This case involves a west coast corporation that was a consumer electronics company formed by a merger. Eventually, the company had grown into the ninth largest U.S. company and the largest U.S. distributor of consumer electronics. The company began having problems when it announced a massive second-quarter loss of over $400 million. The company used accounting practices that enabled it to reduce the company’s tax payments, inflate the company’s income and profits, inflate the company’s stock price and credit rating, and hide losses in off-balance-sheet subsidiaries. The company’s rapid growth early on involved large capital investments that did not generate significant cash flow in the short term. The company’s accountants (CPA) hid losses in off-balance-sheet partnerships by using deals with special purpose entities (SPE’s) that were not arm’s length transactions. The deals would hurt the SPEs financially, but dramatically increase the company’s financial position.