TWO FORMER EXECUTIVES AGREE TO
PLEAD GUILTY IN “JUST FOR FEET” INVESTIGATION

WASHINGTON, D.C. - Deputy Attorney General James B. Comey, Assistant Attorney General Christopher A. Wray of the Criminal Division, U.S. Attorney Alice H. Martin of the Northern District of Alabama, and FBI Special Agent in Charge Carmen S. Adams of the Birmingham Field Office announced today that two former executives have agreed to plead guilty and cooperate with the government’s ongoing investigation into the finances of Just For Feet, Inc.

Thomas Shine, former president of now-defunct Logo Athletic, Inc., and currently senior vice president of sports and entertainment marketing worldwide for Reebok International Ltd., an athletic footwear and sportswear company headquartered in Canton, Massachusetts, was charged in a criminal information unsealed today with conspiracy to submit false statements to JFF auditors and to falsify JFF books and records. Logo Athletic filed for bankruptcy in 2000, and its assets were purchased by Reebok in 2001.

Just For Feet (JFF) was a publicly-traded corporation with headquarters in Shelby County, Alabama. The company was founded in 1977 with a single store in Birmingham. By 1999 it had grown to be the second largest athletic shoe retailer in the United States, with locations in 30 states and annual sales of approximately $775 million. The company filed for bankruptcy in 1999.

According to the criminal information, in or around February 1999 and continuing through on or about April 23, 1999, Deloitte & Touche performed its annual audit of JFF’s financial statements for the fiscal year ending Jan. 30, 1999. As part of the audit process involving JFF’s accounts receivable, Deloitte & Touche requested certain vendors to provide written, independent confirmation of the amounts they owed JFF. This was done in the form of an “audit confirmation letter.”

The criminal information alleges that during the course of JFF’s annual audit, in order to cover an additional $700,000 in fictitious accounts receivable purportedly due to JFF from Logo Athletic as of Jan. 30, 1999, a JFF executive vice president requested that Shine, on behalf of Logo Athletic, sign an audit confirmation letter confirming to Deloitte & Touche that Logo Athletic actually owed JFF approximately $700,000 “for advertising that ran or merchandise sold prior to January 30, 1999.” Shine, allegedly knowing that the information contained in the audit confirmation letter was false, and that Logo Athletic did not, in fact, owe JFF approximately $700,000, signed it and sent it to Deloitte & Touche. Subsequently, Deloitte & Touche included the false financial information when preparing JFF’s annual financial reports for public filing with the Securities and Exchange Commission. As a result, JFF’s earnings for the fiscal year ending Jan. 30, 1999, as stated in its annual audited financial statement and SEC filings, were overstated by at least approximately $700,000, thereby defrauding the shareholders of JFF.

Steven C. Davis, the former JFF director of advertising, was also charged in a one-count criminal information with making false statements to FBI agents in connection with the federal government’s investigation of JFF.

Davis, 33, of Collegeville, Pennsylvania, and Shine, 58, of Carmel, Indiana, have agreed to plead guilty to the respective charges and cooperate with the federal government’s ongoing investigation into JFF’s finances. Hearings on their guilty pleas will be scheduled at a later date.

Each charge against Davis and Shine carry a maximum penalty of five years in prison and a fine of $250,000.

The government’s investigation into Just For Feet’s finances continues. Previously, former JFF president Adam Gilburne pleaded guilty to conspiracy to commit wire and securities fraud, and Timothy McCool, national sales director of adidas America, pleaded guilty to conspiracy to submit false statements to the auditors of a publicly traded company and to cause false entries to be made in the books and records of JFF. Jonathan G. Epstein, former president and chief executive officer of Fila USA, a wholly-owned subsidiary of Fila Holding S.p.A., an Italian company, and Steven G. Dodge, former vice president of U.S. Sales for Converse, Inc., each have agreed to plead guilty to conspiracy to submit false statements to the auditors and to falsify the books and records of JFF.

The ongoing investigation is being conducted by the FBI-Birmingham Field Office, with assistance from the SEC, Atlanta District-Enforcement Division. The prosecution is being handled jointly by the United States Attorney’s Office and the Fraud Section of the Criminal Division of the Department of Justice in Washington, D.C. The prosecution is being conducted under the auspices of the President’s Corporate Fraud Task Force, headed by Deputy Attorney General James Comey.

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