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Madden to plead guilty
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May 23, 2001: 1:06 p.m. ET
Shoe designer settles stock-fraud charges; leaving company temporarily
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NEW YORK (CNNfn) - Shoe designer Steve Madden is pleading guilty to stock fraud and other charges and will temporarily leave the company that bears his name, Steven Madden Ltd. said Wednesday.
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Steve Madden | |
Madden pleaded guilty to security fraud and money laundering charges in a Manhattan federal court Wednesday before Judge Kimba Wood.
Under the plea agreement, Madden faces prison time of between 41 and 51 months, must forfeit $3 million, and pay at least $5.18 million in restitution. Madden could face a maximum prison sentence of 25 years if the plea agreement is rejected by the judge.
Sentencing is set for Sept. 6.
The U.S. Attorney's office said Madden was scheduled to plead guilty to unspecified charges at 2:00 p.m. Wednesday in U.S. District Court in Brooklyn, N.Y.
Steven Madden Ltd. pointed out the federal charges involved in the plea agreements did not involve the company or its operations.
Madden also reached a separate settlement with the Securities and Exchange Commission on outstanding charges of manipulating stock offerings and a new charge of insider trading.
According to the settlement, Madden must pay $7.8 million in penalties and interest and cannot serve as the officer or director of any company for seven years.
The settlement included a new insider trading charge against Madden. According to the SEC, Madden sold 100,000 shares of Steven Madden Ltd. in May of 2000 after learning he could be indicted on securities fraud charges, but before telling the public of what he knew.
Madden was arrested on June 20 last year on federal charges of participating in the manipulation of 22 initial public offerings, including the deal involving his company. Steven Madden Ltd. stock, which had closed at $13.13 on June 19, fell as low as $5.50 on June 20 before closing at $6.69. By selling his stock before the news broke, the SEC said, Madden avoided losses of $784,000.
In signing the SEC agreement, Madden neither admitted nor denied the charges against him.
Madden to leave company temporarily
Trading in shares of Steven Madden Ltd. (SHOO: down $1.03 to $15.00, Research, Estimates) -- which specializes in trendy platform-soled and clunky-heeled footwear for teenage girls and pre-teens -- was halted at $15, down $1.03, on the Nasdaq Wednesday morning after the company announced Madden was settling the charges against him.
Madden, who already had resigned his positions as chief executive officer and chairman of the board of Steven Madden Ltd., will not stand for re-election to the board, the company said.
Madden will become creative and design chief of the company on July 1, but is expected to leave the company "late this year," the company said. The company expects him to return "upon completion of any time he serves."
"Today is a difficult day for the company," Madden Chairman Charles Koppelman said in a press release. "We cannot help but recognize Steve's vision, inspiration and energy, which have done so much to build this dynamic and successful company."
The shoe company also said it is delaying its annual shareholder meeting until July 10.
Replacing Madden as CEO will be Jamieson Karson, a member of the company's board and a partner in the New York law firm Tannenbaum Helpern Syracuse & Hirschtritt. Karson's family also owns a retail apparel business. Koppelman will remain chairman of the company.
Madden's trial in Brooklyn federal court was scheduled for June 4, and he also faced another in Manhattan Sept. 10. In the Brooklyn case alone, he faces up to 25 years in prison and a fine of $500,000 on each of three money-laundering charges. Three securities fraud charges each carry maximum sentences of 10 years and a fine of $1 million. 
- from staff and wire reports
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Steven Madden Ltd.
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