/raid1/www/Hosts/bankrupt/CAR_Public/010508.MBX              C L A S S   A C T I O N   R E P O R T E R

               Tuesday, May 6, 2001, Vol. 3, No. 90


CHARLESTON: Advocate Says Funds Misused & Housing Authority May Be Sued
CISCO SYSTEMS: Savett Frutkin Announces Securities Lawsuit Filed in CA
CREDIT CARDS: More Suits Challenge 1% Currency Fee on Cards
DIRECT MERCHANTS: Metris Subsid. Ordered to Pay $3.2M for Bad Mailings
HOLOCAUST VICTIMS: Heat's On Polish Airline In Bid To Aid Nazi Survivors

INVESTMENT BANKS: Financial Times (London) Reports on Regulatory Probes
INVESTORS LIFE: Contests TX Suit over Unfair Insurance Sales Practices
LUCENT TECHNOLOGIES: Stock Price Fell; Investors Sued; CFO Stepped Down
PENN TREATY: Milberg Weiss Announces Securities Suit Filed in Pa.
PLANETRX.COM, INC: Shareholders Represented by Schatz & Nobel in NY Suit

PRIVACY INVASION: Not Yielding Much Payoff, L.A. Times Presents Views
PRIVACY INVASION: Notices Are Called Too Common and Too Confusing
REDIFF.COM INDIA: Cauley Geller Announces Securities Suit Filed in N.Y.
REDIFF.COM INDIA: Levy and Levy Announces Securities Suit Filed in N.Y.
REDIFF.COM INDIA: Milberg Weiss Corrects Date in Securities Suit

REDIFF.COM INDIA: Schiffrin & Barroway Announces Securities Suit in NY
SUBPRIME LENDERS: Predator Penalties Put Credit Providers at Risk
SUPERMARKETS GENERAL: Dutch Suitor Can Walk Away from Useless Offer
TOBACCO LITIGATION: Lorillard Announces Agreement in Engle Case Appeal
TOBACCO LITIGATION: PM Preserves Right to Orderly Appeal in Engle Case

U.S. GYPSUM: Reports on Impact of Asbestos Litigation
U.S. GYPSUM: Seeks to Decertify Colleges & Us in Property Damgage Case
WINSTAR COMMUNICATIONS: Rabin & Peckel Announces Securities Suit in NY


CHARLESTON: Advocate Says Funds Misused & Housing Authority May Be Sued
advocate for the poor says low-income Charleston residents, especially
blacks, have not received federal funds earmarked for their benefit.

Romona Taylor-Williams, who heads the Charleston advocacy group REDEEM,
said community development block grant money has been used
inappropriately. She also alleges that residents of public housing are
being mistreated.

"The city is not utilizing its Community Development Block Grant Funds to
change the lives of people (the funds) are meant to help," she said. "We
should be putting the (funds) into the hands of the organizations that
work with low-income residents."

For example, block grant money was used to help build the upscale Capitol
Market, she said.

"We have a small group of affluent non-minority residents who have been
planning over the years what our community is going to look like without
our involvement," Taylor-Williams said.

She wants a federal investigation into the way the city distributes
federal community development block grant money.

She's involved in an investigation by Washington, D.C.-based Lawyer's
Committee for Civil Rights that she says may lead to a class action
lawsuit against Charleston's public housing authority.

Charleston Housing officials deny allegations of mistreatment of tenants.

Mayor Jay Goldman said he thinks the city uses its federal grant money

"I think (the Mayor's Office of Community and Economic Development) has
done extremely well," he said.

City Council is scheduled to vote on a proposed a 2001 Community
Development Block Grant Budget that apportions $2,545,000 in federal

According to the U.S. Department of Housing and Urban Development, the
money is to be used to provide good housing and a suitable living
environment and to expand economic opportunities, principally for people
with low and moderate incomes.

Taylor-Williams said she's trying to reach U.S. Secretary of Housing and
Urban Development Mel Martinez to ask for an investigation into how
Charleston spends its block grant money.

Goldman said he welcomes an investigation because the city has nothing to
hide. (The Associated Press State & Local Wire, May 7, 2001)

CISCO SYSTEMS: Savett Frutkin Announces Securities Lawsuit Filed in CA
Savett Frutkin Podell & Ryan, P.C. gives notice that a class action
complaint was filed on behalf of a class of persons who purchased the
securities of Cisco Systems, Inc. (NASDAQ:CSCO) during the period between
August 10, 1999 and April 16, 2001 (the "Class Period"). The complaint
was filed in the United States District Court for the Northern District
of California located at 450 Golden Gate Ave., San Francisco, CA 94102
(No. C 01 1743). You may obtain a copy of the complaint by visiting our
web site at www.savettlaw.com.

The complaint charges Cisco and certain of its officers and directors
with violations of the Securities Exchange Act of 1934. Cisco and its
subsidiaries are engaged in selling products for networking for the
Internet. The complaint alleges that by the beginning of the Class Period
in August 1999, Internet Service Providers and competitive local
telephone companies had technology to deploy but little capital, and
Cisco used this as an opportunity to increase its sales by providing
capital financing to such companies but making such financing conditional
upon the purchase of large amounts of Cisco product. Through this alleged
manipulation and the shipment of defective or incomplete products, as
well as Cisco's failure to adequately accrue for excess and overvalued
inventory and uncollectible finance receivables, Cisco was able to report
"record" earnings each quarter during the Class Period. Defendants thus
made positive but false statements about Cisco's products, financial
results and business during the Class Period. As a result, Cisco's stock
traded as high as $82.

The complaint alleges the inflation in Cisco's stock price was essential
to its main corporate strategy, that of growth through acquisition, which
Cisco accomplished through the exchange of inflated Cisco shares. In
addition, each of the defendants had the motive and the opportunity to
perpetrate the fraudulent scheme and course of business described herein
in order to sell $595 million worth of their own Cisco shares at prices
as high as $80.24 per share, or 84% higher than the price to which Cisco
shares dropped after the end of the Class Period, as the true state of
Cisco's business and prospects began to reach the market.

After completing more than 20 major acquisitions between September 1999
and February 2001, by issuing more than 400 million shares of Cisco
stock, and selling more than 10 million shares of their personal Cisco
holdings, on February 6, 2001, Cisco announced extremely disappointing
second quarter fiscal year 2001 results, including EPS of only $0.18.
This disclosure shocked the market, causing Cisco's stock to decline to
less than $30 per share before closing at $31-1/16 per share on February
7, 2001, on record volume of more than 279 million shares, inflicting
billions of dollars of damage on plaintiff and the Class. Cisco later
admitted that third quarter fiscal year 2001 sales would be less than
$4.8 billion, or lower than any quarter since the second quarter fiscal
year 2000. Defendants' misconduct has wiped out over $400 billion in
market capitalization. On April 16, 2001, Cisco announced a $2.5 billion
write-down of inventory (or 90% of its inventory as of 1/31/01) of
components in its service business. This was one of the largest inventory
write-downs in U.S. history. Cisco stock has dropped to as low as

Contact: Savett Frutkin Podell & Ryan, P.C., Philadelphia Barbara A.
Podell Adam T. Savett Renee C. Nixon 215/923-5400 or 800/993-3233 E-mail:

CREDIT CARDS: More Suits Challenge 1% Currency Fee on Cards
A series of lawsuits against Visa International, MasterCard
International, and several large credit card issuers allege that
consumers who use their credit cards abroad are surreptitiously being
charged currency conversion fees, in violation of the Truth-in-Lending
Act and federal antitrust laws.

The New York law firm Milberg Weiss Bershad Hynes & Lerach LLP, along
with Schrag & Baum PC of Berkeley, Calif., filed the first suit last year
in U.S. District Court in the Northern District of California. Milberg
Weiss filed a similar suit in Manhattan federal court April 30, and says
it plans to continue filing in different jurisdictions to build a case
for a class action. Other lawsuits have been filed in California state
court and, by a different law firm, in Pennsylvania.

The suits describe the practice of both Visa and MasterCard, of adding a
1% fee to purchases made in foreign currencies when those purchases are
converted to dollars. The suit filed in Manhattan calls the 1% fee an
unlawful conspiracy between the two associations and member banks to fix
the fee at an "artificially high rate."

The suit also seeks relief for the defendants' banks' "failure to
disclose, as required by the Truth-in-Lending Act, the first-tier
currency conversion fee and additional second-tier fee superimposed by
the defendant banks on charges associated with general purpose and debit
cards." The institutions named as defendants in the latest suit are
Citibank NA, Bank of America Corp., Bank One Corp., J.P. Morgan Chase &
Co., Providian Financial Corp., and Household International Inc.

The 1% fee charged by the card associations, as well as additional fees
charged by banks, are typically folded into the transaction amount on the
customer's statement and are not disclosed as fees, according to the New
York lawsuit.

"If you want to issue me a credit card, you can charge $100 a year or
nothing," said Thomas F. Schrag, a partner with Schrag & Baum. "But that
is clearly disclosed, and I have the choice. But if you buy a $100 hat in
France and they convert that, it becomes $101; you never see that 1%

A Visa International spokesman said the fee has been charged to banks for
13 years, and Visa does not consider it a customer charge. He said banks
can choose whether or not to pass the fee on to customers, and whether to
add a separate fee of their own.

Mr. Schrag called Visa's claim that the fee is charged to banks, which
are free to absorb the cost or not, "a total fiction."

"There is no bank in the U.S. that does not charge the 1% fee," he said.
"I defy you to pull out your cardholder agreement and see if you do not
feel that Visa is charging it and not the bank."

A lawsuit filed Feb. 15, 2000, in California State Superior Court in
Alameda County names a plaintiff, Adam A. Schwartz, and alleges that in
the previous four years, Visa took in about $500 million in currency
conversion fees, and MasterCard reaped about $200 million.

That suit against Visa and MasterCard said, "there is no rational
relationship between the additional cost to the defendants of a foreign
card charge and the currency conversion fee defendants levy."

In response to that filing, a Visa spokesman said Visa is not alone in
charging a fee for currency conversion; hotels and independent currency
exchanges also do so, he said. (The American Banker, May 7, 2001)

DIRECT MERCHANTS: Metris Subsid. Ordered to Pay $3.2M for Bad Mailings
The Office of the Comptroller of the Currency has ordered the credit
card-issuing subsidiary of Metris Companies Inc. to pay $3.2 million in
restitution to 62,000 people who regulators say were victims of
"downselling," in which they were promised a certain type of card but
instead given one with worse terms and a hidden $79 processing fee.

The OCC said that it had not yet decided whether to charge Metris an
additional penalty for the deceptive mailings, which the regulator said
violated the Truth-in-Lending Act and Regulation Z.

The problem came to light during a routine examination of Metris' direct
mail practices. Metris, a Minnetonka, Minn., company that specializes in
issuing credit cards to subprime customers, said it had discontinued the
direct mail pieces before the OCC began its review because the pieces in
question were not very successful.

Patrick J. Fox, president of Direct Merchants Credit Card Bank, the
Metris subsidiary cited by the OCC, said the flawed direct mailings
totaled 13.5 million pieces out of about 84 million solicitations mailed
from March 1, 1999, to June 1, 2000. "We conducted these test marketing
campaigns from March 1999 to June 2000," he said in a telephone
interview. "There were a couple of different types of direct mail

According to the OCC, Metris had been "prominently marketing to consumers
one package of credit card terms but then approving those consumers only
for accounts with less favorable terms and touting the approved account
in a fashion designed to mislead the customer about the fact he or she
had been 'downsold.' "

Mr. Fox said the problem was primarily the fact that the company's direct
mail pieces mentioned a processing charge that should have been labeled a
finance charge. "If we had disclosed it as a financing charge, it would
not have been an issue," he said.

In a press release, Mr. Fox stated: "While we disagree with the OCC's
interpretation of some of the applicable regulations, we certainly accept
its authority over these matters. We have a track record of open, honest
dealings with consumers, including the 4.5 million who currently have
Direct Merchants Bank credit card accounts."

The $3.2 million is to reimburse fees and interest charged to cardholders
who got direct mail pieces that did not properly disclose fees as finance
charges either in the initial disclosure statement or in the periodic
statement that disclosed the fee, according to the consent order.

Credit card issuers have been charged with numerous blunders in marketing
and business practices in recent years, some of them the subject of class
actions and others the target of regulatory discipline. The biggest case
was the $300 million settlement agreed to by Providian Financial Corp.
and brokered by the OCC and the San Francisco district attorney's office.

Direct Merchants Credit Card Bank, which is in Scottsdale, Ariz., has
been the subject of prior complaints about its marketing practices. A
class action filed last year in Minnesota alleged that Metris engaged in
widespread deceptive practices, including imposing fees for unauthorized
fee-based services, charging late fees for payments received on time, and
promising lower interest rates than people ended up receiving for
services such as balance transfers and cash advances.

In a statement about the consent order agreed to with Direct Merchants,
the OCC described direct mail pieces that promised recipients "guaranteed
approval" for unsecured credit cards but instead gave them cards that
were partially secured by a deposit.

People who responded to the mailings were sent credit cards that charged
fees but "did not advise that the consumer had been approved only for the
card with an annual fee, the higher interest rate, and a required deposit
of $99 that would be charged against the card," according to the OCC. "In
addition, although the consumer had been downsold, the welcome package
prominently stated that the consumer had been approved for the Titanium
card and provided information about the desirability of having a Titanium

In some mailings, more than 50% of the people who responded were downsold
and required to pay a $79 processing fee, according to the OCC.

Direct Merchants Bank must refund the fees, the higher interest charged,
and over-the-limit fees for those who exceeded their limit by less than
the processing fee. All refunds are be paid with interest and will be
accompanied by a letter signed by the OCC.

The consent order also outlined a laundry list of misleading statements
the bank must be careful not to make in the future. It will not be able
to use "guaranteed," "preapproved," or similar terms in a misleading
manner, nor will it be able to downgrade a customer's credit card offer
without informing the person that he or she "has been approved for one or
more credit terms less favorable than the most favorable terms disclosed
in the original communication."

The 62,000 customers to be reimbursed suggest a response rate of 0.46% to
the 13.5 million faulty solicitations, well below the research firm BAI
Global's estimate of a 0.6% overall credit card direct mail response
rate. Mr. Fox denied that the numbers suggested such a low response rate;
he explained that not all respondents to the direct mail pieces were due
refunds. "We enjoyed response rates significantly higher than the
industry," he said. "Our competitors would love to know what our response
rates are."

Analyst Moshe Orenbuch of Credit Suisse First Boston said he found the
consent order ironic, given that it mostly applied to partially secured
card customers. "This is a portfolio that has caused them some problems
already due to their credit loss rates," he said. "The partially secured
business has caused about a 50-basis-point increase in their loss rates
in the first quarter."

Mr. Orenbuch said the agreement with the OCC should have no material
effect on earnings. Last Friday, he reiterated his "strong buy" rating on
Metris, with a $45 price target. Metris' stock closed at $29.25 a share
last Friday, down 68 cents. (The American Banker, May 7, 2001)

HOLOCAUST VICTIMS: Heat's On Polish Airline In Bid To Aid Nazi Survivors
Two state legislators urged the Port Authority to pressure the Polish
government into negotiating with Holocaust survivors by evicting LOT
Polish Airlines from Kennedy Airport.

"We're not interested in dealing with Poland if Poland cannot do the
moral and correct thing," Assemblyman Dov Hikind (D-Brooklyn) said
outside the Polish national airline's offices.

Hikind and Assemblyman Jeffrey Klein (D-Bronx) were joined by several
survivors who have filed a class-action lawsuit to get back land that was
seized in Poland during World War II.

"We are looking for justice, nothing more than that," said one of the
plaintiffs, Theodore Garb, who is outraged a restitution bill was
recently vetoed in Poland.

A PA spokesman said it had just learned of the proposal against LOT and
wanted to know more. Airline officials had no immediate comment. (The New
York Post, May 7, 2001)

INVESTMENT BANKS: Financial Times (London) Reports on Regulatory Probes
Too hot to handle: Dotcom shares sparked a public feeding frenzy. Now
regulators are investigating allegations of malpractice over how the
banks allocated them in IPOs, say Edward Luce and John Labate.

Early last year, regulators in Washington DC received an anonymous e-mail
alleging that Credit Suisse First Boston, a large investment bank, had
demanded kickbacks in return for allocating highly sought-after shares in
a company preparing to list on the public markets.

CSFB subsequently traced the sender, a hedge fund investor, who agreed to
withdraw the complaint and to pay CSFB's court costs. But lawyers at the
Securities and Exchange Commission, to whom the e-mail had origin- ally
been sent, had no intention of ignoring the complaint.

Twelve months later, Wall Street's leading investment banks, including
CSFB, Morgan Stanley, Bear Stearns and Goldman Sachs, are under siege
from three separate regulatory probes into alleged malpractice in their
allocation of shares in initial public offerings during the height of the
stock market boom.

In addition, for the first time in more than a decade, Congress will
later this month hold open hearings into concerns about the role played
by investment banks during the equity bubble years of the late 1990s and

The congressional hearing, which will be chaired by Richard Baker, a
Republican member of the House of Representatives, comes amid mounting
public concern about the collapse of equity valuations over the past
year. There is growing anger about the bankruptcy of a large number of
dotcom and high-technology companies whose share prices shot up after
they were offered to the public during the boom years.

"There are strong and legitimate areas of public concern about the role
of investment banks in the equity markets during the late 1990s and we
will explore them in the congressional hearing," said Mr Baker.

Wall Street lawyers say the regulators are likely to find evidence that
equal treatment of investors was more the exception than the rule during
the boom years. But this, in itself, is not illegal. To prove that
illegal behaviour occurred, the regulators need to demonstrate that the
investment banks allocated hot IPO shares to investors on the explicit
undertaking that the investor would channel an equally lucrative amount
of business back to them. Such quid pro quo agreements are likely to be
hard to prove beyond doubt.

"Investment banks have always channelled hot IPO shares to investors on
the understanding that they will provide an equivalent amount of business
in return," said Bill Hambrecht of W.R. Hambrecht, a bank that allocates
IPOs on a transparent auction system. "But to find explicit agreements of
such practices could prove difficult."

At the heart of the problem is the discretion investment banks have in
pricing the shares of an IPO. Generally, the banks persuade issuing
companies it is in their best interests to price the shares at between 15
and 25 per cent below the "fair value" of the stock, to whet the market's
appetite for future rights issues. Such underpricing usually guarantees
the value of the stock will rise sharply on its first day of trading.

But during the late 1990s, the frenzy of demand often led to a
multiplication in the value of shares. Indeed, in 1999, popular IPOs such
as that of VA Linux, the software company, and askjeeves.com, the
internet search engine, rose by several hundred per cent on their first
day of trading. Such price rises combined with an excess of demand for
shares over supply led to widespread malpractice among investment banks,
according to those close to the investigations.

Under SEC regulations, investment banks must declare any fees they earn
from an IPO. Generally, acknowledged fees vary between 5 and 7 per cent
of the overall value of the IPO. But, according to Jay Ritter, professor
of finance at the University of Florida, such fees would rise to double
digits if indirect earnings were declared.

"In 1999, investment banks left roughly Dollars 35bn on the table (in
underpricing of IPO shares)," said Mr Ritter. "Where did this money go?
It certainly didn't benefit the ordinary investor or the investment
bank's shareholders. The evidence suggests it went into the bonuses and
commissions of bank employees and the institutional investors who
speculated on the stock."

Lawyers at the SEC and the US attorney's office would not comment on
whether significant malpractice had been uncovered. But individuals close
to the regulators say the investigation is focusing on several elements
to the alleged kickbacks.

In conducting the investigation, regulators are questioning individuals
at the banks and are looking at paper or e-mail trails that would
establish whether there was an explicit connection between allocations
and the flow of return business. The alleged malpractice, which is also
contended by dozens of private class action suits against the banks, can
be divided into three areas.

First, it is alleged the investment bank equity syndicate desks
channelled shares to specific investors in exchange for supporting the
value of the stock in the after-market. Such "laddering" would
artificially inflate the share price and generate public demand. "Equity
syndicate desks had an explicit interest in giving the appearance of a
feeding frenzy to generate more business," said a former SEC lawyer.

Second, it is alleged the equity desks channelled generous IPO
allocations to institutional - and individual - investors in exchange for
a proportionate amount of unrelated business. This might take the form of
paying inflated commissions on other share transactions, or directing
business to other parts of the investment bank.

"Bankers would sometimes say to us: 'We want a long-term relationship
with you and we have a hot IPO coming up,' " said Hank Herman, president
of Weddell & Reed, a mutual fund. "But they would never offer an explicit
tie-in and if they had, we would have told them to buzz off."

Third, it is alleged banks won business by allocating popular IPO
tranches to potential IPO candidates, including chief executives of
start-up companies in Silicon Valley. This "spinning" was investigated by
the SEC in the mid-1990s without resulting in substantive legal action.
"It is a culture of mutual back-scratching," said Bob Spira, a parter at
broker Chapman, Spira & Carson. "The only people who lose out are the
small investors who end up holding overvalued stock in over-hyped

So where are these investigations likely to end up? Lawyers say inquiries
could take at least another nine months, during which time there could be
further suspensions of senior employees by the banks. Last month, CSFB
put on administrative leave two senior employees in the bank's Silicon
Valley office, under Frank Quattrone, probably the most prominent
investment banker in the world of high tech.

Unsurprisingly, all the leading banks that have been issued with
subpoenas are thought to be conducting internal investigations into
possible violations of internal and public regulations. "The more intense
the scrutiny of the regulators, the more likely banks will be to suspend
individuals or put them on probation where there is reasonable cause to
believe they have pushed the envelope too far," said a senior lawyer at
one of the banks.

Observers of previous regulatory investigations on Wall Street say that
it is by no means certain that criminal investigations will result from
the inquiries.

Further, there is widespread scepticism about whether regulators would
recommend criminal prosecutions to the Department of Justice in the event
that such malpractices were uncovered. How far the alleged malpractices
will be pursued may depend on President Bush's choice of new SEC

"My guess is that some banks will have to pay large penalties and there
might be a clarification or a tightening up of existing regulations,"
said Mr Ritter. "If the investigators are lucky, they'll get evidence
that proves a senior individual or a well known name was involved. But
that is much easier said than done."

         Investors Are Suing Over Millions Of Dollars

After having failed to make money in the market from initial public
offerings, some investors are taking action in US courts.

Nearly a dozen class action lawsuits have emerged in recent weeks against
leading investment banks and some of the companies they took public. Some
of the companies, including VA Linux Systems, the software company, and
CBSMarket-Watch, the financial news website, made headlines for having
stock prices that quadrupled or more in value on the first day they were
offered to the public. Those quick and early stock gains are currently
the subject of a widespread industry investigation involving the
Securities and Exchange Commission and the US Attorney.

The federal probe centres on the ways in which investment bankers
allocated shares in some of the hottest IPOs to their customers. It has
created an ideal platform for civil class-action claims as investors, and
their lawyers, try to cash in on the outcome. Law firms are eager to
represent the final class of investors against each set of defendants,
and they say that more suits are on the way.

Some individual investors claim to have lost millions of dollars on
certain high-flying IPOs.

"The damage was that people bought (IPOs) at inflated prices not knowing
it was an artificial market," said Melvyn Weiss, senior partner at New
York law firm Milberg Weiss, one of several law firms bringing multiple
class-action suits. "This (case) is a stunner because it involves the
biggest names on Wall Street. Before, these kinds of allegations usually
involved fringe players."

Whether or not the claims stand up in court depends at least in part on
the outcome of the federal investigation. Federal authorities have yet to
bring charges against any of the seven investment banks under
investigation, including Credit Suisse First Boston, Goldman Sachs and
Morgan Stanley Dean Witter.

"Our view of the suits is that they are frivolous," said Larry Kramer,
chairman and chief executive at CBS-MarketWatch (in which Pearson, the
Financial Times' parent company, holds a minority stake). "The issue at
hand is between the investment banks and their customers. This is not
information that we could or would have access to."

VA Linux declined to comment on the suits.

The lawyers point out that since the suits are civil rather than
criminal, they need prove the cases only on the basis of a preponderance
of the evidence, and not "beyond a reasonable doubt" - the stricter
standard required in criminal cases. In addition, some lawyers behind the
suits claim to be carrying on the investigations and building their own
body of evidence.

"We've developed information on our own," said Saul Roffe, partner at
Sirota & Sirota, a New York law firm that has launched 11 IPO
class-action suits. "We are comfortable with what we have and we are most
likely going to go forward regardless of what the SEC does."

The plaintiffs in the suits argue they were wronged for two main reasons.
The first is that alleged tie-in agreements between the investment banks
and their privileged clients led to artificially high prices in the
aftermarket, soon after the shares began trading publicly. The second is
that similar agreements led to higher commissions for the underwriting
banks than were reported in filed documents.

The lawsuits are testing a legal theory that the alleged agreements
worked to the detriment of small investors, who were left in the dark and
suffered considerable losses when the alleged arrangements unwound and
the share prices fell to earth.

The next move in the cases will involve the assignment of law firms in
upcoming weeks to represent each class of plaintiffs in each of the
suits. Once that happens, a clearer set of charges and complaints is
expected, with or without an outcome in the federal investigation.
(Financial Times (London), May 7, 2001)

INVESTORS LIFE: Contests TX Suit over Unfair Insurance Sales Practices
Investors Life Insurance Co. of North America Separate ACC I reports to
the SEC that the Insurance Company is a defendant in a lawsuit which was
filed in October, 1996, in Travis County, Texas. The named plaintiffs in
the suit (a husband and wife), allege that the universal life insurance
policies sold to them by INA Life Insurance Company (a company which was
merged into the Insurance Company in 1992) utilized unfair sales
practices. The named plaintiffs seek reformation of the life insurance
contracts and an unspecified amount of damages. The named plaintiffs also
seek a class action as to similarly situated individuals. No
certification of a class has been granted as of the date of this
Prospectus. The Insurance Company believes that the suit is without merit
and intends to vigorously defend this matter.

LUCENT TECHNOLOGIES: Stock Price Fell; Investors Sued; CFO Stepped Down
Lucent Technologies Inc. said its chief financial officer, Deborah
Hopkins, has stepped down nearly a year after she was hired.

Hopkins, 46, joined the company in April 2000 after 16 months as CFO at
The Boeing Co.

In a statement released Sunday, Lucent said she left ''to pursue other

Hopkins was replaced by Frank D'Amelio, 43, formerly group president of
the Murray Hill, New Jersey-based company's Switching Solutions Group.

During her tenure as CFO, Lucent's stock reached an all-time low, it
announced 10,000 job cuts and was plagued by financial losses.

In the first three months of 2001, Lucent reported dlrs 3.69 billion in
losses, its turnaround efforts hampered by bad loans for Winstar
Communications Inc.

Lucent's beleaguered stock price, which recently tumbled to an all-time
low of dlrs 5.50, closed up 45 cents last Friday at dlrs 11.15 on the New
York Stock Exchange.

Last week, two Lucent scientists and a third Chinese man working in the
United States were accused in federal court of stealing software and
selling a copy of a Lucent product in China.

Lucent, which has denied rumors that it plans to file for Chapter 11
bankruptcy protection, also faces class-action lawsuits by shareholders
who claim they lost money last year because of company wrongdoing.

Lucent lost about dlrs 80 billion in market value under former chairman
and chief executive Richard McGinn, who was fired in October.

Henry Schacht, who was reinstated as Lucent's interim chairman and chief
executive after McGinn's departure, has promised that the restructuring
program will get the company back on track.

D'Amelio began his career in 1979 at Bell Labs research unit, moving to
AT&T in 1988, the company said. He helped establish Lucent's financial
structure in its 1996 spinoff from AT&T before taking the lead position
in the Switching Solutions Group.

''He understands the photons and bits and bytes of Lucent as well as the
balance sheet,'' Lucent spokesman Bill Price said.

Janet Davidson, 44, formerly Lucent's group president of InterNetworking
Systems, will now lead the newly combined Switching Solutions and
InterNetworking Systems Group, the company announced Sunday. (AP
Worldstream, May 7, 2001)

PENN TREATY: Milberg Weiss Announces Securities Suit Filed in Pa.
The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that a
class action lawsuit was filed on April 27, 2001, on behalf of purchasers
of the securities of Penn Treaty American Corp. (NYSE: PTA) between
August 8, 2000 and March 29, 2001, inclusive.

A copy of the complaint filed in this action is available from the Court,
or can be viewed on Milberg Weiss' website at:

The action, numbered 01-CV-2094, is pending in the United States District
Court for the Eastern District of Pennsylvania, located at 2609 U.S.
Courthouse, Independence Mall West, 601 Market Street, Philadelphia, PA
19106, against defendants Penn Treaty, Irving Levit and Cameron B. Waite.
The Honorable Ronald L. Buckwalter is the Judge presiding over the case.

The complaint alleges that defendants 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 August 8, and March 29, 2001, regarding Penn Treaty's
financial condition. Specifically, throughout the Class Period,
defendants reported that Penn Treaty was experiencing tremendous growth,
that this growth was not adversely affecting Penn Treaty's financial
health and that Penn Treaty maintained adequate reserves for the
increased level of business. Unbeknownst to investors, however, these
statements were false as Penn Treaty was unable to maintain adequate
reserve levels, and the rapid growth put the Company's solvency at great
risk. Despite these concerns, Penn Treaty continued to sell policies
during its fourth quarter of 2000. Finally, on March 30, 2001, Penn
Treaty announced that, among other things, its reserves were grossly
below acceptable levels and, as a result, its independent auditors
questioned its ability to continue as a going concern. In response to
this announcement, the price of Penn Treaty common stock fell from its
closing price of $17.46 on March 29, 2001 to just $10.17 on March 30,
2001, a 42% drop on heavy trading volume of over 919,000 shares. Further
revelations of the Company's deficient reserve levels and dire financial
straits drove the stock price down to nearly $3 per share by April 2,

Contact: Milberg Weiss Bershad Hynes & Lerach LLP, New York Steven G.
Schulman or Samuel H. Rudman, 800/320-5081 penntreatycase@milbergNY.com

PLANETRX.COM, INC: Shareholders Represented by Schatz & Nobel in NY Suit
A lawsuit seeking class action status has been filed in the United States
District Court for the Southern District of New York on behalf of all
persons who purchased common stock of PlanetRx.com, Inc. (OTC Bulletin
Board: PLRX) between October 6, 1999 through March 23, 2001, inclusive
(the "Class Period").

The Complaint alleges that PlanetRx.com and four of its senior
executives, together with Goldman Sachs, BancBoston, Merrill Lynch, and
Salomon Smith Barney, violated federal securities law by filing a
misleading prospectus for the Company's initial public offering. Among
other things, it is alleged that the prospectus failed to disclose that
Goldman Sachs and the other underwriter defendants had solicited and
received excessive and undisclosed commissions from certain investors in
exchange for which the investors were allocated substantial blocks of
PlanetRx.com shares. In addition, agreements between the underwriter
defendants and their customers regarding the purchase of additional
shares of the Company in the aftermarket at pre-determined prices were
not disclosed in the prospectus. The Complaint further alleges that the
SEC is conducting an investigation into the underwriting practices in
connection with several initial public offerings, including PlanetRx.com.

Contact: Andrew M. Schatz, or Jeffrey S. Nobel, or Patrick A. Klingman,
all of Schatz & Nobel, P.C., 800-797-5499, sn06106@aol.com

PRIVACY INVASION: Not Yielding Much Payoff, L.A. Times Presents Views
Not long ago, invasion of privacy looked as if it might follow in the
legal footsteps of securities fraud, tobacco deaths and exploding tires
as a source of multimillion-dollar court judgments for consumers doing
battle with giant corporations.

Instead, consumers suing over alleged misuse of their personal
information have suffered a string of courtroom setbacks and paltry
settlements. Based on several pending out-of-court deals, the going rate
for corporate invasions of personal privacy appears to be about $50 a
pop, hardly the gold mine predicted by class-action attorneys.

DoubleClick Inc., an online ad firm, got its privacy lawsuit tossed out
of federal court. RealNetworks Inc. forced its litigants into
arbitration. Amazon.com Inc. settled for far less than consumers
originally sought.

Corporations have benefited from the fact that most privacy law protects
citizens against invasions by the government, not by business. And much
of the case law on the subject dates back 50 years, long before the
Internet and other technology gave companies new tools to collect and use
personal information about consumers.

With Congress still unsure about the need to strengthen privacy
protections, plaintiffs' attorneys are resorting to creative legal
arguments. "You have to stitch and quilt existing laws to make it work,"
said Evan Hendricks, a Washington privacy advocate. "It's not clean and
it's not easy."

A New York federal judge unraveled the latest product of such legal
stitching March 30 when she dismissed a privacy class-action suit against

Plaintiffs argued that the firm's use of cookies--small files placed on
an individual's computer to store personal data--violated criminal
wiretap and computer hacking laws. DoubleClick countered that the laws,
which were originally crafted to protect against hacking and e-mail
spying, should not apply to privacy cases.

The federal statute at the center of the case, known as the Electronic
Communications Privacy Act, has caught the attention of privacy
class-action attorneys because it calls for fines of as much as $10,000
per violation. Because Internet firms such as DoubleClick have installed
millions of cookies, damages could reach hundreds of millions of dollars.

But District Judge Naomi Buchwald refused to apply the wiretap statute to
the DoubleClick suit and dismissed the case before trial. Plaintiffs are

The ruling does not bode well for similar cases brought in federal courts
nationwide based on the same statute, including suits against Web
advertisers Avenue A Inc. and MatchLogic, a unit of Excite@Home.

"It's a mistake for plaintiffs' attorneys to believe that they've struck
gold in privacy," said Alan Westin, a privacy expert and business
consultant. "The courts have been very careful in their decisions. I
don't see any home runs for class-action attorneys so far."

Westin's research firm, Privacy & American Business, is tracking 57
consumer privacy cases in state and federal courts. He expects many to
end in settlements out of court.

Alexa Internet, a unit of Amazon.com, revealed recently that it had
agreed to pay up to $40 each to consumers who could demonstrate that
their personal information was improperly gathered by the company. Alexa
distributes software that monitors Internet surfing and then recommends
related Web sites that might be of interest to users.

But a preliminary survey found that less than 5% of the class of victims
would qualify for the payments or bother to make a claim, according to an
attorney familiar with the case.

Minneapolis-based U.S. Bank was sued in 1999 for selling customer data to
a telemarketer. Under a proposed settlement, payouts would range from $25
to $400 per customer, although most are expected to be less than $50.
Consumers have not received their checks because attorneys are wrangling
over fees, which could reduce how much consumers get.

Other companies have rebuffed privacy suits by invoking arbitration

RealNetworks, which was accused of using software that secretly collected
information about users' music-listening habits, convinced a federal
judge that its standard software licensing agreement, which users must
accept before downloading the program, required that disputes be settled
by arbitration.

Companies prefer arbitration because it is usually confidential, often
yields lower payouts and does not permit class-action status.

Now AOL Time Warner Inc., whose Netscape browser unit is battling its own
privacy suit, is hoping to use the same strategy to push its pending
cases into arbitration.

Though consumer payouts for privacy invasion have not been substantial so
far, Westin noted that class-action attorneys themselves are reaping
large fees. For example, fees in the U.S. Bank case are expected to top
$1.25 million. Plaintiffs' attorneys for Alexa users are set to receive
$1.9 million.

Class-action attorneys and privacy advocates concede that they are off to
a bumpy start. But if they have not won large monetary awards, they argue
that they are forcing businesses to improve their privacy protections.

"As a result of these cases, Web users' privacy has been increased and
additional protections have been put into place," said Adam Levitt, a
Chicago attorney representing DoubleClick, RealNetworks and Amazon

In addition, privacy advocates can point to a handful of promising legal
cases, including a recently certified class-action suit against CVS
Corp., a drugstore chain. The suit was filed by an AIDS patient after CVS
bought his local pharmacy and disseminated his prescription records to
CVS stores nationwide without his permission. CVS says it broke no laws.

Another widely watched case, based partially on invasion of privacy
claims, is in the final stages of a settlement that could yield $15
million for as many as 23,000 consumers nationwide.

The suit, filed in Texas, was spurred by Beverly Dennis, an Ohio woman
who received a consumer questionnaire from information broker Metromail,
which offered to compensate Dennis for her participation by sending free

Instead, Dennis received a threatening, sexually explicit letter from a
convicted rapist in Texas, one of many prisoners used by Metromail to
input the survey data into computers.

Dennis sued Metromail, now part of Orange-based credit bureau Experian,
for invasion of privacy, fraud and negligence.

But such a large settlement is more an exception than the rule, said her
attorney, Michael Lenett. Not only were the circumstances of the case
unusually shocking, but the prisoner's letter also provided tangible
evidence of the harm caused by the invasion of Dennis' privacy.

"Most of the injury in privacy cases is emotional and intangible," Lenett
said. "It's hard to prove actual harm."

Setting a price tag on that kind of injury remains elusive. Unless
consumers are the victims of fraud, embarrassment or identity theft, they
have difficulty showing injury from the collection and use of their
Web-surfing habits, the sale of their bank records to a telemarketing
firm or the sharing of pharmacy records with affiliated drugstores.

                 Attorneys Turn to State Laws

The lack of specific privacy invasion statutes is another stumbling block
for consumers. Most federal privacy laws were adopted in the 1970s and
restrict government use of information about citizens, not commercial
use. In most cases, enforcement rests with federal agencies, not private

As a result, many class-action attorneys are turning to state courts,
where there are more established consumer protection laws dealing with
invasion of privacy, breach of contract, deceptive business practices and
trespassing. DoubleClick still faces state lawsuits in California and

But even state laws related to invasion of privacy were written to
address such things as improperly using a celebrity's likeness and
portraying someone in a false light, not collecting or selling personal

"We urgently need laws that address the collection of data on the
Internet," said Jason Catlett, president of Junkbusters, a privacy
advocacy group. Even business might benefit by having a clearer idea of
which practices are appropriate and which cross the line.

Companies say they are highly concerned about losing the trust of
consumers over their privacy practices and worry about the negative
publicity that privacy lawsuits generate. "Companies react strongly to
public attention," said Jules Polonetsky, chief privacy officer at
DoubleClick, whose stock declined and customers dropped after its privacy

Nor is the courtroom battle over. "All it takes is one judge or one
jury," Westin said. "Most the cases are still pending. . . . No company
wants to become the poster boy" for invading privacy. (Los Angeles Times,
May 6, 2001)

PRIVACY INVASION: Notices Are Called Too Common and Too Confusing
Since last month, millions of American consumers have been getting a
little something extra tucked in with their credit card bills, bank
statements or insurance policy mailings: privacy notices. Millions of
them, and in many cases dozens per household, will arrive before July 1.

The notices are required under a new law, the Gramm-Leach-Bliley Act of
1999, which removed the Depression-era legal barriers that prevented
mergers between banks, insurance companies, brokerage firms and other
financial institutions.

Lawmakers added a provision requiring the notices because of concerns
that financial conglomerates could violate consumers' privacy by sharing
their huge new stores of sensitive customer information with other
companies for marketing purposes. Under the law, all such companies are
required to tell consumers how their personal information will be used,
and to give them an option to not have it shared with third parties at

Many consumers, if they notice the notices at all, say they are

Dick Mills, a software engineer in West Charlton, N.Y., said that he read
through the notices and found that despite banks' promises to diligently
protect his privacy, the kinds of third parties with whom they would
share his data was disturbingly broad.

One bank listed two kinds of companies: "1: Financial service providers;
2: Nonfinancial service providers." Another bank listed the categories of
companies with which it would share information, including a final
category that gave Mr. Mills pause: "Other."

"I wonder how many other creative ways banks can find to express
'everyone on the planet' while making it sound like a highly selective,
closed group," he said.

Most of the leaflets appearing in America's mailboxes describe the
companies' privacy policies and include an opt-out provision that gives
consumers up to 30 days to demand that a company not share personal
financial data with other companies. As a result, said L. Richard
Fischer, a lawyer and financial privacy expert, "The typical middle class
American adult will get between 15 and 25 notices" before July 1.

For companies like Citigroup, that means sending out tons of mail. The
company mailed more than 90 million notices to its credit card customers
alone, said Maria Mendler, a spokeswoman for the company; millions more
went to customers of the company's banking, insurance and brokerage
divisions. Ms. Mendler said, however, that since the company has been
publishing privacy brochures since 1977, the mass mailing "wasn't a
one-off project," adding, "privacy really isn't a new concept for us."

Despite the size of the effort to notify consumers, no one, it seems, is
entirely happy with the notices. Financial services companies and their
supporters in Congress say the notices cost the companies too much.
Privacy advocates say the notices provide too little.

In a Congressional hearing about consumer privacy last month, lawmakers
expressed amazement at Mr. Fisher's estimate of a billion mailed notices
and 25 separate notices per household. "That just seems like overkill, in
my opinion," said Representative Clifford Stearns, a Republican from
Florida. "Most people are worried about their car starting in the
morning. That's not going to be something they look at too carefully."

Marc Rotenberg, who heads the Electronic Privacy Information Center in
Washington, said the law does more for lawmakers than for consumers,
because requiring notices "allows Congress to say, 'We are doing
something for privacy to address the public concerns' without imposing
any significant restrictions on how companies collect and use data."

Critics say the sharing of data with third parties is not the only
concern. As previously independent companies join under the same
corporate umbrella -- the kinds of financial services conglomerates that
1999 act will help to create the sharing of data internally could be a
more potent issue.

Since sharing is not heavily regulated when it occurs among sister
companies, Mr. Rotenberg said that consumers might find that "suddenly,
the information they thought was confidential with insurers, banks and
brokers can now flow freely within those institutions with a very weak
privacy checkpoint."

Do the notices, then, do anything to help consumers safeguard their

"The honest answer is no, the notices themselves don't," Mr. Fischer
said. "I'm going to be real shocked if the average American sits down and
reads and compares 25 of them. I don't, and I've got a morbid curiosity
that leads me to do that. Hopefully, they've got more productive lives."

Tena D. Friery, the research director for the Privacy Rights
Clearinghouse, said that simply finding the notices might present a
challenge, since they could easily be ignored. "For most of us, you tear
up the envelope, pull out the bill and the rest goes in the trash." Her
group has studied hundreds of privacy notices and put information on its
Web site, www.privacyrights.org, to help consumers decipher them.

Even if a consumer finds the notice, reading it can be a problem, said
Mark Hochhauser, a consultant who helps companies make their materials
comprehensible for consumers. Mr. Hochhauser, who has provided analysis
for the Privacy Rights Clearinghouse, gives low marks to most of the
privacy notices he has encountered: the print, he said, is too small for
middle-aged eyes to read easily, and using a magnifying glass won't
necessarily bring the policies themselves into focus. "As a group, these
are some of the most complicated writings that I've seen," he said.

After subjecting a selection of privacy notices to the standard
analytical tools of his field, he said that the notices scored "somewhere
between a third- and fourth-year college reading level, which is pretty
complicated for materials intended for the general public."

Vocabulary is not the only problem, Mr. Hochhauser said. "Even if you
look up terms and define the meaning, you still might not understand the
privacy policy," he said.

This vagueness troubles Daniel J. Solove, a law professor at Seton Hall
Law School who teaches privacy law. "I read a privacy policy and think,
'Well, that sounds like a nice piece of propaganda or a commercial,' " he
said. "When you look at it, it's so cleverly drafted not to say all that
much." He said he has been collecting notices, and he read one at random:
"One of our highest priorities is information security. We regularly
review our security standards and practices to guard against unauthorized
access to information."

"What does that tell you?" he asked. "I have no idea what their specific
security provisions are. How can I make an informed decision?"

Privacy experts also question whether even those customers who want to
opt out will contact every company that sends a notice.

Mr. Fischer said the notices will ultimately help consumers, but not
directly. Even though average Americans won't read them carefully, he
said, class action lawyers will, and they will carefully compare those
promises to the practices of the companies. Financial services companies,
he said, are learning that any deviation from stated privacy policies
could form the basis for a lawsuit under state and federal consumer
protection laws. "As soon as you go out to tell people what your
information practices are, it better be true," he said. "If it's not,
it's a walking time bomb."

FROM CALIFORNIA FEDERAL BANK If you choose not to receive such
solicitations from unaffiliated third parties, you may instruct Cal Fed
not to disclose your nonpublic personal information.

FROM MARQUETTE BANK As further described below, we maintain
administrative, technical and physical safeguards designed to (1) ensure
the security and confidentiality of customer records and information, (2)
protect against anticipated threats or hazards to the security or
integrity of such information and records, and (3) protect against
unauthorized access to or use of such records or information which could
result in substantial harm or inconvenience to our customers.

FROM CAPITAL ONE We may share the information described on Page 1 under
'information we may collect' with companies in the Capital One family or
with business partners such as financial service providers (including
credit bureaus, mortgage bankers, securities broker-dealers and insurance
agents); nonfinancial companies (including retailers, online and offline
advertisers, membership list vendors, direct marketers, airlines and
publishers); companies that perform marketing services on our behalf, or
other financial institutions with which we have joint marketing
agreements; and others, such as non-profit organizations and third
parties that you direct us to share information about you.(pg. A14) (The
New York Times, May 7, 2001)

REDIFF.COM INDIA: Cauley Geller Announces Securities Suit Filed in N.Y.
The law firm of Cauley Geller Bowman & Coates, LLP announced that a class
action lawsuit has been filed in the United States District Court for the
Southern District of New York on behalf of purchasers of American
Depository Shares ("ADSs") of Rediff.com India Ltd. (Nasdaq: REDF) at, or
traceable to Rediff's June 14, 2000 initial public offering ("IPO") and
through March 22, 2001, inclusive.

The action, numbered 01-CV-3814, is pending against defendants Rediff;
Ajit Balakrishnan (Chairman of the Board of Directors), Richard Li
(Director), Nitin Gupta (President and Chief Operating Officer), Rajiv
Warrier (Chief Financial Officer); and co-lead underwriters Goldman Sachs
& Co., Credit Suisse First Boston Corp., and Robert Fleming Inc. The
Honorable Harold Baer, Jr. is the Judge presiding over the case.

The complaint alleges violations of Sections 11, 12(a)(2) and 15 of the
Securities Act of 1933. On June 14, 2000, Rediff commenced an IPO of 4.6
million of its ADSs at an offering price of $12 per share. In connection
therewith, Rediff filed a registration statement, which incorporated a
prospectus (the "Prospectus"), with the SEC. The complaint alleges that
the Prospectus was materially false and misleading because it failed to
disclose, among other things, that: (i) Rediff's advertising client base
was composed primarily of startups, while the Prospectus listed
internationally known and well-heeled companies as "representative" of
its advertising clients; (ii) prior to the IPO, Rediff had experienced
significant problems with its email software systems which hindered its
ability to attract viewers and advertisers to its Internet portal; (iii)
a significant number of advertising contracts would terminate by December
2000, and (iv) the Prospectus stated that defendant Li had graduated from
Stanford University, when he had not. On March 22, 2001, Rediff issued a
press release announcing that revenue for its fourth fiscal quarter of
2001 would decline by 30%-35% from the prior quarter's sales. Also on
March 22, 2001, it was reported that defendant Li had not graduated from
Stanford University. On May 3, 2001, the price of Rediff ADSs closed at
$3.12 -- a 74% decline from its IPO price of $12 per ADS.

Contact: Charlie Gastineau or Sue Null, both of Cauley Geller Bowman &
Coates, LLP, 888-551-9944

REDIFF.COM INDIA: Levy and Levy Announces Securities Suit Filed in N.Y.
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
Rediff.com India Ltd. American Depositary Shares (Nasdaq: REDF) between
June 14, 2000, and April 4, 2001, inclusive, against defendants Rediff,
certain of its officers and directors, and its lead underwriters.

The complaint alleges that defendants violated the federal securities
laws by issuing and selling American Depositary Shares pursuant to the
June 14, 2000 IPO without disclosing to investors that Rediff's Internet
business had been experiencing difficulty with its e-mail software and
that it was known that many significant advertising contracts would
terminate by December 2000. The complaint alleges that Rediff had stated
in the Prospectus that there were significant restrictions on the use of
funds obtained from the IPO. Rediff failed to disclose that it intended
to invest in speculative securities and falsely represented that it would
conservatively apply the funds received through the IPO when in fact it
would not. Additionally, Rediff misled purchasers to believe that Rediff
would have significant cash reserves for the foreseeable future.

No class has yet been certified in this action, and until a class is
certified an investor is not represented. If you purchased Rediff
securities during the Class Period, you have the right to be represented
by counsel and to participate in this action as a plaintiff.

If you purchased securities of Rediff during the Class Period, and wish
to participate in this action and sign up online, please visit our web
site at www.levylawfirm.com . If you would like to discuss your legal
rights and interests please contact our offices.

Contact: Stephen G. Levy, Esq., of Levy and Levy, P.C., 866-338-3674, or
fax, 866-230-8478, or LLNYCT@aol.com

REDIFF.COM INDIA: Milberg Weiss Corrects Date in Securities Suit
In BW2256-5/04, (NY-MILBERG-WEISS) Milberg Weiss Announces Class Action
Suit Against Rediff.Com India Ltd. released May 4 [which was reported in
the CAR, in the fifth graph, second line, date should read xxx no later
than June 11, 2001 (sted June 25, 2001).

The corrected sentence follows:

If you bought Rediff ADSs at or traceable to its June 14, 2000 IPO and
through March 22, 2001, you may, no later than June 11, 2001, request
that the Court appoint you as lead plaintiff in this action.

Contact: Milberg Weiss Bershad Hynes & Lerach LLP, New York Steven G.
Schulman/Samuel H. Rudman, 800/320-5081 Rediffcase@milbergNY.com

REDIFF.COM INDIA: Schiffrin & Barroway Announces Securities Suit in NY
A statement issued May 7 by the law firm of Schiffrin & Barroway, LLP
says that a class action lawsuit was filed in the United States District
Court for the Southern District of New York, located at 500 Pearl Street,
New York, NY 10007, on behalf of all purchasers of the American
Depository Shares of Rediff.com India Ltd. (Nasdaq: REDF) from the June
14, 2000 initial public offering and through March 22, 2001, inclusive
(the "Class Period").

The complaint charges Rediff and certain of its officers and directors
with issuing false and misleading statements concerning the company's
business and financial condition. On June 14, 2000, Rediff commenced an
IPO of 4.6 million of its ADSs at an offering price of $12 per share. In
connection therewith, Rediff filed a registration statement, which
incorporated a prospectus (the "Prospectus"), with the SEC.
Specifically, the complaint alleges that the Prospectus was materially
false and misleading because it failed to disclose, among other things,
that: (i) Rediff's advertising client base was composed primarily of
startups, while the Prospectus listed internationally known and
well-heeled companies as "representative" of its advertising clients;
(ii) prior to the IPO, Rediff had experienced significant problems with
its e-mail software systems which hindered its ability to attract viewers
and advertisers to its Internet portal; (iii) a significant number of
advertising contracts would terminate by December 2000, and (iv) the
Prospectus stated that defendant Li had graduated from Stanford
University, when he had not. Furthermore, on March 22, 2001, Rediff
issued a press release announcing that revenue for its fourth fiscal
quarter of 2001 would decline by 30%-35% from the prior quarter's sales.
Additionally on March 22, 2001, it was reported that defendant Li had not
graduated from Stanford University. On May 3, 2001, the price of Rediff
ADSs closed at $3.12 -- a 74% decline from its IPO price of $12 per ADS.

Contact: Marc A. Topaz, Esq. or Stuart L. Berman, Esq. of Schiffrin &
Barroway, LLP, 888-299-7706 or 610-667-7706, or info@sbclasslaw.com

SUBPRIME LENDERS: Predator Penalties Put Credit Providers at Risk
Regulators and consumer activists fighting predatory lending face a
dilemma: how to extract restitution on behalf of borrowers while ensuring
that the lenders survive long enough to pay it.

Their concern is shared, to some degree, by the financial industry. If
lenders go belly-up, credit providers -- securitizers, warehouse lenders,
etc. could find themselves liable as hungry lawyers search for solvent

The cases of two subprime lenders, Delta Financial Corp. of Woodbury,
N.Y., and First Alliance Mortgage Co. of Irvine, Calif., illustrate the

Eighteen months after the New York State Banking Department reached a
settlement with Delta, many of the borrowers that the agency said were
victims now have little chance of collecting anything.

The Banking Department, which accused Delta of violating state and
federal consumer laws, created two funds for those borrowers. One of
those funds, made up of 525,000 shares of Delta stock and dedicated to
help those in foreclosure, has been all but wiped out.

The state agency claimed the fund was worth $4.8 million on a book-value
basis, but its market value was only $3.3 million on Aug. 19, 1999, when
the deal was announced. And the shares have plunged 95% since.

Last Friday the stock was delisted from the New York Stock Exchange.

The other fund, which consisted of $7.25 million in cash, was meant to
address racial discrimination. It was supposed to provide more than 600
borrowers with monthly mortgage payment reductions of $50 or more. That
fund is still solvent, but only 250 of the borrowers have gotten relief.

The aftermath of the settlement and its bad publicity has left Delta on
the brink of a financial abyss. Not only has its stock price plummeted,
the company has lost $51.2 million in the last three quarters. This has
raised the possibility that the shelling Delta has taken from regulators,
consumer groups, and consumers themselves may have crippled the company
and created the new layer of risk for its business partners.

One civil lawsuit, for example, filed in 1998 by the New York firm of
Abbey, Gardy, & Squitieri, now Abbey, Gardy, names Bankers Trust of
California (a unit of the New York company) and Norwest Bank Minnesota
(now Wells Fargo Bank Minnesota), both of which acted as trustees on
Delta's securitizations.

As for First Alliance, it declared bankruptcy last year after a barrage
of lawsuits and unflattering media coverage. Plaintiff attorneys are
pursuing Lehman Brothers, which underwrote First Alliance's

In Delta's case, however, the wisdom of the settlement has also come into

Consumer activists say they pointed to potential pitfalls when the
settlement was made, and are now hoping for a better solution.

Many of the activists are steaming.

The Banking Department gambled that subprime lending would keep booming,
said Ira Rheingold, supervisory attorney at the Legal Assistance
Foundation of Chicago and soon to be executive director of the National
Association of Consumer Advocates.

"I can't imagine they didn't see the risk," he said. "It would have been
naive to think that after the settlement Delta's shares weren't bound to
drop precipitously."

"The issue of the stock fund entirely misses the thrust of the settlement
agreement," said Bethany Blankley, a spokeswoman for the Banking
Department. "The point is that we took every penny we could in an effort
to give as much money back as possible to the consumer," she said. "We
took all of the cash and then we did more. We wanted the borrowers to
profit from the stock, if at all possible, rather than the company. Delta
officials declined to comment on the settlement.

Sarah Ludwig, executive director of the Neighborhood Economic Development
Advocacy Project, said she sincerely hopes that the Banking Department
finds a way to provide redress to borrowers in foreclosure, but she
expressed disappointment at the current state of affairs.

"The settlement is no doubt symbolic, but once you analyze its content,
you see that it does not meet the caliber of what you would expect from a
Banking Department based in New York, the headquarters of the global
financial industry," she said. "It's disappointing that the department
did not craft a settlement that assured timely, meaningful redress to
Delta borrowers."

The $4.75 million amelioration fund was created with 525,000 Delta
shares. There were three ways the stock could have been valued, sources
close to the settlement said: with a hypothetical higher number, at book
value, or at the stock's trading price. The shares were originally valued
at their book value of $9.10, rather than at the approximately $7 the
stock market valued them at, because at the time there was reason to
believe that the price would go up, these sources said.

Nonetheless, some banking attorneys said the deal is a unique

"I'm not aware of any financial institution settlement, class-action or
regulatory, that have been settled with equity" in a company, said Todd
Poland, a partner with the law firm McCarter & English in Newark, N.J.
"Basically it's just cash."

One would expect a settlement agreement to include some features to
address the consequences of the stock price going up or down
dramatically, as is typical in equity-funded mergers, Mr. Poland said.
"If it is silent on that point, it sounds like the department bet on the
stock of the company and it turned out to be a bad bet."

However, according to a copy of the settlement, there was no provision
addressing a dropping stock price.

"It is naive to think the Banking Department was depending on the stock
price to help consumers. The criticism misses the point entirely. We took
away not only flesh and blood, but also bone."

Josh Zinner, coordinator of South Brooklyn Legal Services' Foreclosure
Prevention Project for Seniors, said the reason some of the borrowers did
not take the payment reduction offer is that to receive that benefit,
they would have had to release Delta from all legal claims based on their

"In other words, if borrowers who accept the $50 reduction go into
foreclosure on their loans -- and unfortunately, many probably will,
because many of the loans were unaffordable at the outset -- they will
have signed away their right to raise any defenses to their foreclosure,
and Delta will be able to foreclose on their homes uncontested," Mr.
Zinner said.

The Banking Department refused to say whether it was surprised at how
many borrowers did not sign up for the option. It also denied that the
low rate of signups indicated that the settlement was flawed.

Another issue the settlement raises is how to remunerate alleged victims
when they are close to or already in foreclosure. Many consumer activists
contend that though the stock fund was intended to help this type of
borrower, they are in danger of not getting anything.

The tide may be turning to some degree. Barbara Kent, the Banking
Department's director of consumer affairs and financial products, said
that the stock fund was a problem, and the department is working on some
remedy -- though she said she is not at liberty to say what that remedy

Still, some people involved with the settlement retain acrimonious
feelings about it.

"We raised serious concerns about the stock fund at the outset," Ms.
Ludwig said. "It did not take great imagination to predict then that we
would end up where we are today." (The American Banker, May 7, 2001)

SUPERMARKETS GENERAL: Dutch Suitor Can Walk Away from Useless Offer
A Dutch suitor whose plan to acquire Supermarkets General Holdings Corp.
was thwarted by the Federal Trade Commission was entitled to walk away, a
Delaware state court has ruled, and cannot be forced to make a useless
tender offer just to fulfill a settlement of a shareholder suit. Wolfson
v. Supermarkets General Holdings Corp. et al., No. 17047 (Del. Ch., Feb.
2, 2001).

The Delaware Chancery Court had previously approved a settlement that
called for suitor Ahold Acquisition Inc. to offer $2 more for the
preferred shares of Supermarkets General -- and $2 less for the common
shares -- than it had in its original tender. Nevertheless, Vice
Chancellor Jack Jacobs said that it made no sense to try to enforce that
agreement after the FTC refused to approve the union and Supermarkets
General went into bankruptcy.

Shortly after Ahold and its Dutch parent Koninkljke Ahold N.V. agreed to
acquire Supermarkets General's parent company, SMG-II Holdings Corp.,
plaintiff Elliot Wolfson filed a class action charging that the SMG and
SMG-II directors breached their duty to preferred shareholders by
agreeing to a price that allocated more of the purchase consideration to
the common shareholders. Wolfson also charged that Ahold and its parent
aided that breach.

Three months later, the parties signed an agreement in which the sole
consideration for the release of all the charges was the reallocation of
the tender offer. Although the court approved that settlement in July
1999 and Ahold announced the tender offer that was to be the first step
of a two-step merger, the tender offer was never consummated, and Ahold
exercised its "walk away" rights under the merger agreement.

Wolfson subsequently asked the court to enforce the settlement agreement
on grounds that Ahold had not used its "best efforts" to gain regulatory
approval. Ahold responded that the settlement agreement did not expressly
and unconditionally require it to consummate the tender offer and, even
if the merger agreement called for that, it was not incorporated into the
settlement agreement.

If the parties really intended to require Ahold to consummate the tender
offer no matter what happened, they could have easily spelled that out in
the settlement agreement, Vice Chancellor Jacobs noted. However, it is
not reasonable to believe that the parties would do, he added.

"Had the plaintiff sought to inject into the Settlement Agreement a term
that would require Ahold to consummate the tender offer unconditionally,
it strains credulity to argue that Ahold would have acceded to it," the
judge wrote. "To imply an unconditional duty to consummate the tender
offer under the rubric of the duty of good faith and fair dealing would
defeat -- not further -- the contracting parties' intent."

Even if, as plaintiffs contend, Ahold scuttled the merger by failing to
push for regulatory approval, that question is squarely before a New York
court in a related action, the vice chancellor explained. In refusing to
enforce the settlement agreement, he also declined to stay this matter
pending the resolution of the New York action.

Plaintiffs are represented by Michael Hanrahan, Elizabeth McGeever and
Ronald Brown Jr. of Prickett, Jones & Elliott in Wilmington, Del.

Ahold is represented by Samuel Nolen and Gregory Varallo of Richards,
Layton & Finger in Wilmington and Philip Schaeffer, Glenn Kurtz and
Sheron Korpus of White & Case in New York.

Supermarkets General and the individual defendants are represented by
Martin Tully, William Lafferty and Christopher Carlton of Morris,
Nichols, Arsht & Tunnell in Wilmington and by Alan Gopudiss, Margaret
Macfarlane, Even Mandery and Laurelyn Douglas of Shearman & Sterling in
New York. (Delaware Corporate Litigation Reporter, March 5, 2001)

TOBACCO LITIGATION: Lorillard Announces Agreement in Engle Case Appeal
Lorillard Tobacco Company on May 7 announced that it, along with two
other tobacco companies, has reached an agreement with the class in the
Engle case in Florida which will provide further assurance of the
company's ability to appeal the jury's verdict awarding punitive damages
against it. The agreement, approved by the Dade County Circuit Court in
Miami, provides additional security for the class pending the completion
of the appeals process and assures that the stay of execution, currently
in effect pursuant to a bonding statute enacted last year by the Florida
legislature, will not be lifted or limited at any point during the

"This agreement is not a settlement of any part of the Engle action, and
we continue to believe we will be successful in overturning the judgment
on appeal," said Ronald S. Milstein, General Counsel and Vice President
of Lorillard. "Although Lorillard believes that the Florida statute
currently in place provides adequate security to stay execution of the
judgment, this agreement further assures that the appeals process will
proceed without obstruction until all available avenues of appeal have
been exhausted, up to and including the U.S. Supreme Court. What we have
done today will gain us the ability to go forward with certainty in the
appeals process and provides for the surest path to that end," he added.

The Engle case is a class action brought by individual smokers against
the country's leading tobacco manufacturers in state court, Miami,
Florida. After a two-and-one-half year trial, the jury awarded a total of
$145 billion in punitive damages against the defendants in the action,
$16.25 billion of which was assessed against Lorillard. Lorillard and the
other defendants are now appealing the verdict and have each posted a
bond to secure the judgment pending this appeal. Lorillard's bond was
undertaken pursuant to a Florida state statute that limited the required
bond amount to no more than $100 million, regardless of the size of the

The agreement calls for the payment by Lorillard of $100 million into an
escrow account to be held for the benefit of the class, and released,
along with Lorillard's existing $100 million statutory bond, to the court
for the benefit of the class upon completion of the appeals process. The
court will ultimately have the right and obligation to direct where these
guaranteed funds are to be paid once the appeal is completed. Lorillard
anticipates it will take a $200 million pre-tax charge to earnings in the
2001 second quarter in relation to the agreement.

With respect to Lorillard and the other participating tobacco companies,
the Agreement further provides that the judgment is stayed, and that the
class will not pursue any collection of it or execution on it, until the
completion of all appeals, including to the United States Supreme Court.
"We believe that this arrangement is in the best long term interests of
the company, its employees and its shareholder and will allow Lorillard
to continue to operate its business without onerous restrictions or
interference," noted Mr. Milstein.

Lorillard Tobacco Company is a wholly owned subsidiary of Loews
Corporation (NYSE: LTR) based in Greensboro, North Carolina.

TOBACCO LITIGATION: PM Preserves Right to Orderly Appeal in Engle Case
Philip Morris Companies Inc. announced on May 7 that its domestic tobacco
subsidiary, Philip Morris USA, has obtained the trial court's approval of
an agreement between Philip Morris USA and the Engle class that ensures
that the Engle judgment will remain stayed throughout the company's
appeal of the Engle verdict.

The agreement was approved by the court. "Because we believe the Engle
verdict should be reversed, we want our appeal to be heard on the merits
and not face the risk that the stay of the judgment would be lifted or
would expire, and that the plaintiffs would then demand full payment of
the judgment before all appeals could be fully heard," said William S.
Ohlemeyer, vice president and associate general counsel, Philip Morris
Companies Inc. "Philip Morris USA has acted in the best interests of our
shareholders by entering into an agreement that eliminates the
uncertainty associated with Florida's bond cap legislation. While we
believe the Florida bond-cap statute is constitutional and would
withstand challenge, the agreement allows Philip Morris USA to proceed
with its appeal in an orderly manner and to focus its efforts on
reversing the case on its merits."

In July, 2000, the six-person jury in the Engle case returned a punitive
damage verdict of $74 billion against Philip Morris USA. Florida's
bond-cap statute permitted the company to post a $100 million bond to
prevent plaintiffs from demanding payment of the full amount during the
appeal. Prior to the agreement, this stay of the judgment was subject to
challenge in the trial court. The agreement preserves Philip Morris'
ability to pursue its appeal of the case in an orderly manner through the
United States Supreme Court.

As a result of the agreement and in addition to the $100 million bond it
has already posted, Philip Morris USA will put $1.2 billion into an
interest bearing escrow account. Should Philip Morris USA prevail in its
appeal of the case, both amounts would return to the company. Philip
Morris USA will also place an additional $500 million into a separate
interest bearing escrow account. If the company prevails in its appeal,
this amount would be paid to the court and the court will determine how
to allocate or distribute it consistent with the Florida Rules of Civil

Philip Morris USA has already begun its appeal of the Engle verdict.

"We are satisfied that we will now be able to concentrate our appeal on
the numerous errors that we believe occurred in the trial court without
having to be concerned about obtaining additional stays of execution
along the way," Mr. Ohlemeyer said.

To date, 31 courts across the country have refused to allow smokers'
claims against cigarette companies to proceed to trial as class actions.
In its appeal, Philip Morris USA will argue, among other things, that
under Florida law, the class should not have been certified; that under
Florida and federal constitutional principles, compensatory damages for
all plaintiffs in a trial must be determined before punitive damages may
be awarded; that punitive damages, under state law, may financially hurt
but cannot be assessed in an amount so large as to financially destroy or
bankrupt a defendant; and there can be no entry of final judgment where
"judicial labor," such as determining who is entitled to share in the
punitive damage award, remains to be done in a case.

"We believe the Engle verdict was the result of a class certification
that should never have occurred in the first place and an illegal and
unconstitutional trial plan that allowed the jury to ignore the
individual issues that must be considered before liability can be
determined in a smoker's claim against a cigarette company," Mr.
Ohlemeyer said. "We are committed to giving these issues a full and fair
hearing in the Florida appellate courts and believe this agreement will
help all involved to do just that."

U.S. GYPSUM: Reports on Impact of Asbestos Litigation
                   Personal Injury Cases

U.S. Gypsum is a defendant in approximately 96,000 Personal Injury Cases
pending at the end of the first quarter of 2001, as well as an additional
approximately 54,000 cases that have been settled but will be closed over
time. In the first quarter of 2001, 13,000 new Personal Injury Cases were
filed against U.S. Gypsum, as compared to 12,000 new filings in the first
quarter of 2000. Filings of new Personal Injury Cases totaled
approximately 53,000 claims in 2000, 48,000 claims in 1999, 80,000 claims
in 1998, and 23,500 claims in 1997. It is likely that Personal Injury
Cases will continue to be filed in substantial numbers for the
foreseeable future, although the percentage of such cases filed by
claimants with little or no physical impairment is expected to remain

U.S. Gypsum has been a member, together with fourteen other former
producers of asbestos-containing products, of the Center for Claims
Resolution (the "Center"), which assumed the handling of all Personal
Injury Cases pending against U.S. Gypsum and the other members of the
Center. Since 1988, costs of defense and settlement of Personal Injury
Cases have been shared among the members of the Center pursuant to
predetermined sharing formulae.

Effective February 1, 2001, the Center members, including U.S. Gypsum,
ended their prior settlement sharing arrangement, and each Center member,
including U.S. Gypsum, negotiates and is responsible for paying its own
settlements separately. The Center continues to perform certain claims
administration, negotiation, and defense functions for its members, the
costs of which will continue to be shared by the members. Certain other
defense costs are borne separately.

In 2000 and years prior, U.S. Gypsum and other Center members negotiated
a number of settlements with plaintiffs' firms that include agreements to
resolve over time the firms' pending claims as well as certain future
claims. With regard to future claims, these settlements typically provide
that the plaintiffs' firms will recommend to their future clients that
they defer filing, or accept nominal payments on, personal injury claims
that do not meet established disease criteria, and, with regard to those
claims meeting established disease criteria, that the future clients
accept specified amounts to settle those claims. These agreements
typically resolve claims for amounts consistent with historical per claim
settlement costs paid to the plaintiffs' firms involved.

In 2000, U.S. Gypsum closed approximately 57,000 Personal Injury Claims
at an average settlement of approximately $2,600 per case, exclusive of
defense costs, and in addition agreed to settle, in future years,
approximately 26,000 claims pending as of December 31, 2000, at
approximately $1,475 per claim.

However, as a result of escalating settlement demands in the first
quarter of 2001, U.S. Gypsum's average settlement costs for Personal
Injury Cases increased dramatically in the first quarter of 2001. Because
settlements are typically paid 60 to 90 days after the agreement is
reached, the cash impact of these increased costs will not occur until
the second quarter. The increase in settlement demands and costs per
case, as discussed below, is believed to be primarily due to the
bankruptcy filings of a number of major defendants in the Personal Injury
Cases and, to a lesser extent, the recent changes in the Center.

During 2000 and early 2001, eight defendants in the Personal Injury Cases
(including one member and one former member of the Center) filed
bankruptcy petitions. When such bankruptcies occur, litigation against
the bankrupt defendant is stayed and the bankrupt defendant typically
ceases paying asbestos claims for a period of years. Under principles of
joint and several liability applicable in most jurisdictions, plaintiffs
have the right to recover their entire damages from defendants that are
found liable and remain outside the protection of bankruptcy. In response
to the absence of the bankrupt defendants from the litigation, plaintiffs
have substantially increased their settlement demands to remaining
defendants, including U.S. Gypsum, to replace the expected payments of
now-bankrupt defendants. Because U.S. Gypsum is named in the vast
majority of pending and newly filed Personal Injury Cases, the impact of
the recent bankruptcies on U.S. Gypsum's average settlement costs in
early 2001 has been significant and U.S. Gypsum has become one of the
primary target defendants in the asbestos litigation generally. In
addition, U.S. Gypsum believes that the termination of the Center
members' sharing of settlement costs has adversely affected U.S. Gypsum's
settlement costs.

In response to these increased settlement demands, U.S. Gypsum has
recently begun to attempt to manage its asbestos liability by contesting,
rather than settling, a greater number of cases that it believes to be
non-meritorious. As a result, in the first quarter of 2001 U.S. Gypsum
agreed to settle fewer Personal Injury Cases, although at a significantly
higher cost per case, than it has in the past. It is also possible that
as a result of these events, more cases will be tried to verdict against
U.S. Gypsum than has previously been the case and that significant
adverse verdicts may occur. In December 2000, a jury in Miami, Fla.,
returned a verdict against U.S. Gypsum and in favor of two plaintiffs (a
husband and wife) in the amount of $14 million in compensatory damages,
and may award additional punitive damages. In February 2001, a jury in
Beaumont, Texas, returned a verdict against U.S. Gypsum and in favor of
22 plaintiffs in the total net amount of $16.6 million in compensatory
damages. No punitive damages were awarded. Damages awarded against U.S.
Gypsum's co-defendant, Flexitallic, Inc., totaled $18.6 million. U.S.
Gypsum has settled with four of the plaintiffs in the Beaumont case and
plans to appeal as to the remaining plaintiffs. Bonding requirements as
to unfavorable verdicts will adversely affect the Corporation's

During 2000, five members left the Center, three of which are (because of
bankruptcy or insolvency) no longer paying their share of certain
settlements agreed to by the Center while they were members. Although in
the past, plaintiffs in such cases have accepted reduced payments from
the remaining Center members consistent with their share of the agreed
settlements, some plaintiffs now argue that the remaining Center members
are required to fund the entire settlement. Although the Company believes
that there are strong defenses to such claims, there can be no assurance
as to the outcome. In other cases, the plaintiffs have certain rights to
nullify the settlement as to any unpaid portion, and it is possible that
such settlements will be jeopardized by the unwillingness of the
remaining members to fund the absent shares. Such a development would be
likely to increase U.S. Gypsum's costs of resolving the cases.

The Corporation continues to believe a legislative solution would provide
the best outcome to all parties involved in the asbestos litigation.
However, if the Corporation concludes that this approach is not likely to
be effective within an appropriate time frame, the Corporation will be
required to consider alternative ways to deal with the asbestos issue.

U.S. Gypsum's payments to defend and resolve Personal Injury Cases
totaled $162 million in 2000, $100 million in 1999, and $61 million in
1998, compared to insurance payments totaling $90 million, $85 million,
and $45.5 million, respectively. As a result of the exhaustion of most
available insurance, current and future costs will be paid largely by
U.S. Gypsum.

U.S. Gypsum's estimated cost of resolving asbestos cases is discussed
below (see "Estimated Cost").

                    Insurance Coverage

As of March 31, 2001, after deducting insurance paid out to date, U.S.
Gypsum had $81 million of insurance remaining to cover asbestos-related
costs. This insurance will be paid over a period of approximately four

U.S. Gypsum currently estimates that expenditures for Personal Injury
Cases in 2001 will total approximately $275 million, before insurance
recoveries of approximately $37 million. U.S. Gypsum's total
asbestos-related payments, net of insurance recoveries, were $62 million
in 2000 and $24 million in 1998. Insurance payments to U.S. Gypsum for
asbestos-related matters exceeded asbestos-related expenses by $6 million
for 1999 due primarily to nonrecurring reimbursement for amounts expended
in prior years.

                     Estimated Cost

The asbestos litigation involves numerous uncertainties that make it
difficult to estimate reliably U.S. Gypsum's probable liability in the
Personal Injury and Property Damage Cases.

In the Property Damage Cases, such uncertainties include, but may not be
limited to, the identification and volume of asbestos-containing products
in the buildings at issue in each case, which is often disputed; the
claimed damages associated therewith; the viability of statute of
limitations, product identification and other defenses, which varies
depending upon the facts and jurisdiction of each case; the amount for
which such cases can be resolved, which normally (but not uniformly) has
been substantially lower than the claimed damages; and the viability of
claims for punitive and other forms of multiple damages.

Uncertainties in the Personal Injury Cases include, but may not be
limited to, the number, disease and occupational characteristics, and
venue of Personal Injury Cases that are filed against U.S. Gypsum; the
age and level of physical impairment of claimants; the viability of
claims for conspiracy or punitive damages; the elimination of indemnity
sharing among Center members for future settlements and its negative
impact on U.S. Gypsum's ability to continue to resolve claims at
historical or acceptable levels; the adverse impact on U.S. Gypsum's
settlement costs of recent bankruptcies of co-defendants; the continued
solvency of other defendants and the possibility of additional
bankruptcies; the possibility of significant adverse verdicts due to
recent changes in settlement strategies, and related effects on
liquidity; the inability or refusal of former Center members to fund
their share of existing settlements and its effect on such settlement
agreements; the continued ability to negotiate settlements or develop
other mechanisms that defer or reduce claims from unimpaired claimants;
and the possibility that federal legislation addressing asbestos
litigation will be enacted. Adverse developments with respect to any of
these uncertainties could have a material impact on U.S. Gypsum's
settlement costs and could materially increase the cost above the
estimated range discussed below.

As a result, U.S. Gypsum's estimate of liability, while based upon the
information currently available, may not be an accurate prediction of
actual costs and is subject to revision as additional information becomes
available and developments occur, and U.S. Gypsum's liability may be
materially different from its current estimate.

Prior to the fourth quarter of 2000, the Corporation, in the opinion of
management, had been unable to reasonably estimate the probable cost of
resolving future asbestos claims, although the Corporation had estimated
and reserved for costs associated with then-pending claims. However, in
1999 and increasingly in 2000, the Center entered into a number of
long-term, broad-based settlements with plaintiffs' law firms that
provide, in addition to settlements of pending claims brought by such
firms, that the Center would have certain rights relating to settlement
of future claims brought by such firms. Generally, under these long-term
settlements, these plaintiffs' firms agree to recommend to their future
clients that they settle their claims against Center members consistent
with specified amounts, depending upon the application of disease

Concurrent with the increase in the number of these long-term
settlements, the Corporation undertook a detailed study of U.S. Gypsum's
current and potential future asbestos liability. This analysis was
completed in the fourth quarter of 2000. As part of this analysis, the
Corporation reviewed, among other things, historical case filings and
increasing settlement costs; the type of products sold by U.S. Gypsum and
the occupations of claimants expected to bring future asbestos-related
claims; epidemiological data concerning the incidence of past and
projected future asbestos-related diseases; trends in the propensity of
persons alleging asbestos-related disease to sue U.S. Gypsum; the adverse
effect on settlement costs of historical reductions in the number of
solvent defendants available to pay claims, including reductions in
membership of the Center; the pre-agreed settlement recommendations in,
and the continued viability of, the long-term settlement agreements
described above; and anticipated trends in recruitment by plaintiffs'
firms of non-malignant or unimpaired claimants. The study attempted to
weigh relevant variables and assess the impact of likely outcomes on
future case filings and settlement costs. In addition, the Corporation
considered future defense costs, as well as allegations that U.S. Gypsum
and the other Center members bear joint liability for the share of
certain settlement agreements that was to be paid by former members that
now have refused or are unable to pay.

In the fourth quarter of 2000 the Corporation concluded that it was
possible to provide a reasonable estimate of U.S. Gypsum's liability for
asbestos cases to be filed through 2003 as well as those currently
pending. Based on an independent study, the Corporation determined that,
although substantial uncertainly remains, it was probable that asbestos
claims currently pending against U.S. Gypsum and future asbestos claims
to be filed against it through 2003 (both property damage and personal
injury) could be resolved for an amount between $889 million and $1,281
million, including defense costs, and that within this range the most
likely estimate was $1,185 million. However, these amounts are expected
to be expended over a period extending several years beyond 2003, because
asbestos cases have historically been resolved an average of three years
after filing. In the fourth quarter of 2000, the Corporation recorded a
pretax charge of $850 million to results of operations, which, combined
with the previously existing reserve, increased U.S. Gypsum's reserve for
asbestos claims to $1,185 million. During the first quarter of 2001, U.S.
Gypsum's payments for asbestos claims and related legal fees totaled $57
million, reducing its reserve for asbestos claims to $1,128 million as of
March 31, 2001. Insurance recovery during the first quarter of 2001
amounted to $5 million, leaving U.S. Gypsum with a corresponding
receivable from insurance carriers (the estimated portion of the reserved
amount that is expected to be paid or reimbursed by insurance) of $81
million as of March 31, 2001, down from $86 million as of December 31,
2000. The Corporation will continue to evaluate from time to time the
impact of new information and trends on established reserves in future
periods. The above amounts are stated before tax benefit and are not
discounted to present value.

Although the Corporation estimates the probable liability for asbestos
claims to be filed against U.S. Gypsum through 2003 to be in the range
set forth above, it is also possible that the cost of resolving claims
will be greater than that set forth in this range, which would require an
additional charge to results of operations. Further, with regard to
asbestos claims that may be filed after 2003, the Corporation does not
believe that adequate information currently exists to allow it to
reasonably estimate the number of claims to be filed beyond 2003, or the
liability associated with such claims. However, claims will continue to
be asserted after 2003, and it is probable that prior to the end of 2003
the Corporation will be able to reasonably estimate costs associated with
claims to be filed after 2003 and will charge results of operations for
such costs.

The Corporation has attempted to evaluate and weigh all relevant factors
in estimating U.S. Gypsum's liability. However, the Corporation cautions
that liability in asbestos cases is difficult to predict and involves
many subjective judgments that can be affected by the uncertainties
identified above, as well as other presently unanticipated factors that
may arise. Many of these factors, including but not limited to
bankruptcies of co-defendants, are outside of U.S. Gypsum's control. In
particular, the long term effect of the recent bankruptcies of other
defendants (including two in 2001) and the absence of the sharing of
settlement costs with the other Center members is presently unknown;
although, as stated above, settlement demands and costs in the first
quarter 2001 have increased significantly. As a result, it is reasonably
possible that actual costs may exceed the estimate set forth above and
that this difference may be material. In addition, asbestos claims will
continue to be asserted after 2003, and it is probable that subsequent
information will allow the Corporation to estimate the costs associated
with those cases. When such events occur, additional charges to results
of operations will be necessary in amounts that cannot presently be
reasonably estimated, but which are likely to be material to the period
in which they are taken.


Recent asbestos costs and charges, combined with declines in operating
results, have adversely affected the Corporation's access to capital,
results of operations, and financial position, but the Corporation
currently believes that it will have sufficient cash flow and other
capital resources to enable it to meet its obligations and maintain its
operations for the reasonably foreseeable future. (See Item 2,
Management's Discussion and Analysis of Results of Operations and
Financial Condition.) However, the Corporation's liquidity and financial
position could be further negatively affected by numerous factors
affecting the asbestos litigation, including, but not limited to, the
continuation or acceleration of recent unfavorable trends in asbestos
settlement demands and costs, the continued possibility of additional
bankruptcies of other defendants, material liquidity demands based on
bonding requirements, and material decreases in cash flow and capital
resources. If adverse developments occur with respect to such factors,
the asbestos litigation will have a material adverse impact on the
Corporation's results, liquidity, and financial position.

U.S. GYPSUM: Seeks to Decertify Colleges & Us in Property Damgage Case
U.S. Gypsum is a defendant in ten Property Damage Cases, most of which
involve multiple buildings. One of the cases is a conditionally certified
class action comprising all colleges and universities in the United
States, which certification is presently limited to the resolution of
certain allegedly "common" liability issues (Central Wesleyan College v.
W.R. Grace & Co., et al., U.S.D.C. S.C.). No Property Damage Cases have
been filed against U.S. Gypsum since June 1998, and the Company
anticipates that, as a result of the operation of statutes of limitations
and the impact of certain other factors, few if any additional Property
Damage Cases will be filed. However, if the class action referred to
above is decertified, as sought by the Company, it is likely that some
colleges and universities will file individual Property Damage Cases
against U.S. Gypsum. It is likely that any cases that are filed will seek
substantial damages.

In total, U.S. Gypsum has settled approximately 116 Property Damage Cases
involving 246 plaintiffs, in addition to four class action settlements.
Twenty-four cases have been tried to verdict, seventeen of which were won
by U.S. Gypsum and seven of which were lost. Three of the twenty-four
cases, one won at the trial level and two lost, were settled during
appeals. In the cases lost, compensatory damage awards against U.S.
Gypsum totaled $11.5 million. Punitive damages totaling $5.5 million were
entered against U.S. Gypsum in four trials. Two of the punitive damage
awards, totaling $1.45 million, were paid, and two were settled during
the appellate process.

During the three-year period 1998 through 2000, U.S. Gypsum expended an
average of $16 million per year for the defense and resolution of
Property Damage Cases and received an average of $22 million in insurance
payments annually, much of which was reimbursement for costs expended in
prior years.

WINSTAR COMMUNICATIONS: Rabin & Peckel Announces Securities Suit in NY
The law firm of Rabin & Peckel LLP announced that a class action
complaint has been filed in the United States District Court for the
Southern District of New York on behalf of all persons or entities who
purchased Winstar Communications, Inc. securities (Nasdaq: WCII, WCIEQ)
during the period from August 2, 2000 through April 2, 2001, both dates
inclusive (the "Class Period").

The Complaint alleges that certain officers and directors of Winstar
violated the Securities Exchange Act of 1934 by making a series of
materially false and misleading statements concerning the Company's
assets, revenues, and earnings during the Class Period. In particular, it
is alleged that Winstar's reported financial results during the Class
were materially false and misleading as a result of the improper
capitalization of numerous expenses as assets, the inclusion of
uncollectible receivables in revenue, and the false earnings attributable
to these practices. Disclosure of these improper accounting practices has
resulted in both the delisting and bankruptcy of the Company. As a result
of these false and misleading statements the price of Winstar securities
were artificially inflated throughout the Class Period causing plaintiff
and the other members of the Class to suffer damages.

Contact: Rabin & Peckel LLP Rekha M. Carozza or Maurice Pesso
800/497-8076 or 212/682-1818 Fax: 212/682-1892 email@rabinlaw.com


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