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Just for Feet Former Exec Pleads Guilty

Adam Gilburne had been charged with artificially inflating the shoe retailer's books.

May 13, 2003|From Reuters

WASHINGTON — A former executive of Just for Feet, the athletic-shoe retailer that filed for bankruptcy protection in 1999, pleaded guilty to fraud charges, the Justice Department said Monday.

Adam Gilburne, who held various positions at Just for Feet starting in 1994, had been charged with a scheme to artificially inflate the company's books by improper recognition of income from the company's advertising agency, Birmingham, Ala.-based Rogers Advertising.

Gilburne, who headed sales and then rose to be president of the Superstore division of Just for Feet, faces a maximum of five years in prison and a $250,000 fine on the charges of conspiracy to commit wire fraud and securities fraud, the department said.

As part of the plea in U.S. District Court in Birmingham, Gilburne is cooperating with the ongoing investigation into Just for Feet's finances, prosecutors said.

Efforts to reach an attorney for Gilburne were unsuccessful.

According to the government, from late 1996 to 1999, Gilburne and others devised a scheme involving a rebate from Rogers Advertising of its commissions for the upcoming year that would be recorded by Just for Feet as a receivable due in the current fiscal year.

Just for Feet Chief Executive Harold Ruttenberg is not mentioned by name, but the government alleged that as part of the conspiracy "the CEO instructed Gilburne and others, if asked about the Rogers rebate, to respond that the rebate was based on services already performed during the current year."

Just for Feet, founded in 1977 with a single store in Birmingham, went public in 1994 and grew over the next five years to become the second-largest athletic-shoe retailer in the United States before filing for bankruptcy protection and selling stores to Footstar Inc. in February 2000.

Just for Feet overstated income in 1996 by $730,000, in 1997 by $3 million and in 1998 by $5.3 million, court papers said.

Shareholders sued Just for Feet, several officers, including Ruttenberg and Gilburne, and former auditor Deloitte & Touche for fraud after the assets were sold to Footstar.

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