Mass storage has come a long way since the introduction of the personal computer. [Tech Time Traveller] has an interesting video about the dawn of PC hard drives focusing on a company called MiniScribe. After a promising start, they lost an IBM contract and fell on hard times.
We’d heard of MiniScribe, but a lot of companies from those days came and went. What we didn’t remember is that once it was taken over by a turnaround firm, pressure to perform caused the company’s executives to do some creative bookkeeping which finally came back to haunt them.
Apparently, the company was faking inventory to the tune of $15 million because executives feared for their jobs if profits weren’t forthcoming. Once they discovered the incorrect inventory, they not only set out to alter the company’s records to match it, but they also broke into an outside auditing firm’s records to change things there, too.
Senior management hatched a plan to charge off the fake inventory in small amounts to escape the notice of investors and government regulators. But to do that, they need to be able to explain where the balance of the nonexistent inventory was. So they leased a warehouse to hold the fraud inventory and filled it with bricks. Real bricks like you use to build a house. Around 26,000 bricks were packaged in boxes, assigned serial numbers, and placed on palettes. Auditors would see the product ready to ship and there were even plans to pretend to ship them to CompuAdd and CalAbco, two customers, who had agreed to agree to accept and return the bricks on paper allowing them to absorb the $15 million writ ..
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