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— In October of 2001, a Peregrine salesman sent an e-mail to Gardner and Moores, complaining that there was "no justification to book revenue when no product has been ordered" and "there is little likelihood of payment." Peregrine's revenue recognition policy was "unethical, immoral, and unconscionable," he complained. The salesman was fired.

Gardner told the board that the company had to grant "extraordinary terms" to record sales in a previous quarter, thus was "borrowing from the future" to match Wall Street's expectations. And no one on the board suspected that the company was backdating contracts and making side deals to record revenue fraudulently? Come now. The board's audit committee was repeatedly told about suspicious deals to hype sales, as well as the accounting firm's ongoing unhappiness.

But the public only heard how the company was growing fantastically -- until the end, and by then, the insiders had dumped shares massively.

All this evidence should make a slam dunk in civil suits. Not in San Diego. Judges can keep such cases from ever getting to the jury. Superior Court Judge Joan Lewis in 2005 ruled that one suit against Peregrine insiders had to be heard in fraud-friendly Delaware. That was overturned by the appellate court; then Lewis lost all the way to the U.S. Supreme Court. Just recently, she found another pretext to throw out the case: ignoring decades of bankruptcy court precedents, she decided that state courts couldn't hear cases with more than 50 shareholders seeking redress. "We believe the ruling is in error," says San Francisco attorney Robert Friese, who was appointed to press the case by the bankruptcy court. "We are hopeful the appellate court will give us the kind of ruling it did last time."

Another egregious case is in U.S. District Court. Judge Roger Benitez gutted it, despite the overwhelming evidence. That is on appeal, too.

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