urers. ..

tt3 the electronicsThe comote

provided. contract i ustry. A.B
employed

iethe sing] elarg

ee TofAB Seetector fir ae until 1992 wh,i ;
Shitflett se N stock by beneficially en the fraud was disclosed
unfolded. = aus Progranis oa 1By . Owning 6.7% ofA; € wa
sient i} B commoncomm
stock.stoc
e Operati and CO
M Owned 4% of AB tions. He also a O, and he was responsi
- Medlin Served as A.B “2 Common stock €d as a director from Set ae for manufacturin

Medlin di -B controller en the

Prior to — Fic: oa .. ... rd Teasurer after graduating from the U
© University of Alabama.

THE AC con threemenworkedatSC] Systems,laboomi

chicite pentSecurities and ———... acoso tt NScm

| te
chief ; © Commission!
y hadrecordedimproperlyvaluedase e
aaa a
that others at an es ES.

the scheme.

The fraud begang SOon after the company went public in 1989 andwas directedby top comp
ex’
. Hebding, g, Mr. Mr.ShiShifflett and Mr. Medlin used their positions of power and influence
maniy
aS deters issuedfromearly1989throughNovember1992
me ice an es ea by manipulating e e the quarterly statements ; during 19
They nts by inappropriately transferring certain costs from cost of goods sold into
 e purchased but not yet sold is reported in the account
oid,ccounts.which(Thein Thisturncost techniqueofoverstatedthe merchandisallowedgross
marginthem toandoverstatenet incomeinventoryfor theand period.understateThequarterlythreeexec
erchandise). c

with the largest adjustments occurring just at quarter'sen

ronthly manual journal entries,
at the fraud was motivated by the loss of a key customer in 1989, SCI system firm. pulati
quarterly financial statements partially
1e executive Sswere successfuldited.inTomanihide the manipulations, they devised

plan
filings were unau ansferred costs from the
e transfer of costs.The y decided to remove thetr