Talk about financial engineering, the following is a snippet (may be of interest to those who follow PRGN) from the LA Times this morning:
During the second half of 2000, as detailed in court filings, Critical Path used just about every trick it could to improperly and illegally boost its revenue.
The first gimmick was a software swap, sometimes called a Barney deal in tribute to the purple dinosaur who proclaims, "I love you, you love me." Under accounting rules, the goods on both sides of the swap must be valued at fair-market prices.
Critical Path's swap was with Peregrine Systems Inc., a San Diego company at which Thatcher had once worked.
"To avoid the appearance that the transaction was a software swap, Critical Path and Peregrine prepared separate contracts for each purchase, each paid the full amounts owed, and made payments to each other on different days," Thatcher admitted in his plea agreement.
Thatcher admits that Critical Path didn't actually want what it was buying from Peregrine. The deal, he told the judge, "was driven by the need to report revenue"--$3million worth.
The full article is at:
latimes.com
Chaz |
