• Mischaracterizing sales discounts as marketing expenses, and having employees make false documents to conceal this fact; 
• shipping more goods to their largest customer than they could reasonable sell, and concealing the returns from OCZ's finance department and auditor so those returns wouldn't be recorded on the books and records; 
• reclassifying cost of goods sold as research and development expenses without sufficient basis to do so; 
• failing to capitalize labor and overhead costs in its inventory; 
• recognizing revenue upon shipment, rather than delivery; and 
• understating accurals for product returns.

These practices wound up inflating the company's financial results, leading to filings that stated the company was in much better shape than it actually was. The SEC said that Peterson, the CEO, profited from this by selling stock and getting a bonus based on these inflated figures. Knapp, the CFO, created or maintained the policies that allowed for this to happen in the fist place, said the SEC, failing to implement sufficient internal accounting controls and procedures that would have prevented all this. 

The two have been charged with violating the antifraud, certification, books and records, internal controls and clawback provisions of federal securities laws, as well as with lying to accountants, aiding and abetting the company's violations of the reporting, books and records and internal controls provisions. 

According to the complaint against Knapp, the accounting irregularities came to light shortly after negotiations with another company for a merger broke down. The company was forced to restate their revenues by over $100 million, leading its stock price to plummet, an event from which the company never recovered. 

Knapp settled with the SEC, agreeing to a permanent ban from acting as an officer or director or a public company, paying $130,000 in disgorgement, plus prejudgment interest and civil penalties, as well as foregoing any claims against OCZ for $170,000 in unpaid compensation. Peterson has not.