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Case
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Reference no. UVA-C-2139
Published by: Darden Business Publishing
Originally published in: 1997
Version: 11.1997

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 SEC, and the investment bankers and accountants were sued for substantial damages.

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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 SEC, and the investment bankers and accountants were sued for substantial damages.

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