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This Day In Market History: Cascade International, A Fascinating Fraud Revealed

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This Day In Market History: Cascade International, A Fascinating Fraud Revealed

Each day, Benzinga takes a look back at a notable market-related moment that occurred on this date.

What Happened

On Nov. 20, 1991, one of BusinessWeeks’ 100 hot growth companies is exposed as one of the market’s most interesting hustles.

Where The Market Was

The S&P 500 closed down at $378.53, and the Dow Jones Industrial Average finished the session at $2,930.01.

What Else Was Going On In The World

Earlier that month, Russian President Boris Yeltsin outlawed the nation’s Communist Party, and NBA legend Magic Johnson retired from the Lakers.

Cascade Stock Cascades

Lauded U.S. fashion chain Cascade International Inc. announced the disappearance of its CEO and the financial deceit of its management. Victor Incendy — an international fugitive to this day — had built up and promptly abandoned a fraudulent firm that struck peak market prices of $11.62 and a valuation of $200 million. By December, Cascade filed for bankruptcy.

The six-year-old Cascade had boasted between 255 and 400 stores earning $11 million in 1990, and many analysts backed it with buy ratings. In actuality, the company operated fewer than 30 and lost $7 million.

Incendy had maintained the ruse for some time and had even threatened to sue skeptics alleging inaccuracies in Cascade’s books. The day of Incendy’s disappearance, management had even scheduled analyst meetings to convince of the firm’s legitimacy. Investors were defrauded of about $170 million over the course of its operations.

Related Links:

This Day In Market History: SEC Goes After Mafia-Linked Stock Manipulators

8 Of The Biggest Whistles Ever Blown On Wall Street

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