rebates to compensate for deterioration in its earnings. In December 2004, Gougherty assisted in obtaining false documentation from Krauss Maffei to disguise a €165,000 discount (approximately $224,000) on capital equipment C&A was purchasing. Gougherty instructed a subordinate to obtain false documents attributing the rebate to prior purchases of non-capital items. Similarly, during the fourth quarter of 2004 C&A also improperly recorded rebates on capital equipment purchases from Demag ($92,000), RPT ($100,000), and Conair ($38,000).
48.Stockman directed and participated in the scheme to improperly treat discounts on capital equipment as rebates, knowing that the documentation was fraudulent and would improperly inflate C&A’s income. Cosgrove knew that immediately recording rebates on capital equipment purchases in income was contrary to GAAP. However, he instructed Purchasing Department employees to obtain documents falsely attributing the rebates to past purchases of other items to justify accounting for the rebates improperly and thereby inflate C&A’s income. Barnaba directed Purchasing Department employees in implementing the false rebate transactions, knowing that the transactions were fraudulent. Gougherty instructed employees under his direction to recognize the Cincinnati Milacron rebate as income in the third quarter of 2004 although he knew, or was reckless in not knowing, that this was improper. He later had his subordinates solicit false documentation for the Krauss Maffei rebate although he knew, or was reckless in not knowing, that this was improper and designed to falsely inflate C&A's income. Stockman, Cosgrove, Barnaba and Gougherty knew, or were reckless in not knowing, that the false documents were intended to mislead KPMG and that KPMG did in fact rely on some of the false documents.