Sherman Oaks Businessman Found Guilty of Fraud : Courts: Once-renowned turnaround specialist Quentin T. Wiles is also convicted of insider stock trading related to collapse of MiniScribe Corp.
Once-renowned corporate turnaround specialist Quentin Thomas (Q.T.) Wiles was found guilty in federal court in Denver of three felony counts of fraud and insider stock trading related to the collapse of a Colorado company he ran, computer disk-drive maker MiniScribe Corp.
The jury deliberated for nine hours over two days before returning the verdict on July 29. Wiles, 74, a Sherman Oaks resident, faces up to 15 years in prison and $750,000 in fines. He remains free on bail while he awaits sentencing, which prosecutors expect will be scheduled for mid to late September.
The former MiniScribe chairman was convicted of filing a false annual report for the company to the Securities and Exchange Commission, which overstated MiniScribe’s 1987 profit by about $15 million. Prosectors said the overstated income was the result of “an elaborate scheme” to conceal a $15-million shortfall in the company’s inventory.
Wiles knew of the shortfall, and sold about $1.7 million of MiniScribe stock in April and May of 1988, before the information was made public, the U.S. Attorney’s office said.
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The false financial statements were also submitted to Standard Charter Bank as a means to secure a $90-million loan for MiniScribe, prosecutors said. Standard Charter suffered significant losses from the loan, they said, although the bank recouped most of those losses in a civil settlement.
During the three-week trial, prosecutors and defense attorneys presented more than 45 witnesses and hundreds of exhibits.
Wiles’ attorneys maintained that Wiles knew nothing of the wrongdoing, and that he had been duped by his underlings at MiniScribe. Several former MiniScribe employees who were promised immunity from prosecution testified against Wiles. It has been reported that Wiles’ attorney, H. Alan Dill, is likely to file an appeal.
Wiles was a trouble-shooter for the San Francisco venture capital and investment banking firm Hambrecht & Quist. He would be sent to sick high-tech companies to nurture them back to health, and his string of successes earned him the moniker “Dr. Fix-It.”
After Wiles joined troubled MiniScribe in 1985, the company appeared to achieve a remarkable turnaround, with surging sales and profits and a soaring stock price. But Wiles resigned shortly after the company reported a loss for the fourth quarter of 1988.
New management then reported to the SEC what it called a “massive fraud” to boost inventory numbers and conceal MiniScribe’s true financial condition. The company has since been liquidated.
Another former MiniScribe executive, Patrick J. Schleibaum, who was chief financial officer, was found guilty in June in federal court in Denver of two counts of filing a false statement with the SEC and insider trading. Schleibaum is also expected to be sentenced in mid to late September.
