FORMER EXECUTIVE VICE PRESIDENT OF JUST FOR FEET, INC.,
AGREES TO PLEAD GUILTY

WASHINGTON, D.C. - Deputy Attorney General James B. Comey, Assistant Attorney General Christopher A. Wray of the Criminal Division, and U.S. Attorney Alice H. Martin of the Northern District of Alabama announced today that Don-Allen Ruttenberg, former executive vice president of Just For Feet, Inc. (JFF), has been charged with conspiracy to commit securities fraud, wire fraud and submitting false statements to the auditors of JFF.

Ruttenberg, 36, of Birmingham, Alabama, and Toronto, Canada, has agreed to plead guilty to a two-count criminal information filed in U.S. District Court in Birmingham. A hearing on Ruttenberg’s plea will be scheduled at a later date.

Just For Feet, Inc., 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.

At all times relevant to the offense to which he has agreed to plead guilty, Ruttenberg was the executive vice president of JFF. 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 of its 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, Ruttenberg caused the company’s accounting department to record over $5 million in fictitious accounts receivable allegedly due to JFF from various vendors as of Jan. 30, 1999. This had the alleged result of causing JFF’s income to be overstated by approximately $5 million.

According to the charges, Ruttenberg allegedly sent the various vendors an audit confirmation letter, requesting that the vendors confirm to Deloitte & Touche that each actually owed JFF certain amounts “for advertising that ran or merchandise sold prior to January 30, 1999.” The vendors, allegedly knowing that the information contained in the audit confirmation letters was false, and that the vendors did not, in fact, owe JFF the amounts claimed, signed them and sent them 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 statements and SEC filings, were overstated by at least $5 million, thereby defrauding the shareholders of JFF.

“Investors demand and deserve honest financial reporting by the executives with whom they entrust their hard-earned money,” said Deputy Attorney General James B. Comey, chairman of the President’s Corporate Fraud Task Force. “The Just For Feet investigation demonstrates, yet again, that the Department of Justice and the President’s Corporate Fraud Task Force will pursue corporate wrongdoers who manipulate those reports and damage the integrity of the marketplace.”

“Ruttenberg and others wrote up $5 million in bogus accounts receivable to make Just For Feet appear more financially solid than it actually was,” stated Assistant Attorney General Christopher A. Wray. “Just For Feet’s finances were a sham, and we will pursue those responsible for the criminal fraud and the company’s bankruptcy. This sort of corporate fraud will not be tolerated; we will investigate and prosecute it fully.”

“The progress in this investigation continues, and with each new plea we come closer to bringing all who betrayed Just For Feet investors’ confidence to justice,” said U.S. Attorney Alice H. Martin.

The conspiracy charge carries a maximum penalty of five years in prison and a fine of $250,000. The charge of making false statements to the auditors of a publicly traded company carries a maximum penalty of 10 years in prison and a fine of $1 million.

In a separate action, the Securities and Exchange Commission today filed a civil fraud complaint against Ruttenberg.

The JFF investigation remains active and ongoing. In April 2003, former JFF President Adam Gilburne pleaded guilty to conspiracy to commit wire and securities fraud. In August 2003, Timothy McCool, the national sales director of adidas America, pleaded guilty to conspiracy to submit false statements and to causing false entries to be made in the books and records of JFF. McCool is scheduled to be sentenced on March 18, 2004.

Jonathan G. Epstein, the former president and chief executive officer of Fila USA, a wholly owned subsidiary of Fila Holding S.p.A., an Italian company, pleaded guilty on Jan. 28, 2004, and is scheduled to be sentenced on May 21, 2004, in Birmingham.

In January 2004, Steven G. Dodge, the former vice president of U.S. Sales for Converse, Inc., also agreed to plead guilty to conspiracy to submit false statements and to falsifying the books and records of JFF. Dodge pleaded guilty on Feb. 24, 2004, in Huntsville, Alabama. Also last month, Steven Davis, the former director of advertising for JFF, agreed to plead guilty to making false statements to federal agents in connection with the federal government’s investigation of JFF. A hearing on Davis’ plea is scheduled for March 25, 2004. And on Jan. 24, 2004, Thomas Shine, former president of Logo Athletic, Inc., agreed to plead guilty to conspiracy to submit false statements and to falsifying the books and records of JFF. A hearing on Shine’s plea is scheduled for Feb. 26, 2004 in Birmingham.

The 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 U.S. 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 Comey.

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