Chambers Development Co. was founded in 1982 and progressed from a minor trash hauler to a rubbish powerhouse. A family-run company headed by John Rangos Sr. with his two sons John Jr. and Alexander as executives. At it's peak in 1989 Chambers Co. released financial reports reflecting sales of $180 million dollars. Forbes magazine in 1989 listed Mr. Rangos 239 in the listing of 400 richest Americans with a fortune valued at about $415 million. Mr. Rangos had a collection of fine art and rare care. The company was considered a darling of Wall Street posting substantially increasing revenue year over year. The tide of prosperity turned for Chambers Co. in 1992 when an outside auditor disclosed that although the company reported substantial profits it had actually lost money.
At the heart of the ethical issue, which would eventually become its downfall, were Chambers Co. accounting practices. Chambers Co. put off recognizing $37 million in indirect costs that other companies would have typically expensed immediately. Examples of items deferred were costs in executive salaries, public relations, legal costs, and travel expenses. Chambers Co. claimed that they were separating costs into operational costs and developmental costs. They continued to defer costs until the company claimed to become an operational company. Chambers management claimed this was a straightforward change in accounting practices. Other sources claimed that Chambers did not change their accounting practices until accountants refused to sign off on the companies' year-end results. Another non-standard accounting practice Chambers employed to reduce their cost base included the capitalization of intangible assets. Deloitte & Touche reported the company capitalized $65 million of interest ...