The SEC’s complaint, filed in the United States District Court for the Northern District of Georgia, alleges that between 2004 and 2009, Elles fraudulently manipulated the amount of discounts that Carter’s granted to Kohl’s, Carter’s largest wholesale customer in order to induce Kohl’s to purchase greater quantities of Carter’s clothing for resale. In an effort to conceal the scheme, Elles persuaded Kohl’s to defer subtracting the discounts from payments until later periods. Elles also persuaded Johnson, who handled the Carter’s account at Kohl’s to sign a false confirmation that misrepresented to Carter’s accounting personnel the timing and amount of those discounts.

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