Former Shoe Company Executive to Plead Guilty to Embezzling $30 million

Posted On Friday, April 16, 2021
By: Daniel Wotherspoon

The former CFO of Alden Shoe Co., a Massachusetts-based shoe company, will plead guilty to wire fraud, unlawful monetary transactions, and filing a false tax return. According to the Massachusetts U.S. Attorney’s Office, Richard Hajjar, 64, embezzled more than $30 million from Alden by writing checks to himself and transferring money from the company to his personal accounts beginning in at least 2011 and lasting until 2019, when the scheme was discovered and he was fired. To cover his crimes, Hajjar altered Alden’s year-end bank statements and provided false information to Alden’s accounting firm in each of the years he embezzled funds.

In addition to enriching himself, Hajjar used the proceeds of his embezzlement to purchase gifts and luxury travel, including private flights to the Caribbean and diamond jewelry, for others close to him, including a former Boston-area tv anchor, Bianca de la Garza. The government says that Hajjar compounded his theft from the company by also failing to report the proceeds of his embezzlement as income on his tax returns, depriving the Internal Revenue Service of approximately $5,112,822 in taxes. 

The circumstances of the embezzlement were laid out by Alden in a related civil lawsuit last summer and tell the tale of an opportunistic fraudulent scheme intended, at least in part, to win the affections of de la Garza. According to the suit, Alden president Arthur Tarlow Jr. made the decision in 2009 to begin leaving retained earnings in the company to cover operations costs. By 2019, this fund had grown to exceed $10 million and Tarlow asked Hajjar to prepare to distribute the money in the fund to family trusts. At this point, Hajjar stopped showing up to work or replying to texts or calls. When Tarlow eventually visited his bank, he found nearly half of the retained earnings fund was missing and an $8 million line of credit in Alden’s name had been opened without his knowledge and completely drawn down.

While Hajjar has been cooperating with both the government and Alden, resulting in the substantial return of assets to the company, the civil suit against Hajjar and de la Garza is still pending. De la Garza’s attorney claims that his client had no knowledge of any of Hajjar’s wrongdoing, or where Hajjar was getting his money, despite receiving at least $15 million from Hajjar since 2015, transfers that Alden claims “consisted entirely of money Mr. Hajjar had stolen from Alden.”

Per his April 13, 2021 plea agreement with the government, Hajjar admitted to each of the charges against him and accepted a sentence including

  1. incarceration for a term between 48 and 74 months
  2. 36 months of supervised release
  3. a mandatory special assessment of $300
  4. restitution in an amount to be determined at sentencing
  5. forfeiture of assets totaling at least $30,000,000, including real property located in Duxbury, MA.

The full text of the government’s information against Hajjar can be found here.

The plea agreement between Hajjar and the government can be found here.      

Gensler Expected to Take Tough Stance on Corporate Issues

Posted On Thursday, April 15, 2021
By: Christin M. Roberts

On Wednesday, April 14, 2021, the Senate confirmed President Biden’s nomination, Gary Gensler, as chairman of the SEC in a 53-45 vote. Although Gensler steps into this role to serve the remainder of predecessor Jay Clayton’s term, ending June 5th, the Senate Banking Committee intends to give Gensler a five-year term after June 5, 2021. Gensler’s experience as the former head of the Commodity Futures Trading Commission (CFTC) during the 2007- 2008 financial crisis, and as the assistant secretary of the U.S. Department of the Treasury, made him an attractive nominee to lead the SEC. Gensler’s confirmation gives Democrats a 3-2 majority on the commission.

A former executive at Goldman Sachs for 18 years, Gensler comes to the SEC with a financial agenda: to maintain fair, orderly, and efficient markets, and to facilitate capital formation. Gensler’s reputation as a tough regulator precedes him as he is expected to continue his priorities of strengthening transparency and accountability in the markets.

Gensler is expected to reverse prior rulemaking priorities that were friendly to businesses. Despite this, he pledges to take a bipartisan approach to the SEC amidst political division. All eyes will be on Gensler as he takes office; environmental, social, and governance (ESG) related disclosure violations, corporate issuers, meme stocks, cryptocurrencies, insider trading, and political spending are all on the table, and you can expect Gensler to take a tough stance on these issues. Gensler’s SEC will likely bring about proactive rulemaking all while doubling down on violations.