Levi Strauss denies fraud allegation

Levi Strauss on Tuesday dismissed as "absolutely false" a lawsuit alleging that the world's biggest branded clothing maker had inflated its profits by hundreds of millions of dollars.


The lawsuit, reported in the San Francisco Chronicle, unnerved investors in the privately-owned company's public debt, with its bonds falling sharply.

Two former high-level tax managers who were fired by Levi in December claim in the lawsuit that the jeans maker inflated profits by booking questionable income and tax deductions.

Jeff Beckman, Levi's spokesman, said the allegations in the lawsuit had already been thoroughly investigated and no irregularities had been found. "We are confident in our tax position. Our financial statements are accurate."

Robert Schmidt, a tax attorney, and Thomas Walsh, an accountant, claim in the suit that their former supervisors at Levi told them to lie about what they considered to be accounting irregularities.

They add that they were fired in December when they refused to conceal financial information from the tax authorities and from Levi's external auditors.

That suit says that if Levi had been truthful about its earnings last year, it would have reported a net operating loss of at least $336m rather than the $25m profit it posted.



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