Most readers will know the term “hard disk,” which contrasts with “floppy disk,” but how many people know about MiniScribe's pioneering efforts in the fields of very hard disks, inventory control, and accounting techniques?

MiniScribe was a successful start-up company based in Longmont, Colorado, that manufactured disk drives. In the late 1980s, Miniscribe ran into problems when IBM unexpectedly cancelled some very big purchasing contracts. The venture capitalists behind MiniScribe, Hambrecht & Quist, brought in turnaround expert Q.T. Wiles to get the company back on track.

Wiles mercilessly drove company executives to meet revenue targets, even as sales fell still further. In desperation, the beleaguered executives turned to outright record falsification. It must have seemed so easy. Over the space of a couple of years they came up with an impressive range of fraudulent techniques for making a failing company have the appearance of prospering.

The Miniscribe executives started off with the easy paper-based deceit, like:

When they were not found out, they graduated to more brazen activities like parading inventory past the accountants twice, so it would be counted twice, and shipping obsolete product to a fake customer called “BW.” “BW” stood for “Big Warehouse” and was a MiniScribe storage building. And so it went, with smaller crimes leading to bigger crimes, just the way your kindergarten teacher warned it would.

Miniscribe employed more than 9,000 people worldwide at the height of its fortunes, so this was no fly-by-night, two-guys-in-a-garage undertaking. This was a fly-by-night, 9,000-guys-in-a-Big-Warehouse undertaking. The companies that supplied Miniscribe were doing less and less business with them and were finding it hard to get paid. One analyst surveyed the entire computer industry and found only one large MiniScribe customer. At the same time, MiniScribe was issuing press releases talking about “record sales.”

The most breathtaking coup, though, was the brick scam. Desperate to show shipments on the books, executives brought in their assistants, spouses, and even children for a crazy weekend of filling disk shipping boxes with house bricks. They also created a special computer program called “Cook book” (these guys were well aware of what they were doing) that facilitated shipping the bricks to good old “BW” and recognizing the “revenue” from that customer. These bricks were surely the ultimate hard drive.

Of course, it all came unglued in the end. On January 1, 1990, MiniScribe announced massive layoffs and filed for bankruptcy. Chief Financial Officer Owen Taranto, the genius who devised the brick shipment plan, was granted immunity for his testimony. The stock went into a precipitous decline, but not before the aptly named Wiles had unloaded a parcel of it at premium prices. So the people who lost their jobs and the stockholders bore the brunt of all this dishonesty.

There was plenty of blame to go around. After a trial, Cooper & Lybrand, Hambrecht & Quist, and sixteen MiniScribe executives were ordered to pay $568 million in restitution to defrauded stockholders. Wiles was sentenced to three years in the Big House. The remains of MiniScribe were bought out by rival Maxtor. The later Maxtor model 8541s looked just like Miniscribe 8541s, so they were still being made, but any resemblance to a brick was long since gone.

You want to know the thing that really kills me about this case, though? It's just not that unusual an event. I taught a programming class at beautiful Foothill College, in Los Altos Hills, California, recently. As well as filling the students' heads with knowledge about stacks, interrupts, kernels, device drivers, heaps, and such, I took pains to talk about the computer industry as a whole. As part of that, I wanted to give a brief lecture on ethics in the computer industry.

I figured I'd dredge up a few shocking tales about benchmark shenanigans, mention whatever was the most recent abuse of an unregulated monopoly by Microsoft corporate executives, and remind the class to avoid dealing from the bottom of the deck. I started collecting news stories and reports of ethical lapses within the computer industry to provide material for the lecture.

To my horror, I found that lack of integrity at high levels within a company was not as rare as I had supposed. My files swelled up with material and case studies to the point where I stopped collecting it. So if the MiniScribe story tells us anything, it is this: you will likely be confronted with something ethically wrong at some point in your programming career. When that happens, you'll have a choice between going along with it, or refusing to. If you have thought beforehand about what you want to be known for, it will be easier to do the right thing. That's all.