Luciano Manganella’s Final Sale

Now let the executives at New York & Company tell you something: They were blindsided by Luciano Manganella’s conduct.

Bought from the Limited in 2002 by a group of investors that included now-CEO Richard Crystal, New York & Company ran its business by accounting for every dollar and never spending a cent more than necessary. After going public in 2004 at $17 a share, it made Jasmine Sola its first acquisition. Not only did the Boston chain have a cult following and high-end wares that wouldn’t compete with New York & Company’s own namesake clothing, but it also had, in Manganella, a proven brand-builder at the helm. With the $7 million escrow payment in place, it had given him incentive to stay, and work for continued success. If things went according to plan, Manganella would grow Jasmine Sola while New York & Company provided the infrastructure, perhaps through the acquisition of Casual Corner. Win-win for all.

But almost immediately that strategy went awry. Casual Corner, the potential framework for Jasmine Sola’s expansion, was sold to a liquidator in August 2005. And as New York & Company took Jasmine Sola into other parts of the country, it found that the brand didn’t have the same cachet as it did in New England. The startup costs for its new locations weren’t insignificant, either. With those expenses straining the bottom line, less than 12 months after the acquisition New York & Company was making half of what it had the previous year.

On May 2, 2006, according to court allegations, New York & Company’s head of HR received a call from Laura Ksieniewic’s father, a lawyer. Ksieniewic had quit her job at Jasmine Sola on April 28 and was demanding severance, saying she had been disturbed by incidents that took place during her time working for Manganella. As the conversation continued, she relayed that Manganella had sexually harassed her.

New York & Company brought in DC law firm Stier Anderson to investigate the claims. After putting Manganella on administrative leave on May 25, the attorneys sat down with select Jasmine Sola managers, buyers, and merchandisers. These sessions, which played out over the course of a month, eventually produced the allegations by Burgess and Chichester, as well as an additional sexual harassment claim from Maggie Wakeland, a buyer.

On June 30, 2006, just 19 days before Manganella was to collect his escrow payment, New York & Company filed a claim in U.S. District Court in Massachusetts, alleging Manganella had committed a “major employment breach” by sexually harassing the four female employees; it also accused him of downloading “scores of sexually graphic images onto Jasmine computers.” For these reasons, New York & Company said, it was terminating its contract with Manganella. And since he was no longer employed by New York & Company, he was forfeiting the $7 million escrow payment.

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