Miniscribe Corporation

Abstract:     
MiniScribe manufactured disk drives for personal computers. It stumbled during an industry shake, but was rescued by a turnaround specialist. The turnaround appeared to be spectacular, but it was only an illusion. After four years of reported successes, the company announced that all prior financial statements were inaccurate, and enormous losses wiped out all equity. In the ensuing investigation, it came out that a large number of employees had caved in to apparently extraordinary pressure for results and had adopted a number of fraudulent schemes to increase profits. Perhaps the most bizarre scheme was to package bricks and ship them as diskdrives. Sixteen individuals were sanctioned by the U.S. SEC, and the investment bankers and accountants were sued for substantial damages.

Number of Pages in PDF File: 30

Keywords: ethical issues, fraud, computer industry, Securities and Exchange Commission, corporate governance

JEL Classification: M41, M43, M49, G24, K22

working papers series