Yesterday it was reported that Dov Charney was being sued for $260 million by a former employee of his company, American Apparel. Irene Morales claims that Charney held her captive in his Manhattan apartment, threatened her job if she didn't perform sexual acts on him once turning 18, and a whole mess of other nasty allegations. We have now received this statement issued by American Apparel in response to the lawsuit, from the company's lawyer Peter Schey.

Charney, 42, has admitted in the past to creating a sexually charged atmosphere at his company, and one look at his ad campaigns over the years shows he's got an affinity for the young ladies. Note how it does not dispute the charges, instead Schey focuses on the fact that Morales signed a contract saying she wouldn't sue the company once departing.

We have been informed [yesterday] that Irene Morales, a former employee of American Apparel who left the company without complaint and resigned with a letter of gratitude regarding her positive experience at the company, has filed a sexual harassment lawsuit in New York against American Apparel. Upon her resignation, Ms. Morales acknowledged in writing that she had no pending claims against the company and signed a severance agreement which included a full release of claims and an agreement to submit any future claims to confidential binding arbitration.

All American Apparel's employees are subject to the same confidential arbitration agreement signed by Ms. Morales in order to protect the privacy interests of employees and former employees, and to prevent predatory plaintiffs and their attorneys from attempting to use the media to extort the company. Such an arbitration process was initiated by the company against Ms. Morales several weeks ago. The company intends to file a formal complaint with the NY state bar seeking disciplinary action against Ms. Morales' lawyers who we believe are engaged in an abuse of the legal system in order to extort money from American Apparel.

CEO Dov Charney’s celebrity status in the fashion industry is being publicly exploited by Ms. Morales’ attorneys despite their client’s agreement to engage in confidential arbitration over any disputes between the parties. We are confident that Ms. Morales' claims will be promptly referred by the court to binding arbitration where her claims and the company's counter-claims will be resolved, we believe fully in favor of the company.

As for Morales, the NY Post paid her a visit and reports back that she's the daughter of Venezuelan immigrants, and only continued working at the store, for $10.25/hour, because "she needed her job." According to the Daily News, The Dov offered her another job in July 2010 but she declined; she claims she was hospitalized in 2008 after suffering a nervous breakdown from her previous interactions with him.