Playboy Must Pay $6 Million to Fired Executive in Largest Federal Whistleblower Verdict Ever

Playboy Must Pay $6 Million to Fired Executive in Largest Federal Whistleblower Verdict Ever

Company still faces punitive damages in ruling that also found age discrimination and “malice, fraud or oppression”

Playboy Enterprises must pay $6 million to a former accounting  executive who was wrongfully terminated, a federal jury in California decided Wednesday, and may have to pay more when punitive damages are decided later this week.

According to the suit filed in the U.S. District Court in California, Catherine Zulfer, a former controller at Playboy, reported to company management “actual and suspected frauds and improprieties” after refusing to prepare $1 million in bonuses for top executives without proper approvals.

Also read: Former Playboy Executive Who Questioned Bonuses Sues Over Firing

The jury found that Zulfer was unlawfully fired in retaliation for reporting alleged fraud within the company, in violation of federal whistleblower protections provided by the 2002 Sarbanes-Oxley Act.

The jury also determined that Playboy Enterprises discriminated against Zulfer on the basis of age, as part of the company's plan to reduce costs by firing older employees. Zulfer was 56 at the time of her termination in 2012.

“We strongly disagree with the jury's decision,” a company spokesperson said in a statement to TheWrap. “Playboy stands behind the conduct of its management team and our corporate governance practices.  We will assess the pursuit of all available options, including an appeal and overturning the verdict.”

The $6 million compensatory damages verdict is thought to be the largest award ever under the Sarbanes-Oxley law. In 2013, two whistleblowers were awarded $4.6 million in a lawsuit against gambling software company International Game Technology. That company is currently appealing the ruling.

Also read: Lisa Kudrow Loses $1.6 Million in Ex-Manager Lawsuit

The lawsuit claimed that Playboy CFO Christof Pachler stopped talking to Zulfer, ostracized her, excluded her from meetings and discussions which she'd normally have been included in, withheld crucial information she needed to carry out her duties, set her up to fail by eliminating 15 corporate accounting positions in Chicago, leaving her to assume those duties in LA with little or no help.

Then, according to the lawsuit, Pachler announced a plan to rid the company of older, long term employees  - specifically those who had been with the company for more than ten years. “That pattern continued until plaintiff was laid off. Plaintiff only learned about her upcoming termination through her replacement,” according to the complaint. Pachler treated her with “utter disrespect” and attempted to “cheat her out of the severance” she was due under Playboy's policy. Plaintiff says she was “shunned, humiliated and treated like an outcast.”

Playboy Enterprises may also face further penalties. The U.S. District Court jury decided the company acted with “malice, fraud or oppression,” so Zufer's case will proceed to a punitive damages phase on Friday.

Pamela Chelin contributed to this report

  • andreana mccann

    my Aunty Arianna got a nearly new silver
    Chevrolet Colorado Crew Cab by working part time off of a macbook air. try this
    J­u­m­p­9­9­9­.­ℂ­o­m

  • Burphelson AFB

    a classy organization like Playboy? no way.

  • erkcyclisme

    Sounds like it has little to do with Playboy, and a lot to do with the CFO.

    • john axelson

      the Playboy Enterprises CFO. that's the way it works. He didn't go “rouge”.

  • Jonas Grumby

    Excellent. Sadly, all too typical in the corporate world regardless of product.

  • SickofBS

    Playboy – there can't possibly be a less relevant magazine on the market. Of course it's being run by the same snake-oil salesman ilk that's running the rest of our corporations.

  • GKid

    Very misleading title. The largest federal whistleblower payout is $104 million to Bradley Birkenfeld. The executive got fired for retaliation of her whistleblowing activity and age discrimation according to the jury.

  • tim hammer

    How do they arrive at these dollar-figures???

  • fromperpig

    Good! I hope this scum, Christof Pachler, carries this rap for the rest of his live long days. Just Google his name and up comes up, “Whistleblower reams Playboy for 6 Million”. Tell ya what, though. No amount of money will compensate the suffering this woman had to endure. She was only trying to do her job and look what she got in return. Now, show this jerk, Pachler, what civil court looks like, Catherine! Make him pay!