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(“McCallum”), a member of C&A’s Board of Directors and a supplier to C&A.  C&A treated more than $14 million in payments received from McCallum in 2001, 2002, and 2003 as indirect increases to C&A’s income, when in fact C&A surreptitiously repaid McCallum for each such payment.  These round-trip transactions should have had no  impact on C&A’s income statement.  Beginning in 2002, C&A further inflated its quarterly earnings by improperly recognizing in income numerous rebates received from suppliers in return for anticipated future business and other benefits.  In 2004 C&A extended this fraudulent rebate scheme to purchases of capital equipment, improperly recording discounts on equipment as rebates for past purchases of non-capital goods or services.  Some of these rebates were recognized in income prematurely, while others should never have been recognized at all.  As part of each of these schemes, C&A induced suppliers, including McCallum, to provide false or misleading documentation regarding the payments they made or promised to C&A.  C&A then used these false documents to justify accounting for these payments contrary to generally accepted accounting principles (“GAAP”).  C&A's materially inflated earnings figures were disclosed to the investing public in reports and registration statements filed with the Commission, in press releases, and in other public statements.  

2.Stockman negotiated the round-trip transactions with McCallum and directed the rebate fraud.  McCallum engaged in the round-trip transactions knowing they were intended to improperly inflate C&A’s earnings and provided C&A with false documents to justify the improper accounting.  Other C&A executives knowingly or recklessly played important roles in connection with the McCallum round-trip transactions or the supplier rebate scheme, or both, including J. Michael Stepp, who

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