Updated 7:29 p.m. ET Nov. 10
Neil Cole is going on the offense.
After 10 years of defending himself in court, the licensing pioneer and founder of Iconix Brands Group is suing the company and its former chief operating officer, Seth Horowitz, for a total of $45 million.
It’s a significant turning of the page for Cole, who last month was cleared by an appeals court, which vacated his securities fraud conviction, ruling that he should not have been tried a second time after a jury did not convict him the first time around in 2021. He had been sentenced to 18 months in prison after his second trial the following year, but was out on bail for the appeal.
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“Starting in August 2015, plaintiff Neil Cole had his life and his life’s work effectively ripped away from him based on abject lies,” according to the suit filed in Manhattan federal court on Monday. “These lies were primarily told by defendant Seth Horowitz, Cole’s one-time yet supposedly spurned protégé at Iconix Brand Group Inc., the visionary branding business that Cole founded and led for nearly 25 years in various forms.
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“Horowitz’s lies sprung an absurd — and now-vacated — federal securities fraud prosecution that tortured Cole for the better part of a decade,” the suit said. “What’s more, the harms from Horowitz’s lies were significantly exacerbated by the indefensible conduct of Iconix itself, which was obligated to help Cole defend himself against these charges but did not.”
Cole, who founded Iconix and was its chief executive officer until the allegations arose, is looking for $25 million from Iconix for breach of contract, bad faith and unjust enrichment as well as $20 million from Horowitz for malicious prosecution.
Iconix declined to comment. Horowitz did not immediately respond to a request for comment after the suit was filed on Monday.
“Neil Cole built Iconix from nothing into a global brand empire,” said his attorney, Benjamin D. White of Bloch & White. “The Second Circuit’s opinion confirms what Neil has said from Day One — that the government’s case was based on falsehoods from a single, unreliable witness.”
Cole hired Horowitz in 2012 and promoted him to chief operating officer two years later.
“Horowitz initially viewed himself as Cole’s protégé and successor as CEO,” according to the suit. “Unbeknownst to Cole at this time, Horowitz’s life was then in turmoil. Horowitz was regularly withdrawing large sums of cash from his bank accounts, each just under the required reporting amount under federal law, some of which he used to buy drugs.
“At this time, Horowitz had also developed a deep-seated and mostly irrational resentment and anger toward Cole, principally on the perceived slight that Cole had unfairly rebuffed Horowitz’s efforts to lead Iconix,” the suit said. “Indeed, when Horowitz ultimately concluded that Cole stood in his path to becoming CEO, Horowitz grew resentful and angry at Cole and vowed to ‘fight back’ against him.”
According to the suit, Horowitz negotiated the SEA-2 and SEA-3 joint ventures between Iconix and Global Brands Group in 2014, deals that soon were being investigated by the Justice Department.
“At first, Horowitz denied having done anything wrong,” the suit said. “However, years later, in 2019, Horowitz became nervous that he would be held accountable for certain terms that he negotiated on SEA-2 and SEA-3 and he decided to throw his perceived nemesis, Cole, under the bus on the basis of abject lies. To protect himself and to harm Cole, Horowitz crafted a false and absurd story that he told to investigators, law enforcement and prosecutors that implicated Cole in wrongdoing….Horowitz repeatedly told investigators, law enforcement and prosecutors that Cole had conspired with GBG…to enter into unwritten side deals that he kept secret from Iconix and its auditors, which Cole supposedly did to artificially inflate Iconix’s revenue.”
Prosecutors suggested the scheme boosted Iconix stock price by 2 percent.
“The government fined me for $790,000,” said Cole, who denied wrongdoing from the start and has had that fine vacated, told WWD. “They said that’s what I did wrong.”
But Cole said the monetary cost of the legal fallout was much larger, totaling $150 million all around.
Iconix stopped covering Cole’s legal bills during the second trial, forcing him to pay out of his own pocket.
Cole said the lawsuit seeks in part to recoup those expenditures as well as other damages.
“I really want to move on with my life and I’m so excited about what’s coming and the things I’m working on, but it’s hopefully holding people accountable for what happened and the pain that my family had to go through over the last decade,” he said.
Cole, a lawyer himself, came out of the experience more jaded.
“I’m going to devote a lot of my charitable philanthropic efforts to criminal reform,” he said. “There’s absolutely no accountability for prosecutors. They basically, no matter what they do, not one of them has ever been accountable for anything in the last 20 years. Nor board of directors…they both do whatever the hell they want.”