There are two overarching goals to this case study. First, the authors want to introduce students as early as possible in their study of business to the perils of deliberate misstatements of income in financial statement and the significant consequences that await those who do. Given the recent business scandals involving mortgage-backed securities and their contribution to the devastating 2007-2009 financial crisis, the authors hope the significant penalties imposed on the executives in the ArthroCare Corporation may provide a lesson to students and perhaps dissuade them from engaging in security fraud activities in their careers. Second, the authors seek to demonstrate to their students how the materials in Legal Environment of Business and Principles of Accounting I are interconnected. Introducing students to the illegal practice of "channel stuffing" not only makes the study of generally accepted accounting principles (GAAP) more understandable, but also shows that fraudulent violations of those principles can have profound legal consequence.