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initially served as a liaison between Cosgrove and C&A's Purchasing Department, knowingly conveying Cosgrove’s directions on how the rebates should be structured to implement the fraud and ensuring that Cosgrove's instructions were carried out.  Later Barnaba supervised Purchasing Department employees in soliciting documentation he knew was false and designed for use in improperly accounting for the rebates.  Gougherty directed accounting employees in the International Plastics Division to recognize the rebate in income immediately in connection with the LVM transaction, despite knowing that the rebate was contingent on future events.  When taking these actions, Stockman, Stepp, Jones, Cosgrove, Barnaba, and Gougherty knew, or were reckless in not knowing, that C&A's treatment of the rebates did not reflect the true terms of the supply contracts and was intended to falsely inflate C&A's reported current earnings.  Likewise, Stockman, Stepp, Jones, Cosgrove, Barnaba, and Gougherty knew, or were reckless in not knowing, that the side letters and other false documents were intended to mislead KPMG and that KPMG did in fact rely on some of the false documents.  

(ii)Capital Equipment Expenditures

43.In 2004 C&A expanded the fraudulent rebate scheme to include capital equipment expenditures.  Under GAAP, discounts on capital equipment affect the book value of the purchased asset and are not immediately recognizable in income.  Nevertheless, at Cosgrove's direction and with Stockman's approval, C&A began requiring suppliers to falsely state that price discounts on capital equipment they sold to C&A were rebates for past purchases of non-capital goods or services.  C&A then improperly recognized the rebates in income.   

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