Sherman Oaks Resident Settles Over MiniScribe

Quentin Thomas Wiles, a Sherman Oaks resident once renowned for returning sick companies to health, has reached a formal settlement of litigation involving MiniScribe Corp., a defunct Longmont, Colo., disk-drive maker whose former management has been accused of fraud.

Wiles, 72, MiniScribe’s former chairman, was sued along with other former MiniScribe executives, the accounting firm Coopers & Lybrand and investment banking firm Hambrecht & Quist by MiniScribe shareholders and creditors in federal court in Denver for up to $1 billion in damages. The total amount of the settlement was $128.1 million, but Wiles’ attorney, Cary Lerman, declined to say how much Wiles will pay, citing a confidentiality agreement.

Wiles previously settled a separate lawsuit by MiniScribe bondholders in Texas, where a jury found Wiles liable for more than $250 million in damages. Lerman declined to disclose the amount of that settlement, but said published reports that Wiles agreed to pay about $1 million were “not far off.”

In 1985, MiniScribe was having financial difficulties when Hambrecht & Quist, which owned 12% of MiniScribe’s stock, sent Wiles to help the company recover. MiniScribe appeared to return to profitability and became a Wall Street favorite.

But Wiles resigned in 1989, and the new management reported that it uncovered a “massive fraud” during Wiles’ regime that included doctoring the company’s books, recording shipments as sales and even shipping bricks instead of disk drives.

MiniScribe filed for Chapter 11 bankruptcy court protection in 1990, and all of its assets have been sold to Maxtor Corp. One remaining action, a lawsuit filed by the Securities and Exchange Commission in federal court in Denver, has yet to be resolved.