I know, its shocking, New Century “probably” overstated earnings

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In a filing with the SEC New Century states that "it is more than likely" that the company overstated earnings for 2005. I know you are shocked. The company says further that their "ability to further investigate these matters is constrained" by the current bankruptcy filing. The board has concluded that "the 2005 Financial Statements should no longer be relied upon."

Well, I am floored! I can’t believe that there might be some inconsistencies in their accounting which resulted in a "material" overstatement of pretax earnings. I mean, their entire company was "overstated" for the last 2 years apparently. It had to have been for it to fold up like cheap lawn furniture in the matter of 60 days.

Reuters adds to the story:

… federal prosecutors in California were examining trading in its
securities and accounting errors.

"What motivates prosecutors is the possibility of ongoing
fraud over a long period of time," said Robert Mintz, a partner
at McCarter & English LLP in Newark, New Jersey, and a former
federal prosecutor in that state. "If indeed (the 2005 errors
are) new, it will likely ratchet up the investigation. It’s an
indication that potential wrongdoing was more widespread and
more prolonged than originally thought."

Read the full statement. Hat tip to Matt @ OC Register.