Ex-Abercrombie boss's partner pleads not guilty to sex trafficking charges

The British partner of former Abercrombie & Fitch CEO Mike Jeffries has pleaded not guilty to charges of sex trafficking and interstate prostitution.

Matthew Smith, in a tan oversized shirt and black rimmed glasses, sat tight-lipped in New York federal court on Long Island as lawyers entered his plea

The 61-year old was released under house arrest on condition of a $10m (£7.7m) bond.

Mr Smith, along with Mr Jeffries, 80, and their alleged middleman James Jacobson, 71, were arrested in October and charged with running an international sex trafficking and prostitution business. Mr Jeffries and Mr Jacobson have also pleaded not guilty.

Federal prosecutors have accused the trio of using force, fraud and coercion to make at least 15 young men engage in "violent” and exploitative sex acts between 2008-2015.

Prosecutors have alleged that the operation "encompassed dozens and dozens of men", with the youngest victim aged 19 at the time of the crime. They have also said that some previously worked at Abercrombie & Fitch (A&F) stores or modelled for the brand.

Mr Smith, a UK citizen, was initially deemed a flight risk by authorities and detained pending trial.

During a half-hour hearing on Tuesday, New York Judge Lee Dunst told Mr Smith he would be under house arrest at his home in Palm Beach, Florida and had to surrender his passport. He was only allowed to leave his house to attend medical appointments with Mr Jeffries.

Mr Smith appeared relaxed as he put forward a $10m (£7.7m) bond using two homes in Florida as collateral as well as a property on Fire Island.

Six people agreed to be sureties for the bond: Mike Jeffries and his wife Susan Jeffries, their son and daughter-in-law Andrew and Annabel Jeffries, as well as former A&F executive vice-president Diane Chang and her husband.

Abercrombie & Fitch has been approached for comment.

Mr Smith was ordered to not have any contact with victims or witnesses, and not communicate with Mr Jacobson, who faces the same charges. He must only communicate with Mr Jeffries about the case through legal counsel.

As Mr Smith left the courtroom, Mr Jeffries’ lawyer, Brian Bieber, handed him a shopping bag embossed with suggestive silhouettes of torsos.

Mr Smith did not respond to questions from reporters as he exited the courthouse, wearing an ankle monitor and a pair of white trousers, and got into a black SUV.

The FBI opened its investigation following a BBC podcast and documentary that revealed allegations of sexual exploitation by Mike Jeffries while he was CEO.

The BBC found Mr Jeffries and Mr Smith had been at the centre of a sophisticated operation involving a middleman tasked with recruiting men for sex events they hosted in major cities around the world including in London, Paris and Marrakesh.

Mr Jeffries stepped down as CEO and Chairman of A&F in 2014 after two decades in charge and left with a $25m retirement package.

Following the BBC’s reporting, A&F opened an independent investigation and suspended annual $1m retirement payments to him.

Alongside the criminal case, A&F, Mr Smith and Mr Jeffries are also defending a civil lawsuit accusing them of running and funding a sex-trafficking operation.

On Monday, Mr Jeffries sued the retailer after it refused to pay the cost of his criminal defence, arguing the brand had agreed to cover him for all claims arising out of his position with the company.

Earlier this year, a US court ruled A&F had to cover his legal costs for the civil case, finding the allegations were tied to his corporate role.

The rarely photographed Matthew Smith met Mike Jeffries in 1989 and the pair have been in a relationship since the 1990s, according to court documents and former staff.

He grew up in Hampshire, England and studied at Newcastle University before moving to the US to pursue an MBA at Wharton Business School in Pennsylvania.

Shortly after, he opened two hair salons, eponymously named The Matthew Smith Clinic, in the Midwest. Former salon staff told the BBC they were required to take IQ tests and wear A&F uniforms as part of their employment.

He later became the head of Mike Jeffries’ private family office, managing his multiple properties and vast multi-million-dollar fortune. Ex-staff described him as secretive and said he ran every part of Mr Jeffries’ life.

During this time, there were also concerns from Abercrombie & Fitch executives about the unofficial influence he held inside the company despite not being an accountable employee.

Mr Smith had access to confidential proprietary and financial records, attended some board meetings, constantly accompanied Mr Jeffries’ on the corporate jet, and even selected real estate for global store locations, according to a legal complaint later filed by shareholders.