Fired for Exposing Playboy Bonuses, VP Says
LOS ANGELES (CN) - Playboy fired a longtime senior vice president because she blew the whistle on a scheme to give executives $1 million bonuses without board approval, she claims in federal court.
Catherine Zulfer says she worked closely with Playboy Enterprises chief financial officers in her role as senior vice president, corporate controller.
Christoph Pachler became CFO after Playboy hired Scott Flanders as CEO in the summer of 2009. Neither executive is named as a defendant in Zulfer's complaint against Playboy.
Zulfer says she and Pachler initially worked well together, but the CFO later pressured her to accrue $1 million in bonuses for various corporate executives for the third quarter of 2010, according the complaint.
"Pachler and CEO Flanders were scheduled to receive the vast majority of this $1 million," the complaint states. "In the approximately three decades that plaintiff had worked for Playboy, to plaintiff's knowledge the board always had to vote and approve of discretionary bonuses before they were accrued or paid. Moreover, Playboy suffered significant losses in 2010, so there did not appear to be a legitimate basis to pay discretionary bonuses - let alone, large ones - in that year."
By that time, Zulfer had allegedly learned that Flanders had been accused of sexual harassment during his first year as CEO, and "was reasonably suspect of his [Flander's] motives."
"She was extremely concerned that CFO Pachler and/or CEO Flanders were attempting to effectively embezzle, steal or convert Playboy assets," the 20-page complaint states. "In the least, plaintiff reasonably believed that approving or paying bonuses without board approval would be dishonest to shareholders and violate Playboy governance and GAAP (generally accepted accounting principles)."
Zulfer says she refused to accrue the bonuses without board approval, but Pachler continued to pressure and intimidate her to cede to his demands.
When Zulfer reported the accounting requests to Playboy's general counsel and the Securities and Exchange Commission in early 2011, Pachler allegedly retaliated immediately.
The CFO allegedly shut Zulfer out of meetings, then downsized corporate accounting staff in Chicago, forcing her to take up the slack in Los Angeles "with little or no help," the complaint says.
Playboy laid off Zulfer, then 56 years old, on New Year's Eve 2011.
Zulfer says the termination was merely a "pretext for what actually was retaliation against plaintiff for exposing Pachler's attempt to engage in deceptive accounting practices.
She also claims that she was the victim of a discriminatory policy to remove employees who had been at Playboy for longer than 10 years. Veterans like Zulfer, who says she spent 30 years with Playboy, didn't stand a chance, according to the complaint.
The Department of Labor's Occupational Health and Safety Administration did not issue a final decision on a complaint Zulfer filed under the Sarbanes-Oxley Act earlier this year, and she says the Labor and Workforce Development Agency told her that that it was not going to investigate her claims.
She adds that she received a "right to sue" letter from the California Department of Fair Employment and Housing.
Zulfer seeks punitive damages, reinstatement or front pay, and an injunction. She is represented by David deRubertis of Studio City, Calif.
Playboy Enterprises did not immediately respond to requests for comment.