Steve Madden Pleads Guilty to Fraud
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NEW YORK (AP) _ Shoe designer Steve Madden, who built a $200 million fashion company based on his trademark chunky shoes for teenagers, pleaded guilty Wednesday to federal charges of securities fraud and money laundering.
``It’s been traumatic,″ said Madden, wearing a white collared shirt, navy blue jacket, khakis and black shoes, in his address to Judge Kimba Wood in Manhattan federal court.
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.
Madden is expected to plea guilty to similar federal charges in Eastern Federal Court in Brooklyn Wednesday afternoon.
Following Madden’s plea, the Long Island City, N.Y.-based Steven Madden Ltd. announced that Madden will not stand for re-election as a director of the company and will relinquish his role as an officer effective July 1.
Madden, 44, who announced he was resigning as chief executive of the company earlier this month, will stay on as creative and design chief of the company. Madden is expected to return to the firm upon completion of any time he serves, the company said.
The fashion company also announced that the designer has reached a separate settlement with the U.S. Securities and Exchange Commission.
Under the agreement, Madden agreed to pay $1 million in civil penalties to the SEC and return approximately $5 million of illegal gains as restitution. He also agreed to be barred from serving as a director or officer of a public company for a period of seven years.
The SEC and Madden also settled a new civil complaint, filed on Wednesday in Brooklyn federal court, in which the SEC charged Madden with insider trading.
In its complaint, the SEC charged Madden with selling 100,000 shares of Madden Ltd. stock on May 31, 2000, after he already had been advised by federal prosecutors that he was a target of grand jury investigations in Brooklyn and Manhattan.
Under the settlement, Madden agreed to return $835,000 in illegal gains and interests, and pay $784,000 in civil penalties.
Madden was arrested last June in connection with reaping the benefits of manipulating 23 initial public stock offerings, including the 1993 IPO of his own company. They were underwritten by Stratton Oakmont Inc., and Monroe Parker Securities Inc., both now defunct.
Shares of Steve Madden were off $1.03, or 6.4 percent, to $15 in afternoon trading on Nasdaq Stock Market.
On the Net: http://www.stevemadden.com