/raid1/www/Hosts/bankrupt/CAR_Public/000925.MBX             C L A S S   A C T I O N   R E P O R T E R

           Monday, September 25, 2000, Vol. 2, No. 186


ARMENIAN GENOCIDE: Insurance Law Allows Victims to Pursur Policy Claims
BANK OF AMERICA: Schroeter Goldmark Files Suit over ATM Charges
BEAR STEARNS: Loses Bid to Stop Certification of Investors' Suit
BRANCH DAVIDIAN: Attorneys Plan to Appeal Ruling Dismissing Wrongdoing
BRIDGESTONE/FIRESTONE, FORD: Issue of Settlement Disclosure Raised

CRAYFISH CO: Schiffrin & Barroway Files Securities Suit in New York
CREDIT CARDS: Chase Latest to Settle Complaints over Late Fees
EVISION USA: Investors File Suit in NY; Fires Back and Seeks Damages
INTERIOR: Anacostia Marina Boat Owners/Slip Holders Sue in Fed. Court
LERNOUT & HAUSPIE: Journal Says Belgians Likely to Bristle at SEC Action

MPOWER COMMUNICATIONS: Wolf Haldenstein Files Securities Suit in NY
NOVACARE, INC: Innelli and Molder Files Securities Claim in Pennsylvania
PEPCO: MD Residents May Sue for April Oil Spill into the Patuxent River
PLUG POWER: Wechsler Harwood Files Securities Suit in New York
SMITH BARNEY: Florida Suit Alleges Excessive Mark-ups by Broker Dealers

U OF PA: Health System Agrees to Pay to End Medicare Fraud Investigation
U.S. CAN: Stockholder Files Suit Challenging Recapitalization
WAR VICTIMS: Head of NCVA Comments on Veterans Trust Fund Lawsuit
WELLS FARGO: Must Refund Mortgage Insurance Premiums, Jury Says
Y2K LITIGATION: IL Appeals Ct Affirms Lawsuit against IBM, Medic

* International Cartels Enforcement Results in Explosion of Sanctions


ARMENIAN GENOCIDE: Insurance Law Allows Victims to Pursur Policy Claims
Mirroring a law passed to benefit Holocaust victims two years ago, Gov.
Gray Davis has signed legislation that will allow victims of the Armenian
genocide and their heirs to pursue unpaid insurance claims in California

The bill by state Sen. Chuck Poochigian (R-Fresno) allows victims of the
genocide at the hands of Turks from 1915 to 1923 to file suits in
California against insurers to recover money allegedly owed from policies.
The policies had to have been purchased by people or companies in Europe or
Asia between 1875 and 1923.

The legislation also extends the statute of limitations on such legal
claims brought by an Armenian genocide victim or heir to 2010. About 1.5
million Armenians lost their lives during the genocide.

Poochigian, whose maternal grandparents survived the genocide, said his
bill, SB 1915, should provide Armenian Americans with new recourse to
pursue what is owed them. Since drafting the bill, he said, he has been
flooded with letters and calls from Armenians interested in pursuing

"Like most Armenian Americans, I was touched by the genocide," Poochigian
said. "My maternal grandfather lost every member of his family, so it is
very important to me. Nonetheless, I was not aware of this insurance issue
until recently.

"This legislation will preserve the rights of the aggrieved in a California
court," he added. "It would be awful for these claims to be denied. Some
people will say this is ancient history, social engineering, but not . . .
those of us who were affected."

The bill originally required that insurers create a list of Armenian
clients during that period along with their policies. But Poochigian
dropped that element because a similar law regarding the Holocaust has
become entangled in court.

As it stands, the new law could strengthen a class-action suit filed in Los
Angeles against New York Life on behalf of 45 people and 7,671 policies
issued between 1895 and 1915. Lawyers for the plaintiffs contend that the
policies are worth more than $ 3 billion.

In other action, Davis signed legislation by Assemblyman Kevin Shelley
(D-San Francisco) to launch a statewide media campaign aimed at raising
awareness of elder abuse. AB 1819 will require better training of police to
spot such abuse and will make it easier to prosecute those who wheedle
money from the elderly.

And in a gesture to pet owners, the governor signed AB 860 by Assemblywoman
Helen Thomson (D-Davis), which protects the rights of condominium and
mobile home owners to have pets, regardless of homeowner association rules
or other restrictions.

In other actions, Davis:

  *  Conservatorships

     Approved a measure that seeks to prevent a conservator or
     guardian from directing business to a firm in which he or she has a
     financial interest. The bill is a response to a conservator scandal
     in Riverside County. AB 1950 by Assemblyman Rod Pacheco (R-

  * Redevelopment

    Signed a bill allowing redevelopment agencies to work with other
    agencies and pool money to build low-cost housing outside
    redevelopment areas. Davis said in a signing message that the bill
    "could result in attempts by some communities to shirk their
    responsibilities to build low- and moderate-income housing" but
    concluded that it would help relieve the state's affordable-housing
    shortage. AB 2041 by Assemblyman John Dutra (D-Fremont).

  * Vandalism

    Signed a bill adding vandalism of cemeteries to the definition of
    crimes against places of worship or religious institutions. The
    measure also adds vandalism of cemeteries to the list of hate crimes
    punishable by state prison time. AB 2580 by Assemblyman Dave Cox (R-
    Fair Oaks). (Los Angeles Times, September 22, 2000)

AUTO FINANCE: Toyota’s Compliance with TILA a Defense to Claim
In a class action alleging an automobile credit company violated the
Consumer Fraud and Deceptive Business Practices Act by failing to disclose
capitalization costs or guaranteed automobile protection charges, the
Illinois Appellate Court held that compliance with the Truth in Lending Act
was a defense to the borrowers' claim. (Robinson v. Toyota Motor Credit
Corp., et al., No. 1-98-3041 (Ill. App. Ct. 8/24/00).)

On July 6, 1993, Emma Robinson leased a car from River Oaks Toyota, signing
a 48-month closed-end lease. On May 14, 1993, Latanya Kemp leased a car
from Point One Toyota for 42 months. Both leases were assigned to Toyota
Motor Credit Corp. On Aug. 31, 1995, Robinson and Kemp sued Toyota and the
dealerships, alleging that the lease agreements violated the Consumer
Leasing Act and various state laws.

                          Related Class Action

The California Superior Court certified a class action in February 1996, to
include all individuals, including Robinson and Kemp, who had leased cars
from Toyota after August 1, 1993. Robinson and Kemp tried to opt out of
Ramirez v. Toyota Motor Credit Corp., No. 752044-8 (Calif. Super. Ct.
1996), by giving their notice after the deadline. Ramirez was settled in
December 1997.

Robinson and Kemp filed a second amended complaint in 1998, adding alleged
violations of the Consumer Fraud and Deceptive Business Practices Act, and
the Uniform Deceptive Trade Practices Act. The court dismissed the
complaint and the consumers appealed.

                          Consumer Fraud Act

Robinson and Kemp argued on appeal that Toyota's failure to disclose the
capitalized cost of the car and the GAP charges was unfair and deceptive in
violation of the Consumer Fraud Act. Toyota maintained that its compliance
with the TILA and the CLA was a complete defense to the Consumer Fraud Act

After granting a petition for rehearing, the Appellate Court observed that
the Illinois Supreme Court held in Lanier v. Associates Finance Inc., 499
N.E.2d 440 (1986), that the Consumer Fraud Act does not require "more
extensive disclosure than that required by the comprehensive provisions of
the TILA" and that "compliance with the requirements of the TILA is a
defense to liability under the Consumer Fraud Act." As in Lanier, the
Appellate Court noted that the TILA and the CLA do not require disclosure
of the capitalized cost of a car or the GAP charges at the time lessees
sign their leases. Therefore, the court concluded that Toyota's compliance
with the TILA and the CLA was a defense to the Consumer Fraud Act claims
and affirmed the dismissal of the charges.

                              Res judicata

The consumers also argued on appeal that the trial court erred in finding
res judicata barred their CLA claims. The Appellate Court observed that a
final judgment on the merits was rendered when the California Superior
Court approved the Ramirez settlement. In addition, because Robinson and
Kemp were members of the class in Ramirez, the Appellate Court found an
identity of parties.

The consumers argued that no identity of causes of action existed between
Ramirez and this case because Ramirez only barred CLA claims regarding
auction, transportation and reconditioning fees. The lessees claimed that
Toyota violated the CLA by disclosing total estimated taxes of 168 and then
assessing monthly payments that totaled 1,242 in taxes. The Appellate Court
found the excessive tax claim could not have been raised in Ramirez.
Therefore, it was not barred by res judicata. The court determined,
however, that the consumers' other CLA claims could have been raised in
Ramirez and were, therefore, barred by res judicata.

The Appellate Court affirmed in part and reversed in part the trial court's
dismissal of the CLA claims. It further found that the trial court erred in
dismissing the breach of contract claim but affirmed the dismissal of the
Deceptive Trade Practices Act claim and the CFA claim.

Justice Hall delivered the opinion of the court. Thomas M. Crisham of
Quinlan & Crisham in Chicago represented Toyota. Joseph A. Longo of Mount
Prospect, Ill., represented the lessees. (Consumer Financial Services Law
Report, September 18, 2000)

BANK OF AMERICA: Schroeter Goldmark Files Suit over ATM Charges
Bank of America customers who pay large fees to use generic or un-branded
ATMs may be surprised to learn they were actually using a Bank of America

Customers who use their cards at Bank of America ATMs are, by contract, not
supposed to be charged for their transactions.

One BOA customer got fed up as those charges continued adding up. Attorney
Adam Berger, from Schroeter Goldmark & Bender, filed the suit in Federal
District court this morning on behalf of a Bank of America customer angry
about the deception. "We believe this practice to be widespread and
illegal. Bank of America knows when one of their customers uses these
machines. Yet they charged their own customers the same hefty fee as
non-Bank of America customers," Berger said. The fees are directly deducted
from the accounts of the bank's customers the moment the transaction is

The customer who first noticed the charges reported the error directly to
BOA and asked that the bank respond to his complaint. No written response
was ever received by the customer, as is required by law. Though $9.75 in
transaction fees were refunded, he continues to be charged when he uses the
unbranded Bank of America machine at a neighborhood grocery.

The class includes all Bank of America customers in the State of
Washington, who use the BOA unbranded machines and who have been wrongly
charged as a result. The suit will seek refunds for customers who have been
wrongly charged during the past six years.

According to the complaint, Bank of America also violated terms of the
Electronic Fund Transfers Act (EFTA), by failing to notify its customers
that they will be charged fees for accessing their accounts through these
unbranded ATMs. The complaint also cites BOA in violation of the Washington
Consumer Protection Act by engaging in unfair or deceptive practices.

Contact: Schroeter Goldmark & Bender Adam Berger, Attorney, 206/622-8000 or
PR Ink India Simmons, 425/742-6926

BEAR STEARNS: Loses Bid to Stop Certification of Investors' Suit
The Bear Stearns Companies and its former senior managing director, Richard
Harriton, have lost a bid to stop a judge from certifying a case against
them as a class action. Judge John Sprizzo of Federal District Court in New
York certified as a class action September 21 a lawsuit brought on behalf
of investors who bought stock in companies through the brokerage firm A. R.
Baron, which is now defunct. Bear Stearns acted as A. R. Baron's clearing
broker from July 1995 to June 1996, when Baron went out of business, the
lawsuit states. The suit, which was filed in 1997, asserts that Mr.
Harriton and A. R. Baron artificially inflated the price of 10 securities.
(The New York Times, September 22, 2000)

BRANCH DAVIDIAN: Attorneys Plan to Appeal Ruling Dismissing Wrongdoing
Two attorneys representing relatives and suvivors of the Branch Davidian
siege in a $675 million wrongful death lawsuit say they will appeal a
federal judge's ruling that clears the government of any wrongdoing during
a 1993 standoff.

U.S. District Judge Walter Smith ruled last Wednesday September 20 that
federal agents acted within the limits of the law and cannot be held
responsible for the deaths of 80 Branch Davidians.

The day following the ruling, Ramsey Clark, a former attorney general and
one of three plaintiff's attorneys, criticized Smith's decision and said
announced his intention to appeal the decision. "The thing that we should
all comprehend is that a tragedy like this should never happen again at the
hands of our own government and its agents," he said in Friday's editions
of The Dallas Morning News. "You can almost feel like a sense of
celebration in the way the judge addressed the case."

In a brief statement last Thursday, lead plaintiff's attorney Michael
Caddell said "it was clear that soon after the trial commenced that Judge
Smith had made up his mind and he could have written his opinion then."
Caddell filed a motion asking Smith to recuse himself and dismiss the case,
saying the judge had displayed a "profound and deep-seated prejudice"
against sect members and their families.

Smith's ruling mirrored the conclusions reached in July by an advisory jury
and Special Counsel John Danforth. Both said Bureau of Alcohol, Tobacco and
Firearms agents and others were not responsible for the deaths on April 19,
1993, the final day of a 51-day standoff.

The siege began Feb. 28, 1993, when ATF agents tried to arrest sect leader
David Koresh. A gunfight erupted, leaving four ATF agents and six Davidians
dead. The standoff ended when tank-driving FBI agents pumped tear gas into
the compound. A fire broke out and nearly all of the Davidians, including
Koresh, died, some from the fire, some from gunshots.

The five-member advisory jury said the government did not use excessive
force in its attempt to serve search and arrest warrants on Koresh. They
also decided that the government's actions on the final day of the siege
were not negligent and did not contribute to the deaths of the sect

The government said suicidal sect members started fires in the building and
were responsible for their own deaths. (The Associated Press State & Local
Wire, September 22, 2000)

BRIDGESTONE/FIRESTONE, FORD: Issue of Settlement Disclosure Raised
The latest consumer safety concerns raised by the recall of millions of
Firestone tires will generate a large class action lawsuit.
Bridgestone/Firestone, the tire maker's parent company, and Ford Motor
Company, who sold sports-utility vehicles using the affected tires, will
likely have to pay out heavy damages.

Both companies can settle the lawsuit, which can often cost them less than
the damages awarded through a civil trial, which Bridgestone/Firestone and
Ford would likely lose.

A settlement also offers secrecy, as no party in the suit may discuss
aspects of the suit. When the safety of consumers is on the line, public
disclosure is very important. Settlement terms should not be shrouded in

The Los Angeles Times reveals hundreds of settlements where the terms were
never discussed, ranging from defective manufacturing to routine
slip-and-fall injuries to securities fraud cases. The plaintiffs obviously
receive money, but nobody knows how much or any other findings.

Elected officials have tried, and are trying, to change the law so
settlement outcomes can be made public. Guess what? Lobbying pressure from
business groups prevents any such laws from being passed -- or even

Settlements obviously have their benefits. Big companies can still end up
paying millions of dollars to plaintiffs, but a jury trial can be far more
damaging. Juries tend to sympathize with affected plaintiffs and rule
against corporations, and every statement within the trial can be a matter
of public record.

A trial can also cause major corporations' stock value - and consumers'
confidence in the good or service -- to plummet.

Settlements often mitigate these dire consequences. Unfortunately, with
secrecy, people may never know that they have been harmed until it is too
late. How would people know if their cars have a defective part or design
flaw that could hurt them or others in the road? How would people know if
they received a medical treatment that may make them sicker? How would
people know if the nearby supermarket has a history of slip-and-fall or
falling object cases?

They wouldn't be able to know.

The bottom line: consumers deserve to know. Businesses have concerns about
snowballing litigation, but many people do not have the time for lengthy
lawsuits, which can drag out for years. Also, settlement disclosure laws
can include protections from these suits. The intent is not really
litigation, but public safety. (University Wire, September 20, 2000)

CRAYFISH CO: Schiffrin & Barroway Files Securities Suit in New York
Notice on September 21 says that a class action lawsuit was filed in the
United States District Court for the Southern District of New York on
behalf of all purchasers of the common stock of Crayfish Co., Ltd. (Nasdaq:
CRFH) pursuant or traceable to the Company's March 8, 2000 initial public
offering and through August 22, 2000, inclusive (the "Class Period").

The complaint charges Crayfish Co., Ltd. and certain of its officers and
directors with issuing a materially false and misleading Registration
Statement and Prospectus.

Contact: Schiffrin & Barroway, LLP, Bala Cynwyd Marc A. Topaz, Esq. Robert
B. Weiser, Esq. 888/299-7706 (toll free) or 610/667-7706 e-mail:

CREDIT CARDS: Chase Latest to Settle Complaints over Late Fees
Chase Manhattan Corp.'s agreement to settle a class action filed by credit
card customers who said they were improperly charged late fees is yet
another sign of consumer backlash against credit card banks and may
encourage consumer lawyers to try copycat suits against other banking

Chase denied any liability in the case, which involved a dispute over the
cutoff time for crediting card payments that were sent by mail, and said
that it settled the case to avoid further legal costs. The episode will
cost the fourth-largest bank card issuer up to $22.2 million for payments
to cardholders, unearned late fees and interest, attorney fees, and
cardholder notification.

Two other issuers chose to settle consumer suits recently, and the spoils
were handsome enough to whet the appetites of class-action lawyers. In
June, Providian Financial Corp. agreed to pay $300 million to settle a
customer lawsuit that charged the San Francisco issuer with deceiving
cardholders about rates and fees. In July Citigroup Inc. agreed to pay $45
million to settle a class action that accused its card unit of improperly
imposing finance charges.

One issuer -- the First USA division of Bank One Corp. -- won a recent
court battle with consumers. In June a Dallas federal judge dismissed a
cardholder class action against First USA that charged the Wilmington,
Del., issuer with wrongfully assessing late fees.

But that victory may have been short-lived: Last month, a federal judge in
Washington granted class-action status to a suit against First USA alleging
fraud and other violations in the way it fixed interest rates on individual

Chase said it will pay $6.6 million in cash to cardholders. This includes
$2.3 million each for finance charge and late fee credits and a $2 million
reserve for future reimbursement claims. Notifying cardholders about the
settlement will cost Chase $1.5 million, the bank said, and attorneys' fees
will come to about $4 million.

The lawyer who brought suit, a Dallas attorney named Britton D. Monts,
estimated that Chase would forgo an additional $10 million in uncollected
late fees and interest as a result of the changes it is making under the

The lawsuit centered on Chase's use of 9 a.m. Eastern Standard Time as a
deadline for crediting mailed credit card payments. Under the settlement,
Chase will reimburse cardholders for some charges and move the cut-off time
for payments to noon Eastern time for at least two years. (The American
Banker, September 22, 2000)

EVISION USA: Investors File Suit in NY; Fires Back and Seeks Damages
On or about September 8, 2000, Michael Halperin, M.D., and Donald Kern,
D.D.S., filed a Complaint in the United States District Court for the
Southern District of New York (Case No. 00 CIV. 6769) against eVision
USA.Com, Inc., eBankerUSA.com, Inc., a partially owned subsidiary of
eVision, and American Fronteer Financial Corporation, a wholly owned
broker-dealer subsidiary of eVision, Fai Chan, Tong Wan Chan, Robert Trapp,
Kwok Jen Fong, David Chen, Gary Cook, Jeffrey Bush and Robert Jeffers, Jr.,
officers and/or directors of eVision and eBanker.

In their Complaint, the plaintiffs state that the action is a class action
brought by them on behalf of purchasers of securities of eBanker and
eVision, through American Fronteer and other securities firms, between
April 1998 and August 2000.

The Complaint alleges that the documents pursuant to which eBanker and
eVision issued securities, American Fronteer sold the securities,
communications with their shareholders and public filings by eVision
misrepresented and/or failed to disclose material facts about the business,
management, services, sales obligations, markets, financial condition, use
of private offering proceeds, registration plans and future business
prospects of eBanker and eVision. The Complaint alleges violations of
Section 10(b) and Rule 10b-5 and Section 20(a) under the Securities
Exchange Act of 1934, of Sections 11 and 12(2) under the Securities Act of
1933 and of the common law of New York. The Complaint also alleges breach
of fiduciary duty and corporate waste against the eBanker and eVision
officer defendants and that the two eBanker offerings should be integrated.

The plaintiffs request that the lawsuit be maintained as a class action and
that they be certified as representatives of the class, that compensatory
damages be awarded against defendants in an amount of not less than
$70,000,000 plus interest; that they be awarded exemplary and punitive
damages pursuant to their claims of fraud and breach of fiduciary duty;
that the defendant companies correct any misstatements and otherwise
provide full disclosure of all material facts concerning the companies;
that eBanker distribute to certain class plaintiffs the same securities as
offered to certain other class members; that eBanker make rescission offers
to certain class members; and such other relief as the Court may deem just
and proper.

The plaintiffs have requested a jury trial.

The defendant companies have reviewed the numerous allegations contained in
the Complaint, believe the allegations are without merit and intend to
vigorously defend against the allegations. One or more defendants are also
considering filing counterclaims against the plaintiffs.

On or about September 15, 2000, eBanker filed a Complaint in the District
Court, City and County of Denver, Colorado (Case No. 00 CV 6942) against
Michael Halperin. In its Complaint, eBanker alleges that Dr. Halperin
intentionally interfered with prospective  economic  relations of eBanker
by deterring investments in eBanker and delaying eBanker's initial public
offering by making false written and verbal statements about eBanker and
its management because eBanker declined to invest in projects suggested by
Dr. Halperin. eBanker also alleges that Dr. Halperin slandered eBanker by
knowingly making false statements against eBanker. eBanker requests that
the Court grant eBanker actual and special damages, including lost profits,
in an amount to be determined at trial.

Specifically, the Complaint alleges that the defendant proposed that
eBanker make an investment in a restaurant franchise and proposed that
eBanker participate with a bank to issue secured credit cards financed by
eBanker. The Complaint alleges that eBanker negotiated with two friends of
defendant regarding the investment in the restaurant franchise and that the
defendant expected to be paid a commission in connection with the credit
card transaction. eBanker determined that the investment in the restaurant
franchise was too risky and that the bank had no experience in issuing
secured credit cards. The Complaint also alleges that when eBanker did not
make the investment or enter into an agreement with the bank, the defendant
deterred future investments in eBanker by making false accusations against
eBanker and its management.

The Complaint also alleges that the defendant's actions delayed eBanker's
initial public offering.

eBanker has requested a jury trial.

INTERIOR: Anacostia Marina Boat Owners/Slip Holders Sue in Fed. Court
September 20, 2000, attorneys for boat owners and slip holders at the
Anacostia Marina filed a federal class action law suit in the United States
District Court for the District of Columbia seeking both a Temporary
Restraining Order and Preliminary Injunction to prohibit the closing of
Anacostia Marina, the seizure of private property (individually owned
boats, trailers, etc.) and the threatened federal prosecution of boat

The suit, which requests an Expedited Hearing, names as Defendants the
Secretary of the Interior, Bruce Babbitt; the US Department of the
Interior; the National Park Service, National Capital Region; and John
Hale, Superintendent of the National Park Service, National Capital Region.

The suit alleges that the Park Service has violated the Fifth Amendment
Right of "due Process under the law" because the Defendants violated the
requirements of the Code of Federal Regulations by failing to issue a
written determination justifying the action (closing the Marina) and
publishing notice of the closing as a Rulemaking in the Federal Register.
The Fifth Amendment to the United States Constitution guarantees that a
person may not be deprived of life, liberty or property without due process
of law.

"The Park Service's decision to close the Anacostia Marina did not provide
the Plaintiffs with adequate notice or due process that they risked losing
their boats and/or being imprisoned if they did not comply with the Park
Service's decision."

The suit calls for a remedy to include a judgement in favor of the
Plaintiffs, the issuance of a preliminary injunction prohibiting the
closing of the Anacostia Marina and the issuance of a permanent injunction
against the closing until the Park Service complies with its own
regulation's. The suit also seeks that Plaintiff's be granted their
attorneys fees and costs.

The Park Service's actions stem from a long running dispute between Mr.
Thomas Long, the operator of the marina (located at 1900 M Street, SE
Washington, DC),and the Park Service concerning environmental issues. The
Park service is terminating Mr. Long's lease to the Park land on September
30, 2000. As part of this action, the Park Service is demanding that all
boat owners move their boats by September 30, 2000, or have their boats
declared "abandoned", thus subject to confiscation, and face criminal

The suit states that the "actions against the Plaintiffs are all the more
egregious because Plaintiffs are innocent third parties in the dispute
between the Park Service and Mr. Long. They are accused of no wrongdoing
yet they are the ones being threatened with confiscation of property, and
possible imprisonment."

The marina is unique as it is Washington's only "working" marina, meaning
that it is primarily a boat maintenance and repair yard, as opposed to a

"It is the classic Catch 22," stated Plaintiffs's attorney Don Dinan. "They
are closing the only facility where boats can be repaired and they
threatened to confiscate boats which require repairs before they can be

Dinan received a letter from the Park Service "stating that the Park
Service had 'no intention of prosecuting any boat owner making every effort
to relocate their property ...' The letter further states that the Park
Service refuses to meet with Plaintiff's counsel and strongly implies that,
if not directly states, Plaintiffs's have to deal with the Park Service
directly ... without the benefit of counsel. Plaintiffs cannot subject
their liberty and their property to the largess of the government or to
such an arbitrary process, particularly where they are denied access to
counsel." "It raises arrogance to a new level. It is illegal," added Dinan.

The marina is the only "working marina" within 65 nautical miles of
Washington DC that possesses a fifty ton lift capable of hoisting vessels
up to 65 feet in length, such as some possessed by the DC Fire Department,
DC Police Department, the DC Water and Sewer Authority as well as many of
the tour boats that ply the Potomac River. If the marina was not open and a
boat encountered an emergency in the water, as happens regularly, boats in
such a condition would sink before they could reach another marina 65
nautical miles away. "The safety of the boating public in and around the
Washington area would be put at risk," stated Dinan.

Contact: Donald R. Dinan, Esq., of Hall, Estill, Hardwick, Gable, Golden
and Nelson, 202-293-1200; or Phil Yunger, 202-445-9024

LERNOUT & HAUSPIE: Journal Says Belgians Likely to Bristle at SEC Action
The Belgian company Lernout & Hauspie Speech Products NV has long sought to
become one of the world's leading high-technology concerns by adding a
voice to anything that uses the silicon chip.

But along with its modernistic visions of talking washing machines,
personal organizers that take dictation and read your e-mail, and
automobiles that obey voice commands, L&H has acquired a checkered
financial reputation. Some of its investors are suing the company in a
class-action suit alleging misleading financial statements, and last
Thursday, L&H watched the value of its shares dwindle after the U.S.
Securities and Exchange Commission announced it was mounting an
investigation into the company's past financial statements.

Many Belgians are likely to bristle at the SEC's action against one of
their high-technology champions. The company, founded in 1987 by Jo Lernout
and Pol Hauspie, is an enormous source of pride in the Flanders region.
Helped by the Flemish regional government, it has brought prosperity to a
corner of Belgium where once hundreds of thousands of soldiers fought and
died in the trenches of Ypres during World War I. Around its headquarters
in the so-called Language Valley at Ypres, it has gathered dozens of
companies seeking to make the keyboard obsolete and the human voice the
primary means of interacting with the computer.

Over the past five years it has engaged in frenzied acquisitions to put
itself in an Internet leadership position by creating programs that
automatically translate text and voice and creating machines that
understand language.

L&H likes to stress its roots in multilingual Flanders, but in fact it is a
global company like any other technology leader, with joint headquarters in
Burlington, Massachusetts, and the source of its present woes comes from
South Korea. Last month, U.S. shareholders filed a class-action suit
against L&H in Massachusetts, contending that the company's statements
regarding its business and financial results were ''materially
misleading.'' Specifically, the shareholders said the company had vastly
overstated profits from a South Korean acquisition and had claimed business
that did not exist.

The SEC will now investigate whether those allegations were true and
whether as a result shareholders bought stock at artificially inflated

The company said it would cooperate fully with the investigation ''to
ensure full compliance with all U.S. laws and regulations,'' but a
representative declined to give further details. The company already has
commissioned an external accounting inquiry into its South Korean
operations, and delays in publishing that report apparently added to
investors' fears.

The company's shares in the United States were down $6.375, or 30 percent,
in late trading September 21 to $14.875

After the class-action suit was filed, the company last month demoted its
chief executive, Gaston Bastiaens, contending that this had nothing to do
with the court case, and replaced him with John Duerden, formerly the head
of Dictaphone Corp., which L&H acquired this year.

By any account, L&H has undergone explosive growth, from $31 million in
revenue four years ago to $344 million last year. But much of that growth
has come from an acquisition spree, in which L&H bought 25 other companies
in less than three years. In 1997, Microsoft Corp. took a $45 million stake
in L&H.

From statements filed with the SEC, analysts learned that sales in South
Korea had increased from a mere $97,000 in 1998 to nearly $59 million in
the first quarter this year. But investors soon began dumping the stock
amid suspicions that the company was inflating its results. (International
Herald Tribune (Neuilly-sur-Seine, France), September 22, 2000)

MPOWER COMMUNICATIONS: Wolf Haldenstein Files Securities Suit in NY
On September 20, 2000, Wolf Haldenstein Adler Freeman & Herz LLP commenced
a class action lawsuit in the United States District Court for the Western
District of New York on behalf of all persons who purchased or otherwise
acquired the securities of Mpower Communications Corp. (NASDAQ:MPWR__news)
between February 4, 2000 and September 7, 2000, inclusive (the "Class

During the Class Period, defendants issued to the investing public false
and misleading statements and press releases concerning the Company's
efforts with respect to and the difficulties experienced during its efforts
to "build out" its networks on a national scale. Moreover, during the Class
Period, the Company misrepresented the pace at which it was building its
national, symmetrical digital subscriber line (SDSL) network and failed to
disclose that it was unable to adequately provision voice-over SDSL
(VoSDSL) capable loops at levels to meet customer demands due to problems
with incumbent carriers and the failure to make the necessary line
available in a timely manner.http://www.whafh.com.

On September 7, 2000, after the close of the market, the Company disclosed
the true state of its fiscal affairs. Despite having said only weeks before
that it would "hit its numbers" for the remainder of fiscal 2000 and fiscal
2001, and that its national expansion plan was on a steady course, the
Company shockingly disclosed that it expected significantly lower revenues
and materially lower earnings that had been previously predicted. These
revelations caused the Company's common stock to decline over 40%, and lose
approximately $400 million in total market capitalization.

Contact: Wolf Haldenstein Adler Freeman & Herz LLP, New York 800/575-0735
Michael Miske, George Peters, Fred Taylor Isquith, Esq. or Gregory M.
Nespole, Esq. www.whafh.com classmember@whafh.com

NOVACARE, INC: Innelli and Molder Files Securities Claim in Pennsylvania
The law firm of Innelli and Molder has filed a class action lawsuit in the
United States District Court for the Eastern District of Pennsylvania on
behalf of investors who purchased common stock of Novacare, Inc. (now known
as NAHC, Inc. (OTC Bulletin Board: NAHC)) between May 20, 1998 and November
22, 1999. The suit, Peitrafitta v. NAHC, Inc., et al, 00-cv-4749, charges
Novacare, certain of its officers and directors, its auditors and its
investment banking advisors with violations of the federal securities laws.
Specifically, plaintiff has brought claims pursuant to Sections 10(b),
14(a) and 20(a) of the Securities Exchange Act of 1934.

The Complaint alleges that in its public statements and SEC filings,
Novacare overstated the value of certain assets in violation of generally
accepted accounting principles. Consequently, the unqualified audit report
of Novacare's auditor, which represented that the financial statements were
prepared in accordance with generally accepted accounting principles, was
false and misleading. The Complaint further alleges, Novacare sold certain
assets which resulted in substantial, undisclosed commitments and
liabilities. As a result of these misrepresentations, the Complaint
alleges, the market price of Novacare, Inc. common stock was artificially
inflated throughout the Class Period.

Contact: John F. Innelli or Michael Molder of Innelli and Molder,
215-627-3394, or Innellilaw@aol.com

PEPCO: MD Residents May Sue for April Oil Spill into the Patuxent River
The Honorable Peter J. Messitte of the United States District Court of the
District of Maryland ruled earlier this month that residents damaged by the
April 7, 2000 release of approximately 110,000 gallons of oil into the
Patuxent River may pursue their claims against Potomac Electric Power
Company ("PEPCO") in federal court.

Prior to the September 8, 2000 decision, PEPCO claimed that any damaged
party was required to submit a claim, along with supporting documentation,
directly to PEPCO, for disposition by PEPCO and the Oil Pollution Act of

The United States District Court ruling in Anthony Williams, et al. v.
Potomac Electric Power Company, class action effectively foreclosed PEPCO's
contention that all claims by property owners must first be brought to
PEPCO. The federal court gave property owners the freedom to bring suit
against PEPCO in state or federal court, without having to first submit a
claim to PEPCO. This ruling came about as a result of PEPCO's motion to
dismiss the class action lawsuit. Mr. and Mrs. Williams are suing PEPCO for
damages associated with the pipeline rupture on behalf of themselves, as
property owners, and others similarly situated.

Contact: Troese, Fastow & Preller, L.L.C. Peter D. Fastow, 410/573-1611 or
Cohen, Milstein, Hausfeld & Toll, P.L.L.C. Gary E. Mason, Esq.,

PLUG POWER: Wechsler Harwood Files Securities Suit in New York
Wechsler Harwood Halebian & Feffer has filed a securities class action
lawsuit in the United States District Court for the Eastern District of New
York on behalf of all investors who bought common stock of Plug Power, Inc.
(Nasdaq: PLUG) in its initial public offering or in the period from January
7, 2000 to August 2, 2000, inclusive (the "Class Period"). In order to
better enable Wechsler Harwood to respond the needs of Plug Power
shareholders, Wechsler Harwood has established a dedicated mailbox at
plugpower@whhf.com and a toll free shareholder hotline at (877) 935-7400.

The complaint alleges against defendants Plug Power Inc., Gary Mittleman,
Manmohan Dahar and Louis R. Tompson violated Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder
by issuing a series of material misrepresentations to the market between
January 7, 2000 and August 2, 2000, thereby inflating the price of PLUG
stock. In February 1999, PLUG partnered with General Electric and formed GE
Fuel Cell Systems LLC, which was dedicated to providing marketing,
distribution, service and installation and maintenance of residential fuel
cells through GE's global network. The complaint alleges that PLUG failed
to disclose that PLUG was unable to produce fuel cells in conformance with
the contractual specifications in the GE contract and that, as a result,
the Company's relationship with GE was subject to increased risk and
uncertainty and GE would be able to terminate its agreement with PLUG
without having to purchase PLUG fuel cells.

As alleged in the complaint, on August 2, 2000, PLUG issued a press release
disclosing (i) that it would cut its fuel cell systems manufacturing
schedule from 2000 to 125 for the year, thus demonstrating, contrary to its
previous representations, that it was just an R&D shop with a potential
product the commercial development of which was a distant hope; (ii) that
it would have operating losses which would continue through the year 2003;
and (iii) that PLUG's fuel cells would not become commercially available
until 2002 at the earliest Upon news of these revelations, PLUG's stock
declined by more than $12 per share to close at $39.50 per share. Prior to
the disclosure of the true facts about the Company, certain PLUG insiders
sold their personally-held PLUG common stock to the public, generating
proceeds of $9 million.

Contact: Wechsler Harwood Halebian & Feffer LLP 488 Madison Avenue, New
York, New York 10022 Telephone: 877-935-7400 (toll free) Patricia Guiteau,
Shareholder Relations Department: plugpower@whhf.com

SMITH BARNEY: Florida Suit Alleges Excessive Mark-ups by Broker Dealers
Smith Barney AAA Energy Fund LP /NY tells investors that, in connection
with the Louisiana and Florida matters, the IRS and SEC have been
conducting an industry-wide investigation into the pricing of Treasury
securities in advanced refunding transactions.

                        Class Action in Florida

In November 1998, a class action complaint was filed in the United States
District Court for the Middle District of Florida (Dwight Brock as Clerk
for Collier County v. Merrill Lynch, et al.). The complaint alleged that,
pursuant to a nationwide conspiracy, 17 broker-dealer defendants, including
SSB, charged excessive mark-ups in connection with advanced refunding
transactions. Among other relief, plaintiffs sought compensatory and
punitive damages, restitution and/or rescission of the transactions and
disgorgement of alleged excessive profits. In October 1999, the plaintiff
filed a second amended complaint. SSB has asked the court to dismiss the
amended complaint.

Smith Barney says that in December 1998, SSB was one of twenty-eight market
making firms that reached a settlement with the SEC in the matter titled In
the Matter of Certain Market Making Activities on NASDAQ. As part of the
settlement of that matter, SSB, without admitting or denying the factual
allegations, agreed to an order that required that it: (i) cease and desist
from committing or causing any violations of Sections 15(c)(1) and (2) of
the Securities Exchange Act of 1934 and Rules 15c1-2, 15c2-7 and 17a-3
thereunder, (ii) pay penalties totaling approximately $760,000, and (iii)
submit certain policies and procedures to an independent consultant for

                  Louisiana Complaints Filed in 1998

In June 1998, complaints were filed in the U.S. District Court for the
Eastern District of Louisiana in two actions (Board of Liquidations, City
Debt of the City of New Orleans v. Smith Barney Inc. et ano. and The City
of New Orleans v. Smith Barney Inc. et ano.), in which the City of New
Orleans seeks a determination that Smith Barney Inc. and another
underwriter will be responsible for any damages that the City may incur in
the event the IRS denies tax exempt status to the City's General Obligation
Refunding Bonds Series 1991. The complaints were subsequently amended. SSB
has asked the court to dismiss the amended complaints.

In May 1999, the Court denied SSB's motion to dismiss, but stayed the
litigation because the matter was not ripe.

In March, 2000 the city filed a notice of discontinuance dismissing the

U OF PA: Health System Agrees to Pay to End Medicare Fraud Investigation
The University of Pennsylvania Health System has agreed to pay $ 12 million
to the federal government, ending a four-year investigation into Medicare
fraud at one of the system's hospitals.

The civil lawsuit was filed by an employee at Presbyterian Hospital, who
claimed that his job was at stake if he chose not to participate in the
scam, involving requests for reimbursements for a program that was not
eligible for Medicare funding.

The alleged fraud occurred before Penn acquired the hospital in 1995 from
the Presbyterian Foundation. Health System officials say they believe the
foundation should be responsible for paying for the settlement.

"Since the program was established and guidelines instituted prior to our
acquisition of Presbyterian, we believe the penalty is largely the
responsibility of the Presbyterian Foundation," said Lee Dobkin, deputy
general counsel and director of compliance and training for the Health

"We have formally requested that the foundation contribute to the
settlement," Dobkin said, adding that discussions with the Foundation are

The program, operated at Presbyterian Hospital since 1993, is designed to
provide psychiatric treatment to elderly patients requiring regular
treatment but not in-patient hospitalization.

In addition to the payment, the University has reduced the operations of
the program and has put new billing systems in place.

Health System officials claim that as soon as they learned of the problem,
they notified the government and worked to correct it. The Health System
has already repaid a fourth of the $ 12 million settlement.

Plaintiff John Saunders alleged that bills included sessions during which
patients attended birthday parties and watched television shows.

Assistant U.S. Attorney Margaret Hutchinson, who handled the case,
explained that "a partial hospitalization program has very specific
eligibility criteria that was not met."

UPHS spokeswoman Rebecca Harmon denied all allegations put forth by
Saunders and insisted that the Health System proactively contacted the
government when it learned of the problem.

Under the Federal False Claims Act, whistleblowers such as Saunders are
entitled to between 15 percent to 25 percent of the total settlement.
Saunders will receive $ 2 million from the agreement, which is 18 percent
of the total $ 12 million.

"My client did the right thing," Saunders' attorney Gaetan Alfano said. "He
is pleased that this investigation and settlement has finally concluded."

In an unrelated case in 1995, the Hospital of the University of
Pennsylvania agreed to pay $ 30 million to settle claims alleging that
certain Medical School faculty members overbilled Medicare for patient
care. (University Wire, September 7, 2000)

U.S. CAN: Stockholder Files Suit Challenging Recapitalization
U.S. Can Corporation (NYSE: USC) announced on September 21 that a purported
class action lawsuit challenging its pending recapitalization transaction
has been filed in the Delaware Court of Chancery by a stockholder against
U.S. Can, Pac Packaging Acquisition Corporation, all of the directors of
U.S. Can, and a principal in Berkshire Partners LLC who formerly served as
a director of U.S. Can.

The complaint alleges, among other things, that the terms of the
recapitalization are unfair to the stockholders of U.S. Can, that U.S.
Can's directors breached their fiduciary duties to U.S. Can's stockholders
in approving the recapitalization, that the proxy statement dated September
6, 2000 is misleading and incomplete, and that under Delaware law the
merger must be approved by a two-thirds vote of disinterested stockholders
rather than a simple majority of the outstanding shares. The complaint
seeks, among other things, that the recapitalization transaction be
enjoined or rescinded and that the defendants pay unspecified monetary
damages as well as unspecified costs and attorneys' fees. The plaintiff has
not filed a motion to preliminarily enjoin the recapitalization or to
expedite the proceedings. U.S. Can is proceeding with its scheduled
stockholders meeting on Friday, September 29, 2000 to approve the
recapitalization and expects to complete the transaction shortly

U.S. Can believes that this lawsuit is without merit and intends to contest
this matter vigorously.

U.S. Can is a Delaware corporation and a manufacturer of steel containers
for personal care, household, automotive, paint, industrial and specialty
products in the United States and Europe, as well as plastic containers in
the United States. U.S. Can also sells food cans in Europe through its
subsidiary May Verpackungen.

WAR VICTIMS: Head of NCVA Comments on Veterans Trust Fund Lawsuit
According to Canada NewsWire, Cliff Chadderton, Chairman of The National
Council of Veteran Associations and Chief Executive Officer of The War
Amps, was featured last Thursday night (September 21) in a report on CBC
TV's The National Magazine concerning a class-action lawsuit which alleges
that the Federal Government owes more than $1billion in interest to
disabled veterans.

Chadderton made the following points in the interview with the CBC:

  * This is a battle between the public relations firm (working with the
    law firm) and The War Amps.

  * I hope the Department of Justice brings out the intent and purpose
     of the Pension Act which mentions veterans, children, spouses and
     dependent parents. There is no provision under the Act for extended

  * Veterans organizations have been watching the situation regarding
    administration of trust funds by DVA/VAC practically since inception
    of the Act. We think it is scandalous for a Court Action to indicate
    that DVA/VAC was not doing its job in helping veterans.

  * We cannot accept criticism of the way DVA looked after the trust

  * The Legislation was weak.

  * Those who are critical are ignoring the set-off principle (see
    Callie decision).

  * One cannot compare a trust company with DVA funds under

  * Admittedly, a trust company pays interest but it also charges for

Why did the lawyers go for a Class Action? This was first raised in the
Callie case. If it had simply been the niece who was the beneficiary of
the estate, attempting to create an additional liability against the
Crown for interest, I doubt that any individual lawyer would have taken
the case on. Presumably, the idea was to engage the services of a high
powered law
firm and a PR firm because the only way the lawyers could "cash-in"
would be on a Class Action suit.

Why are we against? We realize if the case is successful it would
create a large hole in the VAC budget. This is at a time when we need
additional funds for Merchant Navy; Ferry Pilots, etc.... In other
words, should I be fighting for distant relatives or for those who
actually served, such as Ferry Pilots, Red Cross Overseas Workers,

In answer to the question as to why the case came up now, I referred to
the Auditor General's report and pointed out that NCVA had requested
that interest be paid if this was going to become an issue.

CBC interviewer said it was "ironic" that I had fought all my life for
veterans benefits but was against this one. I pointed out that I did
not see my responsibility as that to fight for "extended family" and in
fact I was fighting for veterans to conserve the money for Merchant
Navy, etc....

I pointed out that in my correspondence with the Minister, I had
suggested an appellate procedure to take care of any legitimate cases.

WELLS FARGO: Must Refund Mortgage Insurance Premiums, Jury Says
The nation's largest mortgage lender must refund mortgage insurance
premiums paid by a White Bear Township couple after they were no longer

In what could be a precedent-setting case, a Hennepin County District Court
jury decided last Wednesday September 20 that Norwest Mortgage, now Wells
Fargo Home Mortgage, violated its contract with William and Rose Kochlin by
not automatically canceling private mortgage insurance after they'd paid
their mortgage down to 80 percent of the value of the property at the time
the loan was closed.

"This wasn't a big-money trial, but it made a point," Rose Kochlin said.
She claimed Norwest showed "arrogance" in handling their request for a
premium refund after the 20 percent threshold was met. She and her husband
own a small business. "We were not surprised by the verdict nor are we
uncomfortable with it," said Wells Fargo Home Mortgage spokesman John
Ferchen in Des Moines, Iowa.

The jury awarded $640.56, plus interest from Jan. 1, 1994, in a verdict
that could affect similarly situated borrowers, perhaps thousands, said the
Kochlins' attorneys.

The lawyers did not charge the Kochlins and plan to appeal District Judge
Beryl Nord's denial of class-action status.

In announcing a verdict in the February 1997 lawsuit, Kochlin attorneys Rod
Wilson and Jim Rude said: "In the last few years, numerous lawsuits around
the country have been filed against other mortgage lenders alleging that
(the automatic payments) should have been canceled once the loan balance
reached 80 percent, but those suits have been dismissed by the courts or

Rude called the Minnesota outcome "a very important judgment." To their
knowledge, he said, it's the first time that a court has held a lender
responsible for terminating the payments once the threshold is met. "We
think there are thousands of people out there in the same situation," Rude
said. "If they all had the same size claim our clients had ... it means
that there are potential damages in the millions." (The Associated Press
State & Local Wire, September 22, 2000)

Y2K LITIGATION: IL Appeals Ct Affirms Lawsuit against IBM, Medic
An Illinois appeals court has affirmed the dismissal of Dr. Mario C. Yu's
Year 2000 class action lawsuit against IBM Corp. and Medic Computer Systems
Inc., alleging the companies knowingly sold him a non-compliant computer
system. Yu v. IBM Corp. et al., No. 1-99-2268 (Ill. App. Ct., June 30,
2000); see Software Law Bulletin, March 2000, P. 61.

Yu's lawsuit was dismissed by the Cook County Circuit Court on May 25,
1999. Yu claimed that IBM and Medic sold him a non-compliant "bundled
solutions" computer system on Dec. 10, 1996. He also alleged that written
representations made to him at the time of the purchase stated that
"investment in a +Medic System will be state-of-the-art years after your
initial installation," and that "the software is free from significant
known programming errors and defects in workmanship and material at time of

However, in November 1998 and again in December 1998, Yu says he received
notification that he would require an upgrade, at a cost of $2,410, to
ensure that his system would be Y2K-compliant. Yu then filed his
class-action lawsuit alleging breach of warranty, negligence and fraud.
After he filed his suit, Yu alleges that the defendants notified him that
his system would be fixed at no charge, and the necessary upgrade was, in
fact, installed and the problem solved. The defendants then moved to
dismiss the lawsuit as moot, and the motion was granted.

Yu appealed to the Illinois Appellate Court, asserting that numerous cases
supported his argument that offering a "free fix" after the institution of
a suit did not moot a class-action lawsuit. Moreover, the defendants'
admissions, characterized as a "high-tech version of the old
'bait-and-switch' scam" established breaches of warranties, Yu argued. He
asked the court to remand the matter for consideration of the merits of the
class certification.

The appellate court noted that nowhere in Yu's complaint did he allege
actual damages or injury. The complaint alleged only that that Y2K defect
in the Medic system may cause potential harm to his patients and to the
patients of the putative class members. These allegations merely
constituted conjecture and speculation, said the court. In the absence of
allegations that the Medic system actually malfunctioned and caused
damages, the panel ruled that the trial court properly dismissed the

The appeals court also addressed Yu's contention that the matter was not
mooted by the defendants' offer of a free fix, arguing that the fix was not
free, nor did it resolve the underlying claims of his complaint. It noted
that Yu had demanded and accepted the free upgrade in March 1999. Once the
defendants tendered the requested relief to Yu and his Medic system was
Y2K-compliant, there was no longer a case or controversy for the court to

The court agreed that it was true that a case was not mooted if a motion
for class certification was pending at the time the tender of relief was
made, but distinguished that circumstance from Yu's case. Here, the tender
of the free upgrade was made prior to the motion for class certification,
so dismissal was appropriate. In addition, since Yu was the sole
representative of the class and no remaining class members had sought to
substitute themselves as the named plaintiff, the court ruled that
dismissal of the suit and denial of class certification were proper.

Yu is represented by Arthur S. Gold of Gold, Rosenfeld & Coulson. IBM is
represented by James R. Daly, Eric P. Berlin and Beth A. O'Connor of Jones,
Day, Reavis & Pogue. Medic is represented by Norman M. Hirsch and Brent E.
Kidwell of Jenner & Block. All are located in Chicago. (Software Law
Bulletin, August 2000)

* International Cartels Enforcement Results in Explosion of Sanctions
This article, by Robert D. Paul, was published in the New York Law Journal;
Robert D. Paul is the head of White & Case LLP's worldwide antitrust group.
George L. Paul, a senior associate at the firm, assisted in the preparation
of this article.

Corporations and individuals worldwide face serious and unprecedented risks
in connection with international cartel enforcement. Under the leadership
of Joel Klein, the Antitrust Division of the U.S. Department of Justice
(DOJ), aided by its corporate leniency program and assisted by foreign
competition authorities, has led an ongoing crusade against international

This aggressive enforcement activity, both in the United States and abroad,
has resulted in an explosion of criminal sanctions against foreign and
domestic corporations and individuals. This enforcement activity shows no
signs of slowing down, and is in fact likely to increase. Unfortunately,
many corporations and individuals have only recently begun to appreciate
the serious risks associated with the current aggressive multinational
enforcement activities (such as record multimillion dollar fines,
incarceration of foreign nationals in U.S. prisons, etc.).

This article reviews some of the major risks that corporations and
individuals often encounter in this enforcement environment, and discusses
some of the major considerations and complications associated with these

                       Enforcement: Big Business

Fines and jail sentences serve to end cartel behavior, and as deterrents
for those considering cartel behavior. In addition, the DOJ has recognized
that prosecuting corporations and individuals, wherever they are located
around the globe, for such crimes as price-fixing, market division and
customer allocation, is a big business that gets noticed on Capitol Hill
and around the globe.

International cartel prosecutions often lead to record-setting fines and
lots of publicity. This is evidenced by the following fines recently paid
by corporations to the U.S. government. In FY 1999 the Antitrust Division
obtained over $ 1.1 billion in criminal fines, the vast majority of it
attributable to prosecution of international price-fixing cartels. The
fines obtained against corporations such as Archer Daniels Midland ($ 100
million, food and feed additives), SGL Carbon ($ 135 million, graphite
electrodes), Hoechst AG ($ 36 million, food preservatives), and Hoffman-La
Roche ($ 500 million, vitamins) in the last three fiscal years are many
multiples higher than the sum of all criminal fines imposed for antitrust
violations since the Sherman Act was enacted in 1890.

Individuals, both U.S. and foreign, have also been subject to significant
fines and prison terms. In the graphite electrode investigation, for
example, SGL Carbon's CEO (a German citizen living in Germany) was fined $
10 million and had to travel to the United States to appear before a
federal judge concerning the adequacy of his fine. Two prior executives of
UCAR International, Inc. are serving prison terms and paid six-figure

In the food preservatives investigations, Nippon Gohsei's marketing
director paid a fine of $ 350,000. In the vitamin investigations,
Hoffman-LaRoche's former director of worldwide marketing (a Swiss citizen
living in Switzerland) agreed to pay a $ 100,000 fine and submit to the
jurisdiction of the U.S. courts to serve a four-month prison term; the
former president of Hoffman-LaRoche's Vitamins Division, also a Swiss
citizen and resident, agreed to pay a $ 150,000 fine and serve a five-month
jail sentence. Six others from Hoffman-La Roche and BASF will serve between
three and five months in jail. Several foreign nationals who have agreed to
serve time in U.S. jails are from countries where the United States has no
extradition treaty for antitrust crimes.

DOJ officials clearly have indicated their commitment to deter
international cartels by imposing harsh sanctions. Gary Spratling, former
head of the Antitrust Division's Criminal Section, has stated:

In the last several years, the [DOJ] has made the prosecution of
international cartels that victimize American business and consumers one of
its highest priorities. This focus has led to unprecedented success in
cracking international cartels, securing the conviction of the major
conspirators and obtaining record-breaking fines.

Gary R. Spratling, International Cartel Investigations, Remarks at the 13th
Annual National Institute on White Collar Crime (March 4, 1999), at

Indeed, over the past three years, DOJ has obtained fines of U.S. $ 10
million or more against U.S.-, Dutch-, German-, Japanese-, Belgian-,
Swiss-, British- and Norwegian-based companies. In 17 of the 21 instances
in which DOJ has secured a fine of U.S. $ 10 million or greater, the
corporate defendants were foreign-based. In addition to these record fines,
the DOJ has advocated increasing the U.S. dollar amount for criminal fines
under @ 1 of the Sherman Act from U.S. $ 10,000,000 to U.S. $ 100,000,000.
See id. at 28.

As serious as the DOJ's recent enforcement activities appear, unfortunately
this is only the tip of the iceberg for international corporations and
their management, and the implications, liabilities and costs of
multi-jurisdictional cartel antitrust enforcement can be staggering.

Antitrust investigations into a given product market very frequently lead
to investigations in other related product markets - birds of a feather
(and similar feathers) tend to flock together. For decades, the DOJ has
made a very profitable science of pursuing this theory in the United States
and is now applying it internationally. This raises the stakes even higher
for multinational corporations. Very frequently, conspiracies involving
related product lines entail some of the same cartel players, but also add
new ones. Additional product lines and new co-conspirators obviously create
additional leverage for prosecution and fines for the antitrust

                        U.S. Reach Is Global

The global reach of the DOJ's enforcement activities cannot be
underestimated, as both a legal and a practical matter.

The DOJ takes the position that it is irrelevant where conduct illegal
under the U.S. antitrust law takes place - it only matters whether the
conduct has any substantial effect on U.S. commerce. While the DOJ might
take into account, in terms of intent or relative culpability, the fact
that a foreign target of an antitrust investigation considered that its
activities were legal under the law of its own nation and the countries in
which it conspired, the fact remains that the DOJ will consider such
corporations or individuals responsible for a conspiracy if there is a
substantial effect on U.S. commerce arising from the conspiracy. The DOJ is
also likely to prosecute an allocation agreement whereby a foreign
corporation with no U.S. sales, assets or personnel agrees to sell its
product only in Europe if, but for the agreement, that corporation would
have sold in the U.S.

As a practical matter, the power of the DOJ over foreign corporations and
nationals is immense. Businesses are increasingly multinational and most
have ties with the U.S., a fact of which the DOJ is taking advantage. If a
corporation has a presence in the United States, whether through direct
operations, subsidiaries, divisions, offices or assets, the DOJ may well
assert jurisdiction over it. Moreover, even if a firm has no presence in
the United States, it must take into account future potential expansion of
operations into the United States.

The implications are just as serious for individuals. At first blush, a
witness or target sought by the U.S. government who is a foreign national
and resides abroad may ask why a foreign national in a foreign land, with
no contacts in the United States, should cooperate with the U.S. in an
antitrust investigation. However, if the individual is employed by a
company that does business in the United States, the answer is often clear:
If he or she has to travel to this country for company business dealings,
then he or she must be concerned about being picked up via a border watch

Sophisticated technology has made border watches fairly easy and
inexpensive, and any number of individuals can be put on the border watch
for an indefinite period of time. Passports are checked within fractions of
seconds at both the U.S. and Canadian borders to determine whether an
individual is on a border watch. This is an important tool used by the DOJ
even where it does not have subpoena power.

Why should a foreign national residing abroad who is an ex-employee of a
corporation under investigation (sacked or retired) cooperate with the DOJ?
For one, the sacked employee is probably seeking new employment, and it
does not make the best impression to have to disclose to a potential
employer that your travel must exclude one of the most economically
desirable markets in the world. For the retired employees, it may be that
they have relatives or friends in the United States that they wish to
visit, or they simply enjoy shopping in the Big Apple.

The only individual who can truly ignore the asserted global reach of the
U.S. antitrust authorities is a foreign national who resides outside of
this country, who has not been served with a subpoena or other process in
the U.S., and is willing to avoid travel to the United States. However,
even then, circumstances can always change as to a person's need (or
perceived need) to visit the U.S. Also, a person who is a target and is
indicted by the United States must be concerned about possible extradition
to this country, although, to date, the U.S. has never extradited a person
for antitrust violations. Also, in criminal areas other than antitrust,
U.S. criminal enforcement authorities have arranged with foreign officials
to have individuals detained abroad and brought to the U.S. to appear
before a U.S. court without the formality   of extradition.

                     International Cooperation

Successful international cartel enforcement has led to increased
international cooperation. Despite the DOJ's crackdown on international
cartels, there are some limits on what the agency can accomplish in terms
of jurisdiction over foreign companies and individuals, resources and
international comity to enforce U.S. antitrust laws abroad.

Hence, we see increased cooperation among the United States, Canada and the
EU, and an increasing number of other nations, including the United
Kingdom, Mexico and Japan. The trend will clearly continue, with
information being exchanged among more and more foreign jurisdictions.

In 1998 the EU Directorate General IV established an anti-cartel unit that
has been extremely active. In 1999, Canada, the EU, Japan, Korea, Mexico
and Germany all brought anti-cartel cases. And the U.S. has recently signed
four new antitrust enforcement cooperation agreements, with Mexico, Brazil,
Japan and Israel. Such cooperation will lead to serious issues of
confidentiality and information-sharing, particularly with respect to
criminal proceedings.

One of the paradigm examples of international cooperation is simultaneous
international "dawn" raids. The graphite electrodes investigation was the
first occasion (June 1997) on which the U.S. and the EU antitrust
authorities conducted simultaneous dawn raids on several companies in the
United States and Europe to seize corporate documents and other evidence.
Since then, multi-jurisdictional orchestrated raids have become almost

Also, record fines are contagious. If the DOJ obtains a record fine as to a
global cartel, the antitrust authorities outside of the United States may
not be satisfied with anything less than a corresponding record fine.
Multinational cartel investigations can create a penalty feeding frenzy
spread over different jurisdictions. It can be anticipated that "record
fine syndrome" will spread to other jurisdictions affected by global cartel

                           Leniency Programs

Enacted in 1978 and substantially expanded in 1993, the DOJ's leniency
program provides essentially that the Department will not prosecute the
first corporation that qualifies for leniency by reporting its illegal
conduct and cooperating fully with the DOJ, regardless of whether the
defendant comes forward before or after an investigation has been
initiated. While not without risks, such as ensuing private treble damage
actions, the opportunity to escape criminal prosecution is a powerful
incentive to cooperate with authorities.

International antitrust enforcement activities have made antitrust leniency
programs all the more important. The DOJ's leniency program is quite clear
on the benefits to corporations and their employees who first bring cartel
activity to the agency's attention. This year Canada revised its immunity
program to closely resemble the U.S. leniency program, including a "first
in" requirement. The EU's leniency program, adopted in 1996, is still being
defined, and, for example, leniency is evaluated only at the end of the EU
prosecution process and contains levels of reductions in fines available to
those not first through the door.

As evidenced by the recent vitamin price-fixing fines levied in the United
States, the importance of leniency programs is at an all-time high.
Rh(tm)ne-Poulenc, the French pharmaceutical company, cooperated with the
DOJ's investigation under its corporate leniency program. According to the
agency, "the cooperation of Rh(tm)ne-Poulenc, together with information
provided by others, led directly to the charges filed... and the decision
of the defendants not to contest the charges... " Rh(tm)ne-Poulenc escaped
fines in the United States, while Hoffman-LaRoche and BASF paid over $ 700
million in fines and agreed to cooperate with the DOJ's investigation.

                       Coping with Investigations

Multinational investigations create enormous legal risks, multiple costs
and huge logistical problems for the companies involved. They will need to
worry about: the DOJ; private treble damage actions in the United States,
including antitrust class actions (normally brought by purchasers of the
products), and shareholder and securities fraud suits; Canadian antitrust
enforcement and private single-damage actions; EU civil prosecution and
private actions in Europe (although historically not on the same level as
the U.S.); possible EU member state enforcement; and investigations by
other foreign jurisdictions, e.g., Japan, Brazil, or Australia.

The difficulties for a corporation involved in multinational cartel
activity are complicated by multi-jurisdictional enforcement and the
differing methods and approaches to enforcement; the corporation must also
decide what efforts and costs (including legal and travel expenses) it will
undertake to protect and support its senior management and other employees
who may have been involved in or witnessed illegal conduct.

Particularly in criminal investigations, individuals may require separate
antitrust counsel, and their interests may differ from those of the
corporation and other employees. Thus, a corporation can be involved in a
scenario where it is being investigated by three or more separate
jurisdictions - either civilly or criminally or both - while it
simultaneously must consider its own interests and those of its
shareholders, and the interests of present and former employees. These
issues are further complicated by what corrective or punitive actions a
corporation must or should take with respect to employees, both present,
and possibly former employees still accruing benefits from the company.

Furthermore, settlement and plea bargains with the various antitrust
jurisdictions do not necessarily bring an end to this complex scenario.
Settlements will invariably be conditioned on full cooperation by the
company and employees covered by the settlement, which typically involves
full disclosure of information from the corporation, the production of
documents and the production of present (and sometimes former) employees
for interviews and testimony. Once again, all of this requires substantial
time, effort and money.


The complexities and liabilities involved in international cartel
enforcement, both from the point of view of multi-jurisdictional
governmental prosecution and private actions, can create serious financial
jeopardy for a corporation. The DOJ is not, however, totally unsympathetic
to the financial plight of companies under investigation or indictment. It
recognizes that it normally serves no purpose to eliminate a competitor
from the market, no matter how blatant that competitor's conduct may have
been. Accordingly, the DOJ is finding itself more open to financial
arrangements to maintain the financial viability of culpable corporations
in the face of potentially enormous fines, and is more willing to consider
the financial plight of individuals who are targets of such investigations.

Nonetheless, the risks associated with international cartel enforcement are
extremely real, particularly for U.S. companies. As they expand abroad and
acquire foreign companies whose management, culture and legal systems may
be very different, U.S. companies may not realise what they are buying into
in terms of legal exposure. Due diligence and indemnification take on a new
meaning in the international cartel context: it is the nature of cartel
activities to be kept secret. Even upon discovery that a newly acquired
foreign company is engaged in an international cartel, executives of a U.S.
company might decide not to disturb the cartel.

The ultimate answer for such companies is not only to ensure future
compliance with the antitrust laws of at least the major global antitrust
jurisdictions, but also to ferret out illegal conduct that may - for
cultural or other reasons - have been carried on for years and become
ingrained in the corporation and its employees. Unfair or not, corporations
operating abroad, but with ties to the United States, may have to use the
very strict U.S. antitrust legal standards as their guide. Given the trend
toward increased international antitrust enforcement, such precautions may
well reap the highest rewards in the long run. (New York Law Journal,
September 11, 2000)


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