Because nothing is that black and white. As regards the civil case you must be able to show harm. If I sell you a house with a foundation that is only built to

Because nothing is that black and white. As regards the civil case you must be able to show harm. If I sell you a house with a foundation that is only built to last 10 years and then you burn the house down, you can't sure me for damages so long as the crummy foundation had nothing to do with the house burning down. To win damages you must be able to show harm. So the entire civil case hinges on the root of the poor performance of the company after purchase. On the criminal side it's all going to hinge on whether the accounting practices rise to the level of fraud. That's trickier to nail down than you may think because a certain amount of liberty is often taken in trying to project growth, future earnings, etc. HP is likely going to present the subsidiary's poor performance as evidence that the accounting did rise above the level of normal wiggle room. The defense will surely attack that argument. But as long as HP had access to enough of the company's finincial documents to identify the accounting practices in question it will be hard to prove out and out fraud. Edit: ENRON is a good example because as clear cut as people believe that fraud was, it wasn't so obvious at the time. Writing down future contracts as earnings wasn't unheard of. They just followed that logic to an unsustainable conclusion. Which in the end clearly was fraud but it took hundreds of small steps and it's hard to say exactly when it did become fraud.