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Sanmina Reveals Federal Fraud Probe Following Years Of Revenue Misstatements
The DOJ fraud probe appears to have gone undisclosed for three years and looks unrelated to the manufacturing firm misstating revenue three consecutive years.
May 24, 2023
Sanmina Corporation (SANM), a manufacturer of electronics and systems for OEMs in a variety of industries, filed its latest quarterly report late after realizing it had misstated revenue and earnings per share (EPS) the previous three years.
While closing the books on the quarter ended April 1, 2023, Sanmina says it discovered employees had not properly substantiated and updated cost estimates for materials and other costs over the life of certain contracts, which resulted in the following misstatements:
—Revenue was overstated by $10.2 million, or approximately 0.14% in FY20
—Revenue was overstated by $18.3 million, or approximately 0.26% in FY21
—Revenue was understated by $29.1 million, or approximately 0.36% in FY22
The company also overstated revenue in the quarter ended December 31, 2022 and restated its EPS calculations for each of the periods impacted.
In the belatedly filed quarterly report, Sanmina also revealed it and its SCI Technology (SCI) subsidiary had received a civil investigative demand (CID) from the Department of Justice (DOJ) pursuant to the civil False Claims Act (FCA) in May 2023. The aim of the CID is to determine whether Sanmina defrauded the federal government as far back as 2010.
Sanmina revealed the most recent CID is not the first it has received related to the fraud investigation:
“These CIDs supplement several CIDs relating to the same subject matter served upon SCI and certain current and former SCI and Sanmina employees beginning in August 2020…”
It appears the fraud probe went undisclosed for three years.
We found no mention of the earlier CIDs in Sanmina’s previous three annual reports, all of which were filed after the company first received a CID in 2020.
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