The controversial founder and CEO of the popular clothing brand American Apparel was ousted by the board of directors on Wednesday, citing an "ongoing investigation into alleged misconduct."

The embattled founder, Dov Charney, has been battling sexual harassment allegations for several years, but the board of American Apparel declined to specify whether the CEO was fired for these reasons.

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Charney, a native of Montreal, Canada, started American Apparel in 1998 as a wholesale T-shirt business.

In 2011, the 45-year-old businessman faced lawsuits from four former American Apparel employees for supposed sexual misconduct. Initially, the company came to the founder's defense claiming that the employees had come up with the allegations in order to 'shake down' Charney, who has an estimated net worth of US$20 million.

The fashion tycoon came under fire again in 2012 when a former store manager accused him of rubbing dirt in his face, choking him, and referring to him by derogatory and racist terms.

Once again, the American Apparel board backed Charney up and the case was either dismissed or settled.

Reportedly, Charney was very open about his sex life and was known to wander around his factory in his underwear.

The company has been struggling lately with poor sales reports and debt, reporting a net loss of US$5.5 million for the three months leading up to March 31, and a slightly smaller loss of $46.5 million earlier in the year.

According to S&P Capital IQ, Charney is American Apparel's largest individual shareholder, holding an estimated 27 percent of  company stock.

The company's board stated that it intends to fire the CEO once a 30-day period to resolve the conflict called for in Charney's contract ends. The board also stated that it's a distinct possibility that firing the founder and CEO could leave American Apparel in default according to its credit agreements.

TagsSexual Harassment, American Apparel, Lawsuit, Dov Charney