In a well-known case of inventory fraud, the Securities and Exchange Commission (SEC) brought an enforcement action against an officer of MiniScribe Corporation related to his involvement in overstating inventory reported in the company’s balance sheet. The overstatement of inventory resulted in an understatement of cost of goods sold and an overstatement of profits reported in the company’s income statement (MiniScribe’s net income was actually inflated by $22 million, or 244 percent).