--:-- [Sound of a podium being stepped up to]
--:-- Brian Peace: Good afternoon. I'm Brian Peace, the United States attorney for the Eastern District of New York.
--:-- Brian Peace: Peace was speaking just hours after the arrest of the former CEO of Abercrombie & Fitch, Mike Jeffries. Jeffries was charged with 16 counts of sex trafficking and interstate prostitution.
--:-- Host (Kate Leinbaugh): How serious are the allegations against Jeffries?
--:-- Brian Peace: Very serious allegations. He's been charged with essentially orchestrating a scheme to pressure victims to participate in sex events.
--:-- Host (Kate Leinbaugh): And the indictment alleges that many of those victims were misled into believing that they would get jobs.
--:-- Khadija Safdar: What's most surprising is how long it took to uncover this. Mike Jeffries had been CEO for many years. This is a consumer brand. People knew about this brand. They visited the stores. And yet this was happening behind the scenes. It's pretty shocking.
--:-- Khadija Safdar: The federal indictment against Jeffries alleges that his sex trafficking ring began in 2008 and continued operating for at least seven years. It includes 15 victims, but the U.S. attorney said the number is likely much higher.
--:-- Host (Kate Leinbaugh): Can the company separate itself from these allegations?
--:-- Khadija Safdar: I mean, I think that's the big question because it's not like there's a rogue employee, like a low-level employee that went out on his own and did some things. This is like the CEO.
--:-- Host (Kate Leinbaugh): Welcome to The Journal. Our show about money, business, and power. I'm Kate Leinbaugh. It's Thursday, October 24th.
--:-- Host (Kate Leinbaugh): Coming up on the show, the sex trafficking allegations against the former CEO of Abercrombie & Fitch.
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--:-- Host (Kate Leinbaugh): At malls around America in the late 90s and early 2000s, Abercrombie was king. It sold shirts emblazoned with the company's name. And if you bought one, you'd get one of Abercrombie's iconic bags with a black and white photo of a shirtless male model.
--:-- Host (Kate Leinbaugh): I actually remember when I was in middle school, So people in my school really wanted to work at Abercrombie. They were trying to get the jobs and they would be called floor models.
--:-- Host (Kate Leinbaugh): And a lot of the way that you would get hired would be based on the way you look. And that was really considered cool at the time amongst teens.
--:-- Host (Kate Leinbaugh): Did you ever work there?
--:-- Host (Kate Leinbaugh): I did not work there, but I just remember that it was almost considered like a status symbol to be working there.
--:-- Host (Kate Leinbaugh): Which is, you know, unique because usually like retail jobs aren't really considered a status symbol. But it was like the cool place to work.
--:-- Host (Kate Leinbaugh): One man was credited with making Abercrombie cool, Mike Jeffries. But before he took the helm in 1992, the company was not considered cool.
--:-- Host (Kate Leinbaugh): It was at that time a money-losing brand, and Mike Jeffries completely revamped what Abercrombie was about.
--:-- Host (Kate Leinbaugh): He created a lookbook, and the marketing was very hyper-sexualized. He hired a lot of college students to staff them. They had those shirtless male greeters at the doors.
--:-- Host (Kate Leinbaugh): The T-shirts and sweatshirts had Abercrombie logos all over them. And this revamp actually made sales go up.
--:-- Host (Kate Leinbaugh): Under Jeffries, sales went from $100 million to more than $4 billion.
--:-- Host (Kate Leinbaugh): But over time, his strategies began to fall flat. And in 2014, he stepped down as CEO.
--:-- Host (Kate Leinbaugh): For about a decade after that, we didn't hear much about Jeffries. Until last year.
--:-- Khadija Safdar: So they were discovered by a BBC investigation. A reporter started digging into them. She got connected with one of the victims, and he shared his story.
--:-- Khadija Safdar: And then through that, she learned of other victims, and she interviewed them. Several of the men ended up talking on the record.
--:-- Khadija Safdar: I think he's a deviant. I think he's a predator. And I don't think that's what the public has seen.
--:-- Khadija Safdar: I was overwhelmed. Like, I mean, I've never seen anything like this.
--:-- Khadija Safdar: The BBC investigation brought pressure on Abercrombie. And last fall, one of the victims filed a civil lawsuit seeking class action status.
--:-- Khadija Safdar: Federal investigators started looking into potential criminal activity by Jeffries during and after his time as CEO.
--:-- Khadija Safdar: That led to his indictment earlier this week.
--:-- Khadija Safdar: The indictment alleges that Mike Jeffries used a network of employees and contractors to run a sex trafficking ring, and he kept this a secret.
--:-- Khadija Safdar: According to the indictment, the victims were recruited into the trafficking ring by a man named James Jacobson, who was also arrested this week.
--:-- Khadija Safdar: Jacobson allegedly led them to believe that they were being considered for modeling jobs.
--:-- Khadija Safdar: There was a whole operation that was involved with the recruiting where they would actually interview the men for hiring. So they thought they were going through a real hiring process.
--:-- Khadija Safdar: And the indictment alleges that Jacobson, he would hold tryouts for the recruits and sometimes he would require them to first have sex with him.
--:-- Khadija Safdar: An attorney for Jacobson declined to comment.
--:-- Khadija Safdar: The indictment alleges that after being recruited, victims traveled to events hosted by Jeffries and his partner.
--:-- Khadija Safdar: The events were held at his residences in New York as well as at luxury hotels in places like Italy France and Morocco.
--:-- Khadija Safdar: According to the indictment, some of these men believed that attending these events would be the next step in getting a job.
--:-- Khadija Safdar: They weren't told ahead of time that they were going to be attending a sex event and that they had to put away their phone and that they would have to sign an NDA, non-disclosure agreements.
--:-- Khadija Safdar: And in the civil suit, it describes that the people that were there, the staff, they actually had Abercrombie shirts on and they were led to believe that these events were like company-sponsored events where they were trying out for legitimate jobs.
--:-- Khadija Safdar: And then to top that off, they were given muscle relaxants, which are known as poppers, in some cases, Viagra.
--:-- Khadija Safdar: And so they were coerced into sex acts.
--:-- Khadija Safdar: According to the indictment, Jeffries was present at these events and was either watching or participating.
--:-- Khadija Safdar: The victims say that at the end of the parties, they were handed envelopes with thousands of dollars in cash.
--:-- Khadija Safdar: Federal prosecutors said that Jeffries employed security staff to surveil and intimidate witnesses, and they used burner phones to communicate.
--:-- Khadija Safdar: So there was a scheme to prevent this also from coming out because they were trying to intimidate people into not sharing this publicly and not disclosing what was happening behind the scenes.
--:-- Khadija Safdar: The U.S. attorney alleged that Jeffries had a secret staff to run the events, ultimately spending millions of dollars on the trafficking ring.
--:-- Khadija Safdar: So the indictment and the civil suit alleged that he was allegedly using his power as CEO to lure these men and then compel them into sexual activity.
--:-- Khadija Safdar: They were essentially misled under the pretense that this was a company thing.
--:-- Khadija Safdar: A spokesperson for Abercrombie said that the company is committed to cooperating with law enforcement and has, quote, zero tolerance for abuse, harassment, or discrimination of any kind.
--:-- Khadija Safdar: And while the federal indictment doesn't include Abercrombie, this case is bringing heightened scrutiny to the company.
--:-- Host (Kate Leinbaugh): That's next.
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--:-- Khadija Safdar: During Mike Jeffries' tenure as CEO, Abercrombie faced scrutiny related to its branding and hiring.
--:-- Khadija Safdar: The company marketed itself with pictures of buff young white men, and it staffed its stores to match this look.
--:-- Khadija Safdar: These practices led to lawsuits. People were alleging that they weren't hired for jobs because of discriminatory practices, because it turns out if you're hiring people based on the way they look, that that could be against the law or it could be problematic.
--:-- Khadija Safdar: And so people filed suits for discrimination, age discrimination. There was a string of lawsuits.
--:-- Khadija Safdar: In 2004, Abercrombie agreed to pay $40 million to settle a class action suit that said the company had discriminated against Black, Latino, and Asian job applicants and employees.
--:-- Khadija Safdar: The company agreed to implement diversity programs, but didn't admit wrongdoing.
--:-- Khadija Safdar: A few years later Abercrombie settled a lawsuit over age discrimination The plaintiff who was 55 claimed he was fired because he didn't fit the company quote youthful all image
--:-- Khadija Safdar: The civil case, the one filed by some victims last year, is moving forward.
--:-- Khadija Safdar: It accuses not only Jeffries, but also Abercrombie itself, of playing a role in enabling the sex trafficking.
--:-- Khadija Safdar: The company has said it hired a law firm to conduct an independent investigation.
--:-- Khadija Safdar: I think we'll learn more of that when the civil case proceeds because they're suing the retailer, so we'll find out.
--:-- Khadija Safdar: But it's pretty clear that this wasn't a random rogue employee. This was the CEO of the company that's being accused of doing this.
--:-- Khadija Safdar: And these men thought that they were getting jobs at Abercrombie.
--:-- Khadija Safdar: And there was like details in the civil suit that show that the company name was being used or invoked to lure them there.
--:-- Khadija Safdar: And I think the company may end up alleging that these weren't actually company-sponsored events.
--:-- Khadija Safdar: But this was the CEO that was involved that's being accused.
--:-- Khadija Safdar: So I think there will be questions around whether there were complaints ever made to the board of directors.
--:-- Khadija Safdar: There's a big corporate governance question here. Right.
--:-- Khadija Safdar: What was known inside the company at the time? Did people speak up to HR?
--:-- Khadija Safdar: I think that is going to be one of the questions that the lawyers are going to ask in the course of the civil litigation is finding out whether any complaints were made, whether complaints were taken seriously.
--:-- Khadija Safdar: What does all of this say about how hard it can be for victims to speak out?
--:-- Khadija Safdar: And when the person that they're accusing is the CEO, it's just like the power imbalance is just so large.
--:-- Khadija Safdar: I've spoken to many victims over the years of these kinds of offenses.
--:-- Khadija Safdar: And there's like a million thoughts that run through people's heads, you know, about the consequences.
--:-- Khadija Safdar: Sometimes they fear for their safety, but also like the career consequences, not being able to get a job somewhere else because they went up against somebody who was so powerful in the industry where they want to work.
--:-- Khadija Safdar: Do you think that Abercrombie's hyper-sexualized marketing helped enable or mask these alleged crimes?
--:-- Khadija Safdar: Yeah, I think that it was like hyper-sexualized marketing, judging young men based on their appearance.
--:-- Khadija Safdar: There was a lot of just cultural aspects that had become normalized and that at the time actually were considered cool and people weren't really looking at them the same way that we look at them now like after me too looking back the nature of a lot of the reader comments that I'm getting is that you know that was that was creepy like that was something that shouldn't have been normalized and made to be considered cool.
--:-- Khadija Safdar: How might this impact Abercrombie and Fitch?
--:-- Khadija Safdar: In the civil suit against the company, we would have to see what the outcome for that is.
--:-- Khadija Safdar: But naturally, this is like not good press.
--:-- Khadija Safdar: And there's a lot of questions that now the public has about the company and who at the company knew and how long this has been going on for.
--:-- Host (Kate Leinbaugh): If you think you or someone you know could be a victim of sex trafficking, you can call the National Trafficking Hotline. It's 1-888-373-7888.
--:-- Host (Kate Leinbaugh): That's all for today, Thursday, October 24th.
--:-- Host (Kate Leinbaugh): The Journal is a co-production of Spotify and The Wall Street Journal.
--:-- Host (Kate Leinbaugh): Additional reporting in this episode by James Finelli.
--:-- Host (Kate Leinbaugh): Thanks for listening. See you tomorrow.
