Whitehall Jewellers places executive on leave

Whitehall Jewellers Inc. placed its executive vice president of merchandising on leave after finding he violated company policy regarding the age of certain store inventory.

Whitehall’s Web site lists the executive as Lynn Eisenheim, Dow Jones reports. A spokesman for Whitehall Jewellers told Dow Jones the executives listed on the company’s Web site are accurate.

In a press release, the company said it found the violation during an investigation conducted by the company in connection with the previously disclosed Capital Factors Inc. lawsuit and related investigations by the Securities and Exchange Commission and the U.S. attorney.

The jewelry retailer reportedly said the inventory at issue represents less than 1% of the company’s current inventory. At this time, the company said in its statement it doesn’t believe Eisenheim made any financial gains.

The violation of the company policy doesn’t appear to be related to the matters of the Capital Factors lawsuit, Whitehall said.

Whitehall Jewellers said it’s continuing to cooperate fully with the SEC and the U.S. attorney in connection with their investigations.

The company has placed the executive on leave pending further investigation.

As a result of this action, Whitehall Jewellers’ merchandising organization will, on an interim basis, report to Chief Financial Officer and Executive Vice President John Desjardins.

Manny Brown, the company’s executive vice president, operations, will assume the interim marketing duties of the executive in question.

Earlier this month, Whitehall Jewellers said it received a subpoena from the SEC as part of the agency’s formal inquiry into the lawsuit filed by Capital Factors.

Whitehall Jewellers also said it signed a letter agreement Oct. 29 that clarifies and supplements the existing provisions of its second amended and restated revolving credit and gold consignment agreement with respect to the lawsuit, the SEC investigation and an investigation by the U.S. attorney.

As reported previously, Capital Factors filed a lawsuit against Whitehall Jewellers and 13 others alleging misrepresentation of a former vendor’s accounts receivable. Capital Factors factored – or purchased for immediate cash – the accounts receivable of Cosmopolitan Gem Corp. Whitehall Jewellers has some consignment and other commercial arrangements with Cosmopolitan Gem. The others named in the suit include Crescent Jewelers and Friedman’s Inc.