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Value Protected

Inside the American Apparel Investigation

Value Protected

Inside the American Apparel Investigation

David R. AlfaroSophie Ross
Key Contacts
David R. Alfaro and Sophie Ross

How do you protect a brand and restore business amid a publicized crisis?

Findings from the sensitive internal investigation help set the course for a new direction

When the iconic U.S. fashion company American Apparel publicly suspended its founding CEO amid persistent allegations of misconduct, FTI Consulting was engaged by the independent board of directors and legal counsel Jones Day to conduct a thorough, firm-wide forensic investigation into the allegations.

Less than 12 hours after being selected, FTI Consulting had experts on-site and rapidly assembled a team of more than 60 forensic accounting, technology and corporate finance experts. Over an intense three-month period, our team worked under intense media scrutiny from every major news outlet across the globe. The company presented its findings to the board and to various governmental agencies, supporting the board’s decision to terminate the CEO for cause.

FTI Consulting’s investigation uncovered widespread issues, including indicia of sexual harassment and workplace discrimination, later highlighted in the 2025 Netflix docu-series, “Trainwreck: The Cult of American Apparel.” 1

Our Impact

Uncovering and addressing the alleged malfeasance enabled American Apparel to reduce legal risk and focus on company performance.

Four colleagues in a meeting room collaborate around a wooden table with laptops and coffee cups, one standing and pointing at a laptop screen.
Four colleagues in a meeting room collaborate around a wooden table with laptops and coffee cups, one standing and pointing at a laptop screen.

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Based on FTI Consulting’s investigation, the special committee of the board determined that the company’s relationship with the CEO should be terminated.2

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The removal allowed the company to avoid additional reputational and legal risk, and end payment of his $832,000 ($1.1 million in 2025 currency) annual salary that he was drawing as a non-supervisory consultant during the investigation.3

Person wearing brown pants and a beige coat holding a white shopping bag while walking inside a clothing store with racks of clothes.

Slide for Person wearing brown pants and a beige coat holding a white shopping bag while walking inside a clothing store with racks of clothes.

Immediately after the separation, the company appointed a new CEO — the first female executive in the company’s history — who was positioned to help the company recover and rebuild.4

By the Numbers

A 90-Day Assay in a High-Pressure Environment

60+

Experts Engaged

Including Forensic Accounting, Technology and Corporate Finance

17M

Documents and Accounting Records Reviewed

50+

Interviews Conducted

In crisis and transformation,real-world experience delivers.

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Our Role

A High-Profile, Complex Investigation That Inspired a Netflix Documentary

  1. Under intense media scrutiny, our investigation entailed reviewing more than six million documents, 11 million accounting, expense and payroll records, and conducting more than 50 personal interviews.

  2. FTI Consulting’s team of more than 60 forensic accounting, technology and corporate finance experts conducted the investigation and reported the findings within three months.

  3. The investigation uncovered a long list of failures and malfeasances, ranging from financial mismanagement to gross sexual misconduct, including revelations later detailed in the 2025 Netflix documentary, “Trainwreck: Inside the Cult of American Apparel.”

Footnotes

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