A years-long financial feud between disgraced American Apparel founder Dov Charney and his former hedge-fund ally Soo Kim is getting personal.
After years of trying and failing to collect on a $20 million loan to Charney from 2014 — part of an unsuccessful bid to keep the scruffy American Apparel CEO in his post amid sexual misconduct claims — Kim is now going after Charney’s family in an effort to seize his assets, according to sources and court documents.
“The goal is to make Dov’s life miserable” and take over Los Angeles Apparel, the company he started after he was forced out of American Apparel, a source with knowledge of the case told The Post.
Lawyers for Kim’s Standard General hedge fund will depose Charney’s dad Morris Charney, a Harvard-educated architect from Quebec, via teleconference on Jan. 7, sources said. They have already deposed Charney’s uncle, Moshe Safdie, the architect behind the National Gallery of Canada art museum in Ottawa, court documents show.
At issue is Charney’s assets — or apparent lack thereof.
The new company is owned by his dad via a trust, and Charney’s only other asset appears to be a 20-room house in the Silver Lake neighborhood of Los Angeles, which has been pledged to both his uncle and attorney Keith Fink, according to court papers.
Charney’s supporters say this is because the formerly high-flying clothing executive, who’s been accused of sleeping with employees and women hired to model his clothes, has been struggling to get back on his feet after being ousted from the company he started out of his Tufts dorm room in the 1980s.
He’s so down on his luck, his dad told The Post, that he’s been living out of the LA Apparel warehouse in South-Central LA.
“Dov does not have his own address or bank account,” said the senior Charney in a phone interview.
“Dov is not having a normal life. I have told him it’s wrong. He is living the life of someone who has a judgment over his head,” said the dad, 81, who inspects buildings for COVID-preparedness.
Indeed, the biggest judgement was passed down in 2017 when a Delaware Chancery court judge ruled that Standard General could attempt to collect on its debts, which the fund says has ballooned to $30 million including interest.
To get the money, Kim’s lawyers are attempting to prove that Charney put his assets in other people’s names to wiggle out of payment. And they’re expected to question whether Morris Charney — who says he lost his pension when American Apparel went belly up — actually put any money down to fund LA Apparel, sources said. No evidence has been presented in the case so far to show that he has, sources told The Post.
But the elder Charney says he will prove them wrong. “They are going to be wasting their time. I’m the one who is really financing everything.”
He told The Post he pays his son a salary for running the day-to-day operations. And LA Apparel is making money, he said without providing specifics.
“I talk to Dov almost every day,” he said.
If Standard General succeeds, it stands to take over a company that makes clothes very similar to American Apparel, right down to the bright colored leggings. Sources with knowledge of the case say Standard General estimates LA Apparel generated between $8 million and $25 million in sales prior to the pandemic.
The company’s manufacturing was shut down for a few weeks in July after four warehouse workers died of COVID and 375 tested positive, according to reports. But Charney has also reportedly secured what appears to be a lucrative two-year contract to make face masks for the US Air Force.
Kim’s hedge fund is also going after Charney’s LA mansion, which Zillow estimates is worth $5.6 million, but which Charney’s lawyer, Keith Fink, says is “under water,” or worth less than its debts.
To get the house, Standard General is trying to prove that interests Charney’s transferred to others, including Fink, were fraudulent. It will claim the transfer to the lawyer, which occurred mere months after it sued him in 2015, was done to put the house out of its reach.
Charney is expected to argue that he deeded Fink an interest in the home in exchange for $3.7 million in legal work. Fink defended Charney during his American Apparel ouster and in his on-going cases against Standard General and was never properly paid, he’s said.
The case has been cleared to go to trial, although Fink says he expects to get it “dismissed” before a trial date is set. “Again because there was zero improper,” he said. “Work was done for which we weren’t paid. Standard General has zero evidence to refute this.”
Charney’s 82 year-old uncle Moshe Safdie also has a lien against the Silver Lake house. But in investigating those ties, Kim’s lawyers have decided not to seek to unwind that transaction, sources said.
What they learned was that Safdie, a world-famous architect who introduced Charney’s dad to his mom, loaned his CEO nephew $2 million in 2011 that was never repaid.
Charney in a December 2018 deposition said he gave his uncle an interest in the house in 2016 “to prevent a legal squabble with a family member.”
“Has your uncle ever sought to foreclose on this interest?” Kim’s lawyer asked.
“I mean, that’s a consideration I think that he’s having,” Charney said.