Advertisement
YOU ARE HERE: LAT HomeCollections

Sherman Oaks Consultant Indicted on Fraud Charges

March 12, 1993|PATRICE APODACA | TIMES STAFF WRITER

Quentin T. Wiles, chairman of now-defunct MiniScribe Corp., has been indicted on three counts of federal securities and wire fraud charges for his role in the collapse of the Colorado computer disk drive maker, according to wire reports.

Wiles, 73, a Sherman Oaks resident and once a renowned corporate turnaround specialist, was also chairman of MiniScribe's San Francisco investment banking firm Hambrecht & Quist. He served as chairman of MiniScribe for three years until he resigned in February, 1989.

The indictment, filed on Thursday in federal court in Denver, alleges that Wiles defrauded investors by allowing false and misleading financial statements to be issued and then covering up the deception by ordering employees to sign false financial statements and to destroy a memo reporting an inventory shortfall of millions of dollars, Dow Jones News Service said.

Wiles is also accused in the indictment of profiting from the sale of $1.7 million of MiniScribe stock while aware of privileged information.

Wiles did not return phone calls seeking comment. But his attorney in Los Angeles, Cary Lerman, said that Wiles would plead not guilty. The indictment is "a terrible miscarriage of justice," Lerman said, adding that Wiles had no knowledge of the alleged fraud or the cover-up by other MiniScribe employees.

Each of the three federal counts against Wiles carries a maximum prison sentence of five years and fines of up to $250,000.

Wiles, whose rescues of sickly high-tech companies were once legendary in business circles, joined MiniScribe in 1985. During the next few years, the Longmont, Colo., company reported soaring sales and profits and its stock became a Wall Street favorite. But by the time of Wiles' 1989 resignation, allegations began surfacing that MiniScribe's profits were overstated and a subsequent investigation by new management and outside directors found that a "massive fraud" had been perpetrated at the company.

The management report said that MiniScribe employees had booked shipments as sales and overstated reserve and sales figures. Fictitious sales were logged by transferring nonexistent inventory between company facilities, it said, and at one point even bricks were packaged and shipped as finished computer disk drives.

Wiles was criticized in the report for creating an atmosphere in which abuses went unchecked and for trying to run MiniScribe from his Sherman Oaks office.

An independent business consultant since leaving MiniScribe, Wiles has also been held liable for civil damages stemming from the alleged fraud at MiniScribe. Last year, he was ordered by a state jury in Texas to pay $250 million in punitive damages to MiniScribe bondholders.

Lerman, the attorney, said that Wiles settled out of court with the bondholders for an undisclosed sum.

In early 1990, MiniScribe sought bankruptcy-court protection and its assets were sold.

Advertisement
Los Angeles Times Articles
|
|
|