Stirling Homex Corporation was a company founded by two brothers, David and William Stirling. It manufactured and located
modular homes. It became a publicly traded company on February 20, 1970. At its
initial public offering, the company's stock sold at $16.50 per share. By the middle of March, its stock traded at $51 per share. Stirling Homex misled investors by inflating its reported revenue, stating in its
consolidated financial statements that the value of completed housing modules which were assigned to contracts were counted as revenue and asserting that said contracts were backed by the
United States Department of Housing and Urban Development. In reality, most contracts were not backed by the federal department and revenue was reported for homes which were not paid for and which had not been turned over to customers. On July 7, 1972, ten banks demanded Stirling Homex pay off $38.8 million in loans early, citing company deviations from the terms of their credit agreements. The company announced the resignation of the Stirling brothers from their posts and that it would file for bankruptcy on July 10. In 1975 the company's executives were charged with fraud and conspiracy and in 1977 four of them were sentenced to short prison terms by federal judge
Marvin E. Frankel. The SEC also took punitive action against the company's auditor,
Peat Marwick, banning the firm from obtaining new corporate clients for six months and requiring it to review its auditing methods. ==References==