Despite reporting $3.1 billion profits since then, Apple (NDQ: AAPL) has warned that its financial statements from September 2002 are materially unfactual and will have to be restated.

The practice of back-dating corporate records to advantage particular individuals to the disadvantage of others, including shareholders, is clearly a fraud. But it also illustrates just how a corporate culture works to put power into the hands of those persons who have reached the top of the management hierarchy.

And you wonder how CEO's gain inordinate power over management and board colleagues? The power to dangle free money is one way.

Not only in politics does power corrupt. In the case of some CEO's, absolute power corrupts absolutely. Enron and Worldcom are good examples. I think we'll find that corporate options pricing practices is another.

In a previous blog, I called this a nasty practice. Now I call for a massive investigation and criminal prosecution of all perpetrators.

Using the prosecution of Martha Stewart as a precedent for what happens to managers who deliberately deceive shareholders, I expect to see several thousand of them be sent to jail. Otherwise, Stewart's claim of selective prosecution has merit.

To apply the proverb on the basis of gender of the typical perpetrator, I say, "What's sauce for the gander is sauce for the goose".

I think society is at a major cross-roads in deciding whether rule of law is going to continue to be selectively applied.

In any event, traders do not like what they heard from Apple Computer after the close yesterday. In trading in Europe today, AAPL is down about -7 pct. This is just the start (of traders taking action on this issue), really.

Apple Computer Inc. [GICS 45]
(AAPL: Yahoo Finance file)
(AAPL: StockChart chart)
(AAPL: Investertech chart)
(AAPL: ADVFN Financial Data)
(AAPL: ADVFN Financial Data)

7:30am ET UPDATE: There has been a procession of Talking Heads of Vested Interest Groups sent to BloombergTV and CNBC-TV to calm investor concerns over the Apple scandal. If you listen to these people, you might even think that Apple management did nothing wrong, and is doing the right thing in investigating the matter. hahaha

Just goes to show how rotten to the core is a culture that supports massive theft.