1. 1.

Centennial Technologies Inc Scam 1996 Presented by- SHIFALI GARG

2. 2. INTRODUCTION Centennial Technologies, Inc • Founded by Emanuel Pinez in 1987,
Centennial makes PC memory cards. • The company went public in 1994 . • As a global
leader, Centennial integrates patented and proprietary technology into application
specific cards for commercial, industrial and military markets. • The company's
international sales and service operations are headquartered in the United Kingdom. • It
was once considered a Wall Street darling.
3. 3. PERSONS INVOLVED • Mr. Emanuel Pinez • Former chief financial officer, James
Murphy • The company's auditor, Coopers & Lybrand
4. 4. Emanuel Pinez • He was the CEO of Centennial Technologies. • He has homes in
Canada, Switzerland and suburban Boston. • In 1996, on the strength of vigorous
revenue growth and alleged boasts by Pinez that a big contract from AT&T was
imminent, the stock took off. • Pinez's paper wealth was US$244 million.
5. 5. SCAM • In December 1996, Emanuel Pinez, the CEO of Centennial Technologies, and
his management recorded that the company made $2 million in revenue from PC
memory cards . • Emanuel Pinez was accused of trying to profit from a decline in
Centennial's stock by buying put options and selling call options on the stock. • On 11
February 1997 he was fired by the board of his own company for allegedly falsifying
inventory reports and inflating sales figures.
6. 6. Contd.. • On 15 February 1997 he was arrested by FBI agents and sued by the
Securities and Exchange Commission for stock fraud. • Between April 1994 and
December 1996, Centennial overstated its earnings by about $40 million.
7. 7. Contd… • The employees created fake documents to appear as though they were
recording sales. • Centennial's stock rose 451% to $55.50 per share on the New York
Stock Exchange (NYSE). • According to the Securities and Exchange Commission
(SEC), between April 1994 and December 1996, Centennial overstated its earnings by
about $40 million. • Emanuel Pinez pleaded guilty to masterminding a huge fraud that
made his company's stock the top performer on the New York Stock Exchange in 1996.
8. 8. Contd… • The company reported profits of $12 million when it really lost about $28
million. • The stock plunged to less than $3. • Over 20,000 investors who lost $150 million
to $376 million. • The firm's troubles became public in Feb 10 1997 when firm had fired
former Chief Executive Emanuel Pinez for misstating financial results .
9. 9. Contd.. • The court sentenced the Pinez to five years in prison for stock fraud . • And
ordered him to make restitution of almost $150 million by liquidating all his assets. •
Among other misdeeds, Pinez is accused of engineering phony sales transactions to
boost Centennial's revenues. • In one infamous scheme, Centennial allegedly shipped
fruit baskets to customers to create fake shipping documents.
10. 10. • Centennial's stock began to sink in January 1997 when questions emerged about
Pinez's academic credentials and the company's financial reports. • As the stock
plunged, Pinez's brokers conducted an options trade on his behalf aimed at profiting from
the fall in Centennial's stock price.
11. 11. AFTER THE SCAM • Centennial Technologies Inc. stock plunged 76% . • Centennial,
the top performer on the NYSE will be off the Big Board and every other major U.S. stock
exchange . • Centennial had to pay out $1.475 million in cash and give up 37 percent of
its stock to settle dozens of shareholder suits.
12. 12. • The company is now battling back under new management and has reported four
consecutive profitable quarters. • But the damage allegedly engineered by Pinez was
severe.
13. 13. THANKYOU