix to beat Wall Street analysts’ estimates for revenue and profit in part of 2013 and all of 2014, the feds said.
Cole was allegedly aided by his former chief operating officer, Seth Horowitz, who is cooperating with the government. Horowitz pleaded guilty Dec. 2.
The Securities and Exchange Commission also slapped Cole, 62, and Horowitz, 43, with civil fraud charges.
The SEC, during its five-year probe of Iconix, subpoenaed Jay-Z multiple times in an effort to question him. The rapper, who is famously married to superstar Beyoncé, refused to show up until he was ordered to do so by a Manhattan federal judge in 2018.
The SEC said it wanted to question Jay-Z — and look at his emails and phone calls — concerning “the value of the Rocawear trademark and his involvement with that brand after the sale to Iconix,” court papers said.
Lawyers for Jay-Z, whose real name is Shawn Carter, argued in court papers at the time that their client was no longer involved with Iconix and accused the SEC of being on a “celebrity witch-hunt.”
Jay-Z’s entertainment and management company Roc Nation sold Rocawear to Iconix for $204 million in 2007. At the time, Iconix said the hip-hop mogul would continue to be the chief creative officer.
Their relationship has soured in recent years, however, with the two sides lobbing lawsuits at each other, including Roc Nation earlier this year accusing Iconix of obtaining its trademarks “under false pretenses.” The suits have since been settled.
Neither Jay-Z nor Rocawear are mentioned in Thursday’s court documents, which only refer to the brands involved in the alleged overpayments as companies 1, 2 and 3.
Lawyers for Cole denied the charges, saying their client merely followed the advice of “Iconix’s legal, finance and accounting professionals.”
“Good faith business conduct by a senior business executive should not be criminalized. These charges are completely baseless,” the statement said.
A Horowitz spokesman declined to comment. A spokesperson for Jay-Z said his client has nothing to do with Thursday’s allegations.
Iconix, located near Bryant Park in Midtown Manhattan, said Thursday that it agreed to pay a civil penalty of $5.5 million to settle the SEC’s claims. The stock, which was halted during regular trading Thursday, was down 11 percent in late trading to under $1 a share.
Cole left Iconix in August 2015 and Horowitz left in April 2015 after a two-year tenure.
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