We might be tempted to think, in this day and age, that a move as stupid as this one could not happen in our enlightened business world. However, the CEO of American Apparel (AMEX: APP), seems to think otherwise.

According to a story provided by Gawker.com; "American Apparel's ... madman CEO, Dov Charney is demanding the firing of employees he deems unattractive and thus detrimental to the "AA aesthetic."

It doesn't take a rocket scientist to know that people (especially in America) are ultra sensitive to negative comments about appearance. It also does not take a great deal of intelligence to recognize that the firing of employees based on their looks is a stupidly discriminatory practice. So, being that this project is being undertaken at the sole direction of CEO Charney, one does not have to spend much time analyzing exactly who is the stupid one over there.

BloggingStocks is a family site, so I will simply note the Reuters headline for this story: Probe fingers 1,800 American Apparel (AMEX: APP) workers.

Now that you have had a moment to make your own joke, we continue with the news -- although I will say that when I saw this headline, I thought that CEO Dov Charney was back to his old tricks.

Anyway, a United States federal probe found that about one-third of the company's LA-area factory workers were not authorized to work in the United States.

Back in April, I wrote about Wood Allen's decision to file a lawsuit against American Apparel (AMEX: APP). Woody was upset because his image appeared on company billboard that were up for less than one week, and he wanted $10 million in damages. I thought the figure was laughably high and American Apparel lawyers said they did too -- but today The New York Times reports that the matter has been resolved:

On Monday morning, as a trial was set to begin in Federal District Court in Lower Manhattan, Mr. Allen announced that he had accepted a $5 million settlement in his lawsuit against American Apparel and Dov Charney, its founder and chief executive. The settlement means that Mr. Allen, who had initially sought $10 million in the trial, can avoid a trial that could have dredged up potentially salacious details about the filmmaker and his wife, Soon-Yi Previn.

Shares of American Apparel (AMEX: APP) have been poor performers since the company went public through a special-purpose acquisition vehicle, even though the company's same-store sales numbers have been incredibly impressive.

The company's shares have rebounded recently following the announcement of a major investment by Lion Capital. Now CEO Dov Charney is making his first trades in his company's stock since it went public and guess what? He's buying: 855,000 shares for $2.67 million, including 460,000 shares purchased on margin.

American Apparel (AMEX: APP), the fashion company sporting impressive growth along with a bizarre corporate sideshow, has a new chief financial officer.

According to a press release, Adrian Kowalewski has been appointed Executive Vice President and Chief Financial Officer, effective immediately. He's been with the company since 2006, most recently as Director of Corporate Finance and Development. He is only 31 years old. The company's last CFO bowed out not long after CEO Dov Charney publicly blasted him as a "complete loser."

American Apparel's operational growth has been nothing short of phenomenal, but its stock price has been hurt by a lack of professionalism and faith in managerial competence. It's possible that Mr. Kowalewski will do a great job, but let's face it: appointing a 31-year old with little in the way of executive suite experience is not going to get investors breathing a sigh of relief.

Hiring a company outsider with a long track record in the industry would have been the savvier move from a PR perspective, but this is a company that marches to the drum of its eccentric founder.

There's plenty of scandal surrounding American Apparel (AMEX: APP) since it went public but, up until now, it's consisted almost exclusively of hallegations of bizarre sexual conduct by the company's founder and CEO Dov Charney.

But a new lawsuit tosses the American Apparel quandary into a whole new category. Roberto Hernandez, a former accountant at the company, is suing (subscription required) for wrongful termination alleging that, in 2006, Charney "demanded that Mr. Hernandez pad the inventory" in attempt to make the company appear more attractive to investors. Hernandez says that he "refused to participate in any scheme to potentially defraud the investors" and was fired on November 9th of that year.

This is second time this month that American Apparel has come under fire over allegations that it sought to mislead investors. On November 4th, I wrote about a lawsuit accusing the company of asking an alleged victim of sexual harassment to participate in an arbitration hearing with a predetermined outcome -- and then plotting to issue a press release declaring victory in the sham hearing.

Here's the question: With American Apparel's stock beaten down so badly in spite of incredibly impressive sales growth, does any of this really matter? Up until now, you might have been able to say that it doesn't. But many investors will want to steer clear of a company with a lawsuit accusing the company's CEO of directing an accountant to cook the books.

The shares fell yesterday after the company reported earnings that were down sharply because of stock-based compensation expenses.

UPDATE: This morning American Apparel released a statement in response to the lawsuit and media reports, calling it a "frivolous and baseless lawsuit recently filed by a disgruntled former employee." The company added that "It is unfortunate that the media continues to focus on sideshows and false allegations. It does a disservice to the 10,000 men and women who make American Apparel such an outstanding company; to our customers who love our products; and to our investors who appreciate our strong financial performance and our dedication to being a leading public company."

Even as American Apparel (AMEX: APP) posts incredible sales numbers in an incredibly tough environment, the company can't seem to shake the scandals created by its eccentric CEO Dov Charney who was settled a sexual-harassment claim involving one of his female employees earlier this year.

The Wall Street Journal reports (subscription required) that the company has agreed to pay the employee $1.3 million to settle the claim with one catch -- that she keep the settlement a secret "and instead participate in an arbitration proceeding, with a preordained outcome" so that Charney could publicly declare victory.

The woman refused to participate in the arbitration and the matter ended up in court. Last week, a three judge panel of California's Second Appellate District in Los Angeles said that the woman's alleged breach of the agreement should be reviewed by independent arbitrators.

However, the court added that it was concerned about the "potential illegality of the 'arbitration' clause ... with its goal of issuing a press release for the purpose of misleading journalists and the public."

With the appearance of efforts to mislead investors about the nature of the case, this fiasco moves beyond the realm of the hanky panky that has been part of Mr. Charney's behavior and his company since it went public. Now you have to wonder about integrity.

To say that American Apparel (AMEX: APP) is a unique company is like saying that Tiger Woods is a talented athlete: you have a CEO who receives oral sex from employees during interviews, tells reporters that his company's CFO is a "complete loser," and the company has taken out ads promoting its controversial views on immigrations laws. Then, just for fun, the company is being sued by Woody Allen.

But when you get past all the weirdness, you have a company that reported comparable store sales growth of 25% for July, in one of the toughest environments for retailers in recent memory.

Portfolio reports that American Apparel is making significant investments in advertising on MySpace and Facebook -- social networking sites that target the young, hip demographic that is the company's stronghold. According to comScore's data for April, American Apparel placed 483 million internet display ads -- more than apparel giant Nike!

Many companies have been wary of social networking sites as outlets for ads because, as cool as the users might be, they also tend to be broke. But it's hard to argue with 25% same store sales growth.

Shares of American Apparel are down more than 50% from where they traded as recently as December -- it seems that the market just doesn't have an appetite for a hot retail play right now.

Once you strip the kinkiness out of the American Apparel story, the stock looks cheap -- the question is, how much of the market's skepticism is justified?

On Friday morning before the opening bell, American Apparel (AMEX: APP) announced that CFO Ken Cieply -- the main founder and CEO Dov Charney called a "complete loser" -- had resigned. Except they didn't exactly announce that. The headline was American Apparel Announces Hiring of Interim CEO, which is reminiscent of the old joke about NASA needing another seven astronauts. But the market saw through the attempted spin and sent the stock down a few cents.

But American Apparel's spin machine wasn't done. At 2:00 PM ET that same day, the company decided to announce a "$25 Million Share Repurchase Program," which allowed the stock to close up for the day. That press release raised a number of red flags. The reason for its timing was obvious: give investors some good news to go along with the resignation of the CFO. I'm always of skeptical of companies that use buybacks to try to pump up share prices. It's even worse when the company times its announcement of a buyback to pump up its stock price.

Then there's the question of whether Charney and company are really in a position to be buying back stock. American Apparel has a substantial debt load and ambitious expansion plans. I doubt that it's generating enough cash to make a buyback prudent.

Of course American Apparel hasn't committed to buying back stock. It's board of directors has simply said that it can. I'll be surprised if it does but, either way, the company made some PR hay.

On April 12th, I wrote about a Wall Street Journal piece that raised some interesting questions about American Apparel (AMEX: APP): CEO Dov Charney had taken the ambitious step of referring to the company's CFO as a "complete loser", and the company was also dealing with accounting issues, a substantial debt load, and more. The stock took a hit following the Journal piece.

American Apparel didn't issue any public rebuttal but, yesterday afternoon, DealBreaker published a letter sent by to the Wall Street Journal by director Adrian Kowalewski. Kowalewski wrote that "Our lawyers are currently pursuing this matter with News Corporation, so we have not yet issued a public statement." He went on to make the case that the company is in strong financial health and that, furthermore, Mr. Charney doesn't walk around the offices in his underwear, except for that one time, but that was part of a promotional video.

The financial issues and Charney's unconventional personality aside, American Apparel has put up some pretty spectacular growth numbers.

In a related story, Judge Judy is not a fan of American Apparel's racy ads.

After taking an initial look at American Apparel (AMEX: APP), I cautioned investors that CEO Dov Charney's interesting management style -- which apparently includes public masturbation, sexual relations with employees, and posing nude for magazines -- might present a problem as the company makes the transition from private to public.

Then the company drew some fire for its ad campaign touting immigration reform. I questioned whether it was appropriate for a public company to be using shareholder capital for an ad campaign that advanced the CEO's political views.

Now the strange saga of American Apparel gets a little more bizarre: Director Woody Allen has sued the company for $10 million, alleging that it used a photo of him dressed as a rabbi on billboard ads without his consent. Check out this post from The Jewish newspaper Daily Forward for more background/funny commentary on the picture choice.

Recently gone-public clothing sensation American Apparel (AMEX: APP) has a new marketing campaign, and it isn't just about selling clothes.

According to the New York Times, "In a new series of ads, American Apparel is moving in a political direction. The cause is immigration reform, and the ads say in part that the status quo "amounts to an apartheid system" and should be overhauled to create a legal path for undocumented workers to gain citizenship in the United States."

American Apparel CEO Dov Charney has never shied away from controversy. In a recent post on BloggingStocks, I discussed some of the more bizarre antics of his career and it isn't just erotic advertising. This is a guy who actually masturbated in front of a reporter during an interview with Jane magazine.

It isn't that I doubt the sincerity of Mr. Charney's beliefs about immigration. As he said, "These people don't have freedom of mobility, they're living in the shadows. This is at the core of my company, at the core of my soul."

The problem is that, now that American Apparel is public, it isn't just Mr. Charney's company. Now he has a fiduciary responsibility to shareholders, and putting his company at the center of divisive issues may not be in their best interests. When a company is private, it gets to make decisions about what's important, and certainly has a right to use its own resources to take a stand for causes that are important to the owner. But as a public company, American Apparel has a responsibility to focus its resources on increasing its profits.

As intriguing as the company's growth is, I do question whether Mr. Charney is well-suited to run a public company. He's a brilliant maverick and an ingenious entrepreneur, but dancing to his own drum may alienate Main Street ... and Wall Street.

in 2007, special purpose acquisition companies, or blank-checks, made up 23% of the total number of IPOs. In other words, nearly a quarter of IPOs this year have been for businesses with no business. A blank check IPO exists to raise money, and then seeks to use that money to acquire another company.

For instance, Endeavor Acquisition went public as a blank-check IPO and then acquired American Apparel. Now the company trades as American Apparel (AMEX: APP), and Kevin Kelly wrote about why he thinks that company is a buy here.

Sometimes companies that go public through this process can be good investments, but there's something investors need to keep in mind: A company that has been acquired by a SPAC has just been put up for sale and is therefore unlikely to be undervalued. If the sellers could have gotten more for it, they would have sold it to someone else.

A piece in the Wall Street Journal discusses (subscription required) blank checks and some of their pitfalls. American Apparel is definitely one of the better/most interesting companies to go public this way (the CEO's alleged perversions aside) in recent years but, in general, I think blank checks are something for investors to avoid.

Fellow writer Zac Bissonnette highlighted the interesting (but somewhat controversial) story in American Apparel (AMEX: APP) about a week ago. He did a good job of explaining the company itself as well as the perverted CEO.

Although I think the questions surrounding the CEO's "lifestyle" are pertinent, I think they should be overlooked in favor of getting a piece of this high growth name at such an opportunistic time to buy. In short, I think the stock makes sense after a recent pullback.

Fundamentally, American Apparel appears very confusing at first. The older generation of readers is probably very baffled as to why a company that sells light-colored, tight fitting clothes is in the middle of a humongous growth cycle, understandably so. However, I'm more aiming this post towards those members of the younger generation who know just how powerful this concept is.

Over the past several years, there has been an interesting trend on Wall Street: special purpose acquisition companies (SPACs). That is, a company raises capital through a public offering and then hunts for acquisitions (it is also known as a "blank check" offering – since the investors do not know what companies that will be purchased).

These deals are easy to setup (after all, there is very little to disclose). Also, the capital is held in escrow.

This week, there was a SPAC deal. Endeavor Acquisition Corp. (AMEX:EDA) agreed to purchase American Apparel for $244 million.

Based in Los Angeles, American Apparel has certainly been an edgy/hip retailer, with 143 stores.

So, why go this route? First of all, American Apparel will have access to more capital. Also, it did not have to go through the grueling IPO process. Finally, the company can use its stock to make acquisitions, as well as incentivize employees with stock options.

Keep in mind: a SPAC has 18 months to find a deal. If none is found, the capital goes back to investors.

And, yes, there are a myriad of SPACs coming up on the deadline. So, going into 2007, it's a good bet to see more of these transactions.

Tom Taulli is the author of various books, including the Complete M&A Handbook and operates DealProfiles.com.