Disgraced American Apparel founder Dov Charney is set to sue the retailer after being fired following an internal investigation into alleged misconduct.

The 45-year old, who founded American Apparel in 1998, is set to sue the company for wrongful termination after the board of directors unanimously voted to oust him last week and refused to meet him to discuss the future of the company.

In a letter leaked over the weekend, the board accused Charney of misuse of company funds and argued his alleged misconduct damaged the retailer's reputation following a string of sexual harassment lawsuits that were either settled or dismissed.

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The board also claimed Charney knew of the existence of a controversial blog, which impersonated a former employee to make what it described as "defamatory" posts, but took no action to stop it.

The board also argued Charney refused to participate in mandatory sexual harassment training and violated company policies by making derogatory remarks aimed at employees of "certain ethnicities or related to their gender, sexual orientation or religious persuasions".

His lawyer, Patricia Gliser told the LA Times, Charney - who remains the largest shareholder in the company - and his team "question the legitimacy" of the investigation and pointed out that most claims "involve activities that occurred long ago" and the board had knowledge of.

The company, known for its racy advertisements, has seen sales decline and struggled with debts. Earlier this year it appointed restructuring advisers to help pay down a $240 million (£141 million) debt pile.