/raid1/www/Hosts/bankrupt/CAR_Public/020116.mbx
C L A S S A C T I O N R E P O R T E R
Wednesday, January 16, 2002, Vol. 4, No. 10
Headlines
ARIZONA: Hair Salon Sued For Discriminating Against Black Hair Stylists
BAYER AG: Lipobay Suit To Be Expanded To Include Foreign Plaintiffs
CALIFORNIA PHYSICIANS: Court Approves $20M Consumer Suit Settlement
DAIMLERCHRYSLER CORPORATION: Court Refuses Jurisdiction Ruling in Suit
DECONNA ICE: Founder Says No Attempt To Mislead "Big Daddy" Consumers
DOLLAR GENERAL: Settles Securities and Derivative Suits In Tennessee
ECHOSTAR COMMUNICATIONS: Dealers Sue For Breach Of Contract, Fraud
FIRST AMERICAN: CA Commissioner Yet To Approve Fraud Suit Settlement
IMCLONE SYSTEMS: Weiss Yourman Lodge Securities Suit in S.D. New York
INFONET SERVICES: Milberg Weiss Commences Securities Suit in C.D. CA
LEVEL PROPANE: Customers Sue For Deceptive Marketing Practices, Fraud
LIBERTY LIFE: Asks For Review of Penalties For Discriminatory Premiums
NATIONAL FOOTBALL: Cheerleaders Sue Philadelphia Eagles For "Peeping"
OHIO: Female Prison Officers' Discrimination Suit Granted Certification
WISCONSIN: Governor May Reject Supermax Prison Suit Settlement
Securities Fraud
ACLN LTD.: Much Shelist Investigates Possible Securities Violations
AETNA INC.: Much Shelist Investigates For Possible Securities Suit
ANN TAYLOR: $3.3M Securities Fraud Suit Settlement Reached in S.D. NY
CORNING INC.: Much Shelist Investigates Possible Securities Violations
ERNST YOUNG: Appeals Court Upholds Dismissal of $800M Securities Suit
GLOBIX CORPORATION: Cohen Milstein Initiates Securities Suit in S.D. NY
GLOBIX CORPORATION: Cauley Geller Commences Securities Suit in S.D. NY
HOST REIT: Faces Several Suits Over Acquisition of Marriott Partnership
HOST REIT: Faces Suit in Illinois Over Limited Partnership Acquisition
MCKESSON CORPORATION: CA Court Dismisses Portions of Securities Suit
MCLEOD USA: Charles Piven Files Suit For Securities Violations in Iowa
RENT-A-CENTER INC.: Bernstein Liebhard Lodges Securities Suit in TX
RHYTHMS NETCONNECTIONS: Ademi O'Reilly Commences Securities Suit in CO
RHYTHMS NETCONNECTIONS: Schiffrin Barroway Files Securities Suit in CO
RHYTHMS NETCONNECTIONS: Stull Stull Lodges Securities Suit in Colorado
SALOMON SMITH: Klayman Toskes Investigates Securities Fraud Allegations
SUNBEAM CORPORATION: Former CEO to Pay $15M to Settle Securities Suit
TAKE-TWO INTERACTIVE: Much Shelist Mulls Possible Securities Fraud Suit
VAN WAGONER: Schatz Nobel Commences Securities Suit in E.D. Wisconsin
*********
ARIZONA: Hair Salon Sued For Discriminating Against Black Hair Stylists
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A Tucson, Arizona hair salon, Hair Dynasty faces a class action suit
filed by the Arizona Attorney General's Office, alleging the salon
discriminated against black workers, according to an Arizona Daily Sun
report.
The suit, filed in Pima County Superior Court on behalf of current and
former employees of the salon, alleges that the store manager caused
them to lose commissions, tips and other compensation in bypassing them
for non-black hair stylists when distributing clients among the staff.
The suit further contends that at one point, all black hair stylists
were moved to the back of the salon.
Regis Corporation, owner of Hair Dynasty, denied the charges. Company
legal counsel Bert Gross asserts, "we're denying that there was any
discrimination.it's our policy not to discriminate in any manner." He
declined to comment further on the suit, because the company had not
yet seen a copy of it. No trial date has been set for the suit.
BAYER AG: Lipobay Suit To Be Expanded To Include Foreign Plaintiffs
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Lawyer Kenneth Moll plans to expand the class action suit against
German pharmaceutical giant Bayer AG over the anti-cholesterol drug
Lipobay to include plaintiffs from Canada, German, Egypt, Australia,
France and Jamaica, according to a CBC News report.
Mr. Moll has already filed a suit on behalf of American users in the US
District Court for the Western District of Pennsylvania. He plans to
file the suit for foreign plaintiffs in the US District Court in
Minneapolis.
The suits were commenced after the Company initiated a recall last year
of the drug, also known as Cerivastatin or Baycol. The Company had
received reports of the product being related to rhabdomyolysis, a
condition that causes muscles to break down, releasing muscle cells
into the bloodstream. Lipobay was also linked to more than 50 deaths
worldwide.
Mr. Moll told CBC News that joining the American lawsuit will ensure
all people have access to higher damage settlements from US courts. He
indicated that damages could range from a few hundred dollars to as
much as $15 million for families of those who died.
The Company has countered the allegations, saying it is confident that
the court will not include foreign plaintiffs in the suit. In a
statement, the Company asserts, "Lipobay was sold at different dosage
levels, subject to different regulatory requirements, and by different
entities in different countries."
CALIFORNIA PHYSICIANS: Court Approves $20M Consumer Suit Settlement
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The San Francisco Superior Court granted final approval to a $20
million settlement of a class action against California Physicians
Service (dba Blue Shield of California) relating to the Company's
communication of the method by which it calculated co-payments and
deductibles from January 1,1987 through June 30,1992.
Judge Stuart R. Pollak's ruling paved the way for Blue Shield
subscribers and covered dependents who received treatment at hospitals
within the Blue Shield network during that time, and who incurred
percentage co-payments or deductibles under their Blue Shield plan for
the hospital treatment, to receive compensation. Judge Pollak also
approved the manner in which the funds are to be allocated among the
members of the class.
The lawsuit had no relevance to Blue Shield of California's current
operations, as the company changed its method of calculating co-
payments in 1992. The Company admitted no wrongdoing in settling the
matter.
The approval of the settlement and the approval of the plan of
allocation will each be final 60 days following the court's entry of
the orders, if no appeal is filed.
For more information, contact Alan Plutzik or Tom Epstein by Phone:
925-945-0200 or 415-229-5110
DAIMLERCHRYSLER CORPORATION: Court Refuses Jurisdiction Ruling in Suit
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The Supreme Court refused to rule on jurisdiction for class actions
accusing Daimler Chrysler Corporation filed by California car owners of
bad paint jobs on Chrysler, Dodge and Plymouth vehicles made between
1986 to 1997, according to an Associated Press report.
The Company had tried twice to get the lawsuits, originally filed in
California State Court, moved to Federal Court. The Company's lawyer
then asked the Supreme Court to decide on the rules for jurisdiction,
but the Justices refused without comment. The issue is deemed crucial
partly because of fears of forum shopping for a court known for
sympathetic jurors.
According to Company attorney Jeffrey S. Sutton, the Court must make
this issue clear, saying "One lower court after another has found
uncertainty in this area when by now there ought to be clarity."
He added, "In an age when the meek and brazen alike are calling on the
courts to resolve all manner of social, political and business
disputes, it is difficult to perceive the virtue of allowing this
uncertainty to persist."
Lawyer for the plaintiffs Scott L. Nelson said there is no reason now
to try to determine the amount involved here. The state litigation has
been dismissed, and it was never certified as class action, he told
Associated Press.
"Discovery and fact-finding concerning the value of claims in a never-
certified and now-dismissed class action would hardly constitute a
worthwhile use of federal judicial resources," Scott L. Nelson wrote
for the car owners.
The Product Liability Advisory Council had pressed the Supreme Court to
intervene and review the case. The council said corporations are facing
more class-action lawsuits in state courts.
"There is no avoiding the fact that the emerging class action
litigation crisis has resulted in part from the fact that the doors of
the federal courts are often closed to class actions, even those of
national importance," attorney John H. Beisner wrote in the council's
court filing.
The 9th US Circuit Court of Appeals had ruled against DaimlerChrysler,
which appealed.
DECONNA ICE: Founder Says No Attempt To Mislead "Big Daddy" Consumers
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Deconna Ice Cream's founder, Dan Deconna said his Company would never
deliberately hoodwink its consumers. Mr. Deconna, 83, said he is
"dismayed" to find himself defending one of his ice cream varieties,
Big Daddy, in Broward County against charges that it masqueraded as a
reduced-fat product.
Big Daddy ice cream became popular among dieters after its label
proclaimed that it had 100 calories and two grams of fat for a 12-ounce
serving, a claim that none of its competitors could come remotely close
to. In June 2001, however, The South Florida Sun-Sentinel had the ice
cream sent to a laboratory, amidst its growing popularity discovered
the product actually had triple what was claimed.
The Company later said they committed a "labeling error", the product
should have read "3 servings" instead of only one. Deconna Ice Cream
re-labeled the product in June to show the strawberry, vanilla, and
chocolate flavors of ice cream has 94 calories and two grams of fat for
a 4-ounce serving. Big Daddy planned to make amends with customers
through a coupon offer.
When dieter Mardi Cohen read the report, she filed a class action in
Broward County court. The court has granted class action status to the
suit. Ms. Cohen asserts "Everyone in Weight Watchers was eating it.We
all felt so betrayed when we learned the truth."
She added "I thought I was eating the equivalent of an apple.but I was
really eating the equivalent of a Dunkin' Donuts chocolate-covered
doughnut. I was sabotaging my own diet."
The Company contracts with another company, Highland Roberts of
Norfolk, Neb., to manufacture and label Big Daddy ice cream. Mr.
DeConna said the Company never checked the label.
Mr. DeConna believes strongly that although Big Daddy was misleadingly
mislabeled it was still a good product. The Florida Department of
Agriculture required DeConna Ice Cream to send in a list of steps
correcting the product and the time period it would take. The Company
immediately complied, so it wasn't fined.
DOLLAR GENERAL: Settles Securities and Derivative Suits In Tennessee
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Dollar General Corporation reached an agreement to settle more than 20
securities and derivative class actions pending in the various federal
courts against the Company and certain of its current and former
officers and directors, asserting claims under the federal securities
laws.
These cases were consolidated in Federal Court in Tennessee, and the
court appointed the Florida State Board of Administration and the
Teachers' Retirement System of Louisiana as lead plaintiffs under the
Private Securities Litigation Reform Act of 1995.
Under the agreement, Dollar General has agreed to make a cash payment
to the class and to implement certain enhancements to its corporate
governance and internal control procedures. The settlement agreement
resolves all outstanding shareholder claims brought in the class action
and is subject to confirmatory discovery by the plaintiffs and to court
approval.
As a result of the execution of the settlement agreement, the Company
has recognized an expense of $162.0 million in the fourth quarter of
2000. The Company expects to receive from its insurers approximately
$4.5 million in respect of the class action settlement, which amount
has not been accrued in its financial statements.
A number of purported shareholder derivative lawsuits have also been
filed in Tennessee state court and US federal courts against certain of
the Company's current and former directors and officers and Deloitte &
Touche LLP, Dollar General's former independent accountant.
The Company and the individual defendants have reached a settlement
agreement with counsel to Michael Dixon, Jr., Carolinas Electrical
Workers Retirement Fund and Thomas Dewey, the lead plaintiffs in the
lead Tennessee state shareholder derivative action. The agreement
includes a payment to Dollar General from a portion of the proceeds of
the Company's director and officer liability insurance policies as well
as certain corporate governance and internal control enhancements.
Pursuant to the terms of such agreement, the Company anticipates that
all other shareholder derivative lawsuits, which are currently stayed,
will be dismissed with prejudice by the courts in which they are
pending. Such agreement is subject to confirmatory discovery and to
court approval.
If the settlement agreement is approved, Dollar General expects that it
will result in a net payment to the Company, after attorneys' fees
payable to the plaintiffs' counsel, of approximately $24.8 million,
which amount has not been accrued in the Company's financial
statements.
ECHOSTAR COMMUNICATIONS: Dealers Sue For Breach Of Contract, Fraud
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Echostar Communications faces two class actions filed by its retailers
on behalf of persons, primarily retail dealers, who are alleged
signatories to certain retailer agreements with Echostar Satellite
Corporation in the United States District Court in Texas.
In separate lawsuits, Company retail dealers Air Communication &
Satellite, Inc. and John DeJong charged the Company with breach of
contract and breach of the covenant of good faith and fair dealing.
The plaintiffs are requesting the Court to:
(1) declare certain provisions of the alleged agreements invalid
and unenforceable;
(2) declare that certain unilateral changes to the agreements are
invalid and unenforceable; and
(3) award damages for lost commissions and payments, charge backs,
and other compensation.
The Company stated in a regulatory filing that it intends to vigorously
defend the lawsuit and to assert a variety of counterclaims. It also
said that it is too early to make an assessment of the probable
outcome of the litigation or to determine the extent of any potential
liability or damages.
FIRST AMERICAN: CA Commissioner Yet To Approve Fraud Suit Settlement
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First American Financial Corporation is awaiting the new California
Insurance Commissioner's approval on the settlement of a class action
pending in Sacramento State Court, after the resignation of Chuck
Quackenbush, the commissioner who approved the initial agreement.
The suit was commenced in May 1999 by the Controller and Insurance
Commissioner of the State of California, on behalf of all title and
escrow companies doing business in California from 1970 to the present,
including certain of the Company's subsidiaries.
The suit alleges that the defendants:
(1) failed to give unclaimed property to the State of California
on a timely basis;
(2) charged California home buyers and other escrow customers fees
for services that were never performed or which cost less than
the amount charged; and
(3) devised and carried out schemes, known as earnings credits,
with financial institutions to receive interest on escrow
funds deposited by defendants with financial institutions in
demand deposits.
In February 2000, First American entered into an administrative
settlement with the California Department of Insurance, known as the
DOI. Under the settlement, the DOI released them from any further claim
of liability as to its receipt of earnings credits or any alleged
overcharges for miscellaneous escrow fee items, such as courier or wire
service fees. The DOI further agreed to direct the California attorney
general to dismiss the insurance commissioner as a plaintiff from the
lawsuit.
In the settlement the Company was directed by the Insurance
Commissioner to make a contribution to a consumer education fund and
accept a new regulation in the form drafted by the DOI, whereby
earnings credit programs will be authorized and regulated by the DOI
and rate filings will be required for escrow fees.
However, in July 2000, Commissioner Chuck Quackenbush, who approved the
administrative settlement, resigned. The new Insurance Commissioner has
not yet indicated whether he will re-examine the previously agreed upon
administrative settlement. First American stated in a filing with the
Securities and Exchange Commission, "We do not believe our settlement
will be affected."
Subsequent to the filing of this lawsuit, Company subsidiary First
American Title Insurance Company was named and served as a defendant in
two private class actions in California courts. The allegations in
those actions include some, but not all, of the allegations contained
in the lawsuit discussed above.
One of the private class actions has been dismissed. The remaining
private class action was stayed by court order pending settlement
negotiations relating to the class action filed by the California
controller and insurance commissioner. The stay was recently lifted.
IMCLONE SYSTEMS: Weiss Yourman Lodge Securities Suit in S.D. New York
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Weiss and Yourman filed a securities class action against ImClone
Systems, Inc. (NASDAQ:IMCL) and certain of its officers and directors
was commenced in the United States District Court for the Southern
District of New York, on behalf of purchasers of Company securities
between May 12, 2001 and January 9, 2002.
The suit charges the defendants with violations of the Securities
Exchange Act of 1934 and alleges that defendants caused damages to the
plaintiff and the class by issuing materially misleading statements
which artificially inflated the stock and enabled insiders to reap
approximately $145 million in proceeds by selling their stock at such
inflated prices.
For more information, contact Mark D. Smilow, David C. Katz or James E.
Tullman by Mail: The French Building, 551 Fifth Avenue, Suite 1600, New
York, NY 10176 by Phone: 888-593-4771 or 212-682-3025 or by E-mail:
info@wynyc.com
INFONET SERVICES: Milberg Weiss Commences Securities Suit in C.D. CA
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Milberg Weiss Bershad Hynes and Lerach LLP initiated a securities class
action in the United States District Court for the Central District of
California on behalf of purchasers of Infonet Services Corporation
(NYSE:IN) securities during the period between December 16, 1999 and
July 31, 2001, including those who purchased their shares pursuant to
the December 16, 1999 initial public offering (IPO).
The suit charges the Company and certain of its officers and directors
with violations of the Securities Exchange Act of 1934 and alleges that
from December 16, 1999 through July 31, 2001, the Company saw its stock
price soar from its IPO price of $21 per share to as high as $32.93 per
share as it misrepresented the true status of its AT&T-Unisource
Communications Services N.V. (AUCS) business, concealing the fact that:
(1) the Company would be required to migrate the customer before
offering new services, which required, among other things,
reconnecting each customer to a new platform, a time-
consuming, complicated and expensive process;
(2) the complexity of migration (from company X to Infonet) caused
massive disruption to the Company's ability to "upsell" its
new products; and
(3) the Company's AUCS business required massive upgrades, both in
its financial data and billing systems, preventing the Company
from billing its customers on a monthly basis and delaying the
recognition of material revenue for 1-1/2 years until the
upgrades could be completed.
The individual defendants knew that disclosure of these problems with
its AUCS business would devastate Infonet's chances of going public
which allowed the Company to raise $1.1 billion in its December 16,
1999 IPO. Top Company executives were determined to conceal the news of
the problems associated with its AUCS business.
As a result of the defendants' false statements/omissions, Company
stock traded at inflated levels during the class period, increasing to
as high as $32.93 on March 3, 2000. Company shares began to fall as
defendants partially revealed the status of its AUCS business, tumbling
to $3.55 on August 1, 2001.
For more information, contact William Lerach by Phone: 800-449-4900 by
E-mail: wsl@milberg.com or visit the firm's Website:
http://www.milberg.com
LEVEL PROPANE: Customers Sue For Deceptive Marketing Practices, Fraud
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Propane gas supplier, Level Propane Gases faces a class action lawsuit
filed by residential customers alleging the propane gas supplier
violated the Equal Credit Opportunity Act, the Fair Credit Reporting
Act and the Ohio Consumer Sales Practices Act as a result of false,
misleading and deceptive contracts and marketing practices. The suit
also asserts common-law claims against the Company based on theories of
unconscionability, fraud and deceit. The class consists of thousands of
Ohio residential consumers who were customers of the Company at any
time since September 1, 1994.
Specifically, the action alleges that Level Propane promises to sell
propane to consumers at a certain price, usually described in the
contract as a "guaranteed price" or "firm price," which is then
increased in subsequent propane orders.
In one instance, a customer leased a tank from the Company and was
guaranteed a per gallon price of $1.40 firm for one year, the company
refilled the tank several months later at a rate of $2.40 per gallon.
In another case, a consumer was charged more than double the guaranteed
price in the contract. Level Propane later informed the consumer that
the guaranteed price had been dependent on its ability to obtain
propane at what it deemed the lowest possible price.
LIBERTY LIFE: Asks For Review of Penalties For Discriminatory Premiums
----------------------------------------------------------------------
Liberty Life Insurance Company has asked the state of South Carolina to
review the suspension of the Company's license for one year and the
imposition of a $2 million fine for allegedly charging black customers
more than white ones for similar policies. Company attorney Frank
Ellerbe told The State (Columbia, SC), "We're looking forward to the
opportunity to respond to the department's charges."
The Company is also facing a class action, claiming that 120,000 of the
black Liberty Life policyholders, living in South Carolina and other
states, have been overcharged for racially discriminatory reasons.
The Company's request has been forwarded to the Administrative Law
Judge Division, said Douglas Concannon, Associate General Counsel for
the State Insurance Department. The move on Liberty Life's part
automatically stays the penalties levied against the Company, Mr.
Concannon said.
State Insurance Director Ernst Csiszar said that tens of thousands of
the Company's black customers paid up to one-third more for burial
insurance policies than whites. Liberty Life said it charged black
customers more for insurance only because blacks had shorter life
expectancies than whites when the policies were sold years ago.
A hearing before an administrative law judge is a good forum for the
Company to explain and discuss the issues, Ellerbe said. "We think a
judge will agree with us that the Department's conclusions are wrong,"
he added. The Administrative Law Judge Division, an autonomous
quasi-judicial agency, provides a neutral forum for hearings on actions
or proposed actions of some state agencies.
NATIONAL FOOTBALL: Cheerleaders Sue Philadelphia Eagles For "Peeping"
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Forty-four cheerleaders formerly employed by the Philadelphia Eagles
team of the National Football League have filed a legal action claiming
that members of opposing teams spied on the cheerleaders while the
women changed and showered in the cheerleaders' locker room at the
Eagles' football stadium (Veterans Stadium).
The action, which is filed against 29 of the other 30 NFL teams (all
but the Jacksonville Jaguars), alleges the following:
(1) invasion of privacy,
(2) trespass,
(3) intentional infliction of emotional distress,
(4) gross negligence,
(5) failure to supervise,
(6) conspiracy and
(7) outrageous conduct
Also named as defendants are 500 "John Does" (persons whose names are
as yet unknown to the plaintiffs) meant to represent the specific
players, coaches, owners and other team personnel who engaged in the
spying.
The cheerleaders allege that, since the early 1980's, members of other
NFL teams playing in Veterans Stadium observed the cheerleaders' locker
room and shower facility through holes in doors and door jambs, holes
scraped through painted-over windows, and gaps between double doors.
They claimed that the members of the other teams in fact created some
of these conditions that permitted the players' peeping.
According to the action, the "ability to peer into the cheerleaders"
locker room, and to view them in states of undress, was considered one
of the special `perks' of playing the Eagles. "It was common knowledge
among virtually the entire National Football League-while at the same
time a carefully guarded secret to be known only to the players and
other team employees of the (visiting) teams," the suit asserts.
OHIO: Female Prison Officers' Discrimination Suit Granted Certification
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An Ohio trial court has granted class certification to a lawsuit
brought against the Ohio Department of Rehabilitation and Correction by
female corrections officers alleging violation of Title VII as a result
of employment discrimination.
The suit was filed on behalf of female employees of the Belmont
Correctional Institute in St. Clairesville, Ohio, who are members of
the OCSEA union and who worked at Belmont at any time since July 7,
1995.
The suit alleges that there is a general pattern of discrimination
against women at Belmont that results in women being denied promotions,
leave and overtime while given undesirable employment positions. The
suit claims that class members have been held to different standards
and given different duties than male corrections officers at the same
facility, resulting in the promotion of less qualified male employees
and the different treatment of male and female officers who commit
infractions.
In addition, female officers maintain that Belmont uses "temporary
positions" to avoid posting requirements and that these temporary
positions eventually become permanent with male officers occupying
them. The suit alleges that this pattern of discrimination is
demonstrated by the fact that 17 of 18 senior positions at Belmont are
occupied by male corrections officers.
A trial date has been set for April 8, 2002.
WISCONSIN: Governor May Reject Supermax Prison Suit Settlement
--------------------------------------------------------------
Governor Scott McCallum might reject the proposed settlement of an
inmate lawsuit against Wisconsin's super-maximum-security prison at
Boscobel, according to a recent Associated Press report. The
Governor's administration has been criticized by some lawmakers who
claim the tentative settlement would coddle criminals serving time at
the prison built to house the state's most violent and incorrigible
offenders. The prison, completed in 1999, has a 500-inmate capacity.
The Republican Governor, interviewed by the Milwaukee Journal Sentinel,
said he might reject the deal and fight the lawsuit in Federal Court.
The inmates who filed the class action claim their solitary confinement
for virtually 24 hours each day is cruel and unusual punishment, in
violation of the Eighth Amendment of the US Constitution.
As part of the tentative settlement, several changes would be made,
including setting specific cell temperatures, expanding the amount of
time prisoners spend out of their cells and offering free, round-trip
bus rides for visits by relatives of prisoners. The prison would also
be renamed because inmates' lawyers contend the term "Supermax" sends
the wrong message.
The settlement would require approval of US District Judge Barbara
Crabb of Madison, who has scheduled the lawsuit for trial in July.
Last fall, Judge Crabb ruled that Supermax was no place for the
seriously mentally ill. She had five inmates removed and ordered
independent exams of others who appeared to fit that category.
The Governor, who initially expressed support for the agreement, told
the newspaper that he might kill it, especially if the terms mean
spending more tax dollars. He asserted changing the prison's name
isn't worth a court battle, but the busing proposal is. He adds, "The
name, we were going to change it anyway, and we had already started
that process.That's not worth a fight but I'm not going to spend more
money on busing to coddle prisoners."
Representative Scott Walker, R-Wauwatosa, one of the loudest critics of
the proposed settlement, has scheduled a hearing on the deal by his
Assembly Correction and Courts Committee.
Ed Garvey, a lawyer for the inmates, said little would be gained if the
Governor decides to reject the tentative settlement. "If they wanted
to just walk away from the whole thing and go forward to trial, I guess
there's nothing we could do to stop them from doing that," Mr. Garvey
said, adding that Wisconsin would face an "enormous cost" of fighting
the suit.
Securities Fraud
ACLN LTD.: Much Shelist Investigates Possible Securities Violations
-------------------------------------------------------------------
Much Shelist Freed Denenberg Ament & Rubenstein PC is investigating
ACLN, Ltd. (NYSE:ASW) and:
(1) Joseph Bisschops,
(2) Aldo Labiad, and
(3) Alex De Ridder
for possible violations of Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, by issuing
materially false and misleading statements to the market.
Beginning in June 29, 2000, and continuing through December 20, 2001,
the defendants issued multiple press releases and filed quarterly and
annual reports with the SEC that highlighted the Company's growth and
strong financial performance.
It is believed that these statements were materially false and
misleading because they failed to describe the Company's true state of
financial affairs. Specifically, the defendants:
(1) failed to disclose certain self-dealing transactions between
Mr. Bisschops and certain private entities he controlled;
(2) overstated the Company's assets by listing a shipping vessel,
the Sea Atef, as a Company asset when, in fact, the Company
did not own the Sea Atef;
(3) understated the Company's selling, general and administrative
expenses, causing its net income to be overstated; and
(4) violated generally accepted accounting principles and the
Company's own stated policy with regard to revenue recognition
by reporting revenue for the cars that it sold as soon as the
ship carrying the cars left the port and not when the shipment
was completed.
The truth about these statements finally came to light on December 20,
2001 in an article published by Herb Greenberg on TheStreet.com. In
response to the questions raised in Greenberg's article, shares of the
Company plunged 64%, falling $16.71 to close at $9.40 per share.
For more details, contact Carol V. Gilden by Phone : 800-470-6824 or by
E-mail: cgilden@muchlaw.com
AETNA INC.: Much Shelist Investigates For Possible Securities Suit
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Much Shelist Freed Denenberg Ament and Rubinstein PC is investigating
potential securities claims against Aetna, Inc. (NYSE:AET) and officers
William H. Donaldson, Chairman of the Board, and John W. Rowe, Chief
Executive Officer, President and Director.
The firm is investigating allegations of violations of 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 December 1, 2000 and April 9,
2001.
It is believed that during the class period, Aetna, Mr. Donaldson and
Mr. Rowe announced that they had reached a definitive agreement to sell
the Company's financial services and international businesses to ING
Groep N.V. and, in an integrated transaction, that the Company planned
to spin-off its domestic healthcare and large case pensions businesses
in the form of New Aetna, to its shareholders.
In order to successfully spin-off New Aetna, its domestic healthcare
and large case pensions businesses, the Company and the two directors
represented that New Aetna was successfully implementing operative and
strategic initiatives to improve efficiency and decrease medical costs.
These statements were allegedly false and misleading because medical
costs were in fact escalating due to, among other factors, overpaying
and double-paying claims and inadequate risk-enrollment pricing.
In April 2001, before the market opened, Aetna announced that its first
quarter of 2001 financial results would be significantly lower than
previous estimates due to higher utilization of healthcare services in
the fourth quarter 2000 and the first quarter 2001. The Company
announced that it expected to record in the first quarter approximately
$90 million before tax of additional medical costs related to services
performed in prior periods, primarily the fourth quarter 2000. The
remainder reflected a fourth quarter commercial HMO medical cost trend,
based on current information, of approximately 13%, compared to the 12%
that was estimated previously.
As a result of this announcement, the price of the Company's common
stock plunged from $36.15 on April 9, 2001 to a low of $28.75 on April
10, 2001, a decrease of over 20% on heavy trading volume.
For more information, contact Carol V. Gilden by Phone: 800-470-6824 or
by E-mail: cgilden@muchlaw.com
ANN TAYLOR: $3.3M Securities Fraud Suit Settlement Reached in S.D. NY
---------------------------------------------------------------------
Ann Taylor Stores Corporation has agreed to settle for $3.3 million the
securities class action pending in the United States District Court for
the Southern District of New York against the Company, its wholly-owned
subsidiary AnnTaylor, Inc., and certain former officers and directors,
alleging federal securities violations.
The complaint alleged causes of action under Section 10(b) and Section
20(a) of the Securities Exchange Act of 1934, as amended, asserting
that the defendants made false and misleading statements about the
Company and AnnTaylor, Inc. during the period commencing February 3,
1994 through May 4, 1995.
The Company admits no wrongdoing, but pursued the settlement to avoid
the significant legal fees, other expenses and management time
that would have to be devoted to continue to vigorously defend the suit
in the courts. Finalization of the settlement is subject to Court
approval.
CORNING INC.: Much Shelist Investigates Possible Securities Violations
----------------------------------------------------------------------
Much Shelist Freed Denenberg Ament & Rubenstein, P.C. is investigating
Corning, Inc. (NYSE:GLW) for possible violations of Sections 11,
12(a)(2) and 15 of the Securities Act of 1933 by issuing a materially
false and misleading registration statement and prospectus, dated
November 3, 2000, in connection with its offering of common stock and
debentures in November 2000.
Specifically, the firm is investigating whether the prospectus was
materially false and misleading, among other reasons, because:
(1) it stated that demand for the Company's products was robust;
(2) it omitted to disclose that the Company was amassing hundreds
of millions of dollars of obsolete inventory that would have
to be written-off; and
(3) given the foregoing, the projection of 25% earnings growth in
2001, contained in thep, was lacking in a reasonable basis at
all times.
In July 2001, the Company announced that it was taking a $5.1 billion
charge primarily related to two recent acquisitions, that it would also
write-off $300 million in excess and obsolete inventory, and that it
would cut 1,000 jobs and close three plants. In the same month, the
Company reported a massive second-quarter loss of $4.76 billion, or
$5.13 per share. Company shares closed that day at $13.77, down 80%
from the offering price.
For more information, contact Carol V. Gilden by Phone: 800-470-6824 or
by E-mail: cgilden@muchlaw.com
ERNST YOUNG: Appeals Court Upholds Dismissal of $800M Securities Suit
---------------------------------------------------------------------
A US appellate court has upheld a lower court ruling dismissing a
shareholder lawsuit that sought more then $899 million in damages from
the accounting firm Ernst & Young LLP, accusing the Company of making
misleading statements about the financial health of Ikon Office
Solutions Inc., Malvern, The Philadelphia Inquirer reported recently.
In affirming last year's dismissal of the suit by a federal judge in
Philadelphia, the three-judge panel of the US Court of Appeals for
the Third Circuit ruled that there was no evidence that the accounting
firm intended to deceive shareholders or "acted with reckless disregard
for the truth and accuracy of Ikon's financial disclosures" and that
the Company's December 1997 audit report caused the sudden rise in
Ikon's stock price. The Court also said that there was no act on the
part of the Company to cause a one-day drop of 27% percent in Ikon
stock, after Ikon announced lower-than-expected earnings.
The stock decline triggered a series of shareholder lawsuits that were
consolidated under one class action filed by the City of Philadelphia's
Board of Pensions and Retirement. Ikon, which sells and leases
photocopiers and printers, settled its part of the lawsuit in November
1999 for $111 million.
GLOBIX CORPORATION: Cohen Milstein Initiates Securities Suit in S.D. NY
-----------------------------------------------------------------------
Cohen Milstein Hausfeld & Toll PLLC commenced a securities class action
in the United States District Court for the Southern District of New
York. The suit was filed on behalf of those persons who purchased or
otherwise acquired the common stock of Globix Corporation (Nasdaq:
GBIX) during the period of November 16, 2000 through and including
December 27, 2001 against the Company and:
(1) Marc Bell,
(2) Peter Herzig and
(3) Brian Reach
The suit alleges that the defendants violated federal and state
securities laws by, among other things, issuing false misleading
statements regarding the Company's financial condition as well as its
present and future business prospects.
As alleged in the complaint, in November 2000, in an effort to
stabilize the price of Company stock and to assuage investor concerns
over Globix continuing as going concern, defendants set forth the
Company's business plan. The plan stated that Globix would be fully
funded to fiscal 2003 and cash flow positive. This sentiment was
repeated in the Company's annual report filed on Form 10-K with the
Securities Exchange Commission and numerous times thereafter in Company
press releases and conference calls.
Despite such assurances, on December 27, 2001, defendants shocked the
investing community by announcing that management had been secretly
negotiating with its bond holders and preferred stock holders to
effectuate a pre-packaged bankruptcy that would result in a near total
dilution of the existing common stockholders' interest in the Company.
For more information, contact Steven J. Toll or Mary Ann Fink by Mail:
1100 New York Avenue, NW West Tower, Suite 500 Washington, DC 20005 by
Phone: 888-240-0775 or 202-408-4600 or by E-mail: stoll@cmht.com or
mfink@cmht.com
GLOBIX CORPORATION: Cauley Geller Commences Securities Suit in S.D. NY
----------------------------------------------------------------------
Cauley Geller Bowman & Coates LLP initiated a securities class action
in the United States District Court for the Southern District of New
York on behalf of purchasers of Globix Corporation (Nasdaq: GBIX)
common stock during the period between November 16, 2000 and December
27, 2001, inclusive.
The suit charges defendants with violations of Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder. The suit alleges, among other things, that starting on
November 16, 2000 defendants set forth the Company's business plan
which stated, in no uncertain terms that the Company would be fully
funded to fiscal 2003, and thereafter cash flow positive. This
sentiment was repeated in the Company's annual report filed on Form 10-
K with the SEC and consequently in Company press releases and
conference calls.
Despite such assurances, on December 27, 2001, defendants announced
that management had been secretly negotiating with its bondholders and
preferred stockholders to effectuate a pre-packaged bankruptcy that
would result in a near total dilution of the existing common
stockholders' interest in the Company.
The suit further alleges that defendants' misrepresentations caused the
price of Company common stock to be artificially inflated throughout
the class period.
For more information, contact Jackie Addison, Sue Null or Shelly
Nicholson by Phone: P.O. Box 25438, Little Rock, AR 72221-5438 by
Phone: 888-551-9944 or by E-mail: info@classlawyer.com
HOST REIT: Faces Several Suits Over Acquisition of Marriott Partnership
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Host Real Estate Insurance Trust (Host REIT), formerly Host Marriott
Corporation faces several class action suits filed by limited partners
of Marriott Hotel Properties II Limited Partnership (MHP II) accusing
the Trust and certain of its affiliates with violating their fiduciary
duties, fraud and coercion in connection with the 1996 tender offer for
MHP II units and the Trust's acquisition of MHP II in connection with
the 1998 REIT conversion.
The first suit was filed in May 1996 in the Delaware Court of Chancery.
The court initially granted the plaintiffs' motion to voluntarily
dismiss the case with the proviso that the plaintiffs could re-file in
the suit in Florida Federal Court.
Another suit was filed in Florida State Court, but the defendants later
removed the case to the United States District Court for the Southern
District of Florida. In June 1998, after hearings on various
procedural motions, the Federal Court remanded the case to State Court.
After the Federal Court's remand of the Florida action back to
State Court, two of the three original Delaware plaintiffs asked the
Delaware Court to reconsider its order granting their voluntary
dismissal. The Court refused to allow the plaintiffs to join the
Florida action and, instead, reinstated the Delaware case.
In light of the Court's decision in the Delaware case, the defendants
in the Florida action filed a supplemental memorandum in support of
their motions to dismiss, and attached a copy of the Delaware opinion
to the memorandum.
One of the original plaintiffs, Cary W. Salter, filed an amended
consolidated class action complaint in the Delaware Chancery Court.
In January 2000, the Court issued a memorandum opinion in which the
Court dismissed all but one of the plaintiff's claims, which remaining
claim concerns the adequacy of disclosure during the initial tender
offer.
In October 2001, the Trust entered into a settlement agreement with
respect to the two cases. In December 2001 the Florida Court gave
preliminary approval to the settlement so that notice may be
disseminated to MHP II's limited partners.
A fairness hearing to consider final approval of the settlement is set
for February 22, 2002. The Delaware Court of Chancery has stayed the
Delaware case pending the Florida Court's consideration of the proposed
settlement.
A subsequent lawsuit was filed in August 2000 in the Delaware Court of
Chancery by the MacKenzie Patterson group of funds, one of the three
original Delaware plaintiffs, against the Trust and certain of its
affiliates alleging breach of contract, fraud and coercion in
connection with the acquisition of MHP II during the 1998
REIT conversion.
The plaintiffs allege that the Trust's acquisition of MHP II by merger
in connection with the REIT conversion violated the partnership
agreement and that the Trust's subsidiary acting as the general partner
of MHP II breached its fiduciary duties by allowing it to occur.
The settlement mentioned above does not address this suit, although
MacKenzie Patterson group could choose to remain in the settlement
class and this action would be mooted.
HOST REIT: Faces Suit in Illinois Over Limited Partnership Acquisition
----------------------------------------------------------------------
Host Real Estate Investment Trust faces a class action filed by limited
partners of Mutual Benefit Chicago Marriott Suite Hotel Partners, L.P.
(O'Hare Suites) in the Circuit Court of Cook County, Illinois, Chancery
Division in October 2000 against the Trust and:
(1) Host Limited Partnership,
(2) Marriott International, and
(3) MOHS Corporation, a subsidiary of Host LP and a former general
partner of O'Hare Suites.
The suit alleges that an improper calculation of the hotel manager's
incentive management fees resulted in inappropriate payments in 1997
and 1998, and, consequently, in an inadequate appraised value for their
limited partner units in connection with the acquisition of O'Hare
Suites during the 1998 REIT conversion.
In April 2001, the Court heard the motions to dismiss that the Trust
and Marriott International filed. The Court granted the motions in
part, denied them in part, struck various portions of the plaintiffs'
complaint, and reserved ruling on some points. The plaintiffs then
filed an amended complaint in June 2001.
At a hearing held in July 2001, the plaintiffs sought and were granted
leave to amend their complaint for a third time. They filed a third
amended complaint, which did not include Marriott International as a
defendant, on August 28, 2001.
The Company responded by filing a motion to dismiss based on the
plaintiffs' lack of standing to bring a derivative action under Rhode
Island law. The Court has yet to decide on this motion.
MCKESSON CORPORATION: CA Court Dismisses Portions of Securities Suit
--------------------------------------------------------------------
The United States District Court for the Northern District of
California dismissed portions of the second amended and consolidated
securities class action against McKesson Corporation (NYSE:MCK)
relating to its 1999 acquisition of HBO & Company (HBOC) and the
subsequent financial restatement.
The Court granted the Company's motions to dismiss the Section 14(a)
proxy claim and the Section 10(b) fraud claim, to the extent the latter
claim is based on any pre-merger conduct or statements by McKesson.
Similarly, the Court granted the motions of the McKesson director
defendants to dismiss the Section 14(a) proxy claim against them and
also granted the motions of certain McKesson officer defendants to
dismiss the proxy and fraud claims pending against them. The Court
granted plaintiff thirty days leave "for one last opportunity" to amend
the subject claims.
In addition, the Court dismissed, without leave to amend, the Section
14(a) proxy claim against HBOC based on the applicable statute of
limitations. In a related ruling, the Court dismissed, without leave
to amend, the Company's class action complaint and counterclaim for
unjust enrichment. The Company intends to file an appeal.
For more information, contact Larry Kurtz by Phone: 415-983-8418 or
visit the firm's Website: http://www.mckesson.com
MCLEOD USA: Charles Piven Files Suit For Securities Violations in Iowa
----------------------------------------------------------------------
The Law Offices Of Charles J. Piven PA commenced a securities class
action on behalf of shareholders who acquired McLeod USA, Incorporated
(NASDAQ:MCLD) (NASDAQ:MCLDP) securities between January 30, 2001 and
December 3, 2001, in the United States District Court for the Northern
District of Iowa, against the Company and:
(1) Clark McLeod, the Company's Chairman and Co-CEO,
(2) Steve Gray, the Company's President and Co-CEO and
(3) Chris Davis, the Company's Chief Operating and Financial
Officer since August 1, 2001
The suit charges that defendants violated Sections 11, 12(a)(2) and 15
of the Securities Act of 1933, Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder,
by issuing a series of materially false and misleading statements to
the market between January 30, 2001 and December 3, 2001.
For more information, contact Charles J. Piven by Mail: The World Trade
Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore,
Maryland 21202 by Phone: 410-986-0036 or by E-mail:
hoffman@pivenlaw.com
RENT-A-CENTER INC.: Bernstein Liebhard Lodges Securities Suit in TX
-------------------------------------------------------------------
Bernstein Liebhard and Lifshitz LLP initiated a securities class action
on behalf of all persons who acquired Rent-A-Center, Inc. (NASDAQ:RCII)
securities between April 25, 2001 and October 8, 2001, inclusive in the
United States District Court for the Eastern District of Texas,
Texarkana Division, against the Company and:
(1) J. Ernest Talley, Chairman and CEO until October 8, 2001,
(2) Mitchell E. Fadel, President and Director,
(3) Robert D. Davis, CFO and Treasurer and
(4) Mark E. Speese, Director until October 8, 2001, thereafter
Chairman and CEO
The suit charges 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 materially false and misleading
statements to the market between April 25, 2001 and October 8, 2001.
For example, in April 2001, the Company issued a press release
announcing record results for the first quarter of 2001 and
highlighting the Company's resilience in a weakening economy. The
representations in the press release were, according to the allegations
of the complaint, materially false and misleading because the Company
did not disclose that its expenses were rising dramatically as it
attempted to combat weakening demand with deep discounts and
promotions.
While in possession of this adverse non-public information, the Company
completed a secondary offering of 3,200,000 shares of its common stock
at $42.50 per share, on May 25, 2001. Defendant Talley sold 1,700,000
Company shares in the secondary offering, grossing over $72 million,
and defendant Speese sold 500,000 shares, grossing over $21 million.
On May 31, 2001, defendant Talley sold an additional 1,955,000 shares
of the Company's common stock at $40.38 per share, grossing over $78
million.
Subsequently, on October 8, 2001, only five months after the secondary
offering, the Company issued a press release announcing that earnings
for the third and fourth quarter of 2001 would be significantly less
than its previous guidance to the market, due to rising expenses. In
response to this announcement, the Company's stock price dropped by 19%
in one day on heavy trading volume.
For more information, contact Ms. Linda Flood by Mail: 10 East 40th
Street, New York, New York 10016 by Phone: 800-217-1522 or 212-779-1414
by E-mail: RCII@bernlieb.com or visit the firm's Website:
http://www.bernlieb.com
RHYTHMS NETCONNECTIONS: Ademi O'Reilly Commences Securities Suit in CO
----------------------------------------------------------------------
Ademi & O'Reilly LLP initiated a securities class action in the United
States District Court, District of Colorado on behalf of purchasers of
Rhythms NetConnections, Inc. (OTCBB:RTHM) common stock during the
period between January 6, 2000 and April 2, 2001.
The suit 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 materially false and misleading statements to
the market. Throughout the class period, the Company portrayed itself
as a fast-growing and expanding provider of DSL services and repeatedly
represented that it could continue to expand its broadband network
throughout the United States and reassured investors that it was
financially able to continue this expansion.
As alleged in the suit, defendants' statements issued throughout the
class period were materially false and misleading when made as they
failed to disclose the following adverse facts which were then known to
defendants or recklessly disregarded by them:
(1) that the Company lacked the financial resources necessary to
execute its business plan of a full national network
expansion;
(2) that the Company's efforts to scale back its expansion plans
were not meeting with success as it was unable to generate the
necessary financing;
(3) that the Company was not well-funded or well-positioned to
continue its growth, as the Company's expenses, including its
ongoing debt payment obligations, were far outpacing its
revenues and rapidly depleting its cash reserves;
(4) that the Company did not have adequate cash reserves and was
not sufficiently "stable" and "financially strong" that it
would be able to fund the Company's operational needs into the
first quarter of 2002, as defendants repeatedly promised
investors - defendants were not even able to keep the Company
running though 2001, as it had earlier guaranteed; and
(5) that without the influx of additional capital, the Company
would be forced to seek bankruptcy protection, which would
render its common stock worthless.
While in possession of the true facts about the Company and its
business, the individual defendants and other insiders collectively
sold 600,000 shares of the Company's common stock for gross proceeds in
excess of $16 million. Over $12.6 million alone was received by
defendant Hapka, and the Company raised hundreds of millions of dollars
in preferred stock sales and debt issuances.
For more information, contact Guri Ademi by Phone: 866-264-3995 by Fax:
414-482-8001 by E-mail: rhythms@ademilaw.com or visit the firm's
Website: http://www.ademilaw.com
RHYTHMS NETCONNECTIONS: Schiffrin Barroway Files Securities Suit in CO
----------------------------------------------------------------------
Schiffrin & Barroway, LLP initiated a securities class action in the
United States District Court for the District of Colorado on behalf of
all purchasers of the common stock of Rhythms NetConnections, Inc.
(Pink Sheets: RTHMQ) from January 6, 2000 through April 2, 2001,
inclusive.
The suit charges the Company and certain of its officers and directors
with issuing false and misleading statements concerning its business
and financial condition. Specifically, the complaint alleges that
throughout the class period, the Company portrayed itself as a fast-
growing and expanding provider of DSL services and repeatedly
represented that it could continue to expand its broadband network
throughout the United States and reassured investors that it was
financially able to continue this expansion.
As alleged in the suit, defendants' statements issued throughout the
class period were materially false and misleading when made as they
failed to disclose the following adverse facts which were then known to
defendants or recklessly disregarded by them:
(1) that the Company lacked the financial resources necessary to
execute its business plan of a full national network
expansion;
(2) that the Company's efforts to scale back its expansion plans
were not meeting with success as the Company was unable to
generate the necessary financing;
(3) that the Company was not well-funded or well-positioned to
continue its growth, as the Company's expenses, including its
ongoing debt payment obligations, were far outpacing its
revenues and rapidly depleting its cash reserves;
(4) that the Company did not have adequate cash reserves and was
not sufficiently "stable" and "financially strong" that it
would be able to fund the Company's operational needs into the
first quarter of 2002, as defendants repeatedly promised
investors - defendants were not even able to keep the Company
running though 2001, as it had earlier guaranteed; and
(5) that without the influx of additional capital, the Company
would be forced to seek bankruptcy protection, which would
render its common stock worthless.
While in possession of the true facts about the Company and its
business, the individual defendants and other insiders collectively
sold 600,000 shares of the Company's common stock for gross proceeds in
excess of $16 million - of which over $12.6 million alone was received
by defendant Hapka - and the Company raised hundreds of millions of
dollars in preferred stock sales and debt issuances.
For more information, contact Marc A. Topaz or Stuart L. Berman by
Mail: Three Bala Plaza East, Suite 400, Bala Cynwyd, PA 19004 by Phone:
888-299-7706 (toll free) or 610-667-7706 by E-mail: info@sbclasslaw.com
or visit the firm's Website: http://www.sbclasslaw.com
RHYTHMS NETCONNECTIONS: Stull Stull Lodges Securities Suit in Colorado
----------------------------------------------------------------------
Stull, Stull & Brody initiated a securities class action in the United
States District Court, District of Colorado, on behalf of purchasers of
the securities of Rhythms NetConnections, Inc. (NASDAQ:RTHM) between
January 6, 2000 and April 2, 2001, inclusive against:
(1) Catherine M. Hapka,
(2) Steve Stringer,
(3) Scott C. Chandler and
(4) John W. Braukman
The defendants allegedly violated the federal securities laws by
issuing materially false and misleading statements to the market.
Throughout the class period, the Company portrayed itself as a fast-
growing and expanding provider of DSL services and repeatedly
represented that it could continue to expand its broadband network
throughout the United States and reassured investors that it was
financially able to continue this expansion.
As alleged in the suit, defendants' statements issued throughout the
class period were materially false and misleading when made as they
failed to disclose the following adverse facts which were then known to
defendants or recklessly disregarded by them:
(i) that the Company lacked the financial resources necessary to
execute its business plan of a bull national network
expansion;
(ii) that the Company's efforts to scale back its expansion plans
were not meeting with success as the Company was unable to
generate the necessary financing;
(iii) that the Company was not well-funded or well-positioned to
continue its growth, as the Company's expenses, including its
ongoing debt payment obligations, were far outpacing its
revenues and rapidly depleting the Company's cash reserves;
(iv) that the Company did not have adequate cash reserves and was
not sufficiently "stable" and "financially strong" that it
would be able to fund the Company's operational needs into the
first quarter of 2002, as defendants repeatedly promised
investors - defendants were not even able to keep the Company
running through 2001, as it had earlier guaranteed; and
(v) that without the influx of additional capital, the Company
would be forced to seek bankruptcy protection, which would
render its common stock worthless.
While in possession of the true facts about the Company and its
business, the individual defendants and other insiders collectively
sold 600,000 shares of the Company's common stock for gross proceeds in
excess of $16 million - of which over $12.6 million alone was received
by defendant Hapka - and the Company raised hundreds of millions of
dollars in preferred stock sales and debt issuances.
For further details, contact Tzivia Brody by Mail: 6 East 45ht Street,
New York NY 10017 by Phone; 800-337-4983 by Fax: 212-490-2022 or by E-
mail: SSBNY@aol.com
SALOMON SMITH: Klayman Toskes Investigates Securities Fraud Allegations
-----------------------------------------------------------------------
Klayman & Toskes PA is investigating Salomon Smith Barney, Inc., a unit
of Citigroup, Inc. (NYSE:C) and filed a suit before the National
Association of Securities Dealers, Inc. for alleged unlawful conduct at
its Atlanta, Georgia, Peach Tree Road branch office. Subsequent to the
filing, the firm has received numerous inquiries and information with
regard to the alleged allegations.
The suit alleges that the Company, through its registered
representatives, Phillip Louis Spartis, David Hobby and Amy Jean Elias,
failed to recommend to WorldCom, Inc., (NASDAQ:WCOM) employee stock
option participants hedging strategies to protect their concentrated
position in WorldCom as a result of the exercise of their stock options
through the use of margin.
The claimants have brought a claim against the Company for its
mismanagement of their portfolio given the fact that there were options
available at the time of exercise that could have protected the value
of the margin concentrated portfolio known as a "zero cost" collar.
The claim seeks compensatory and punitive damages for violations of:
(1) Securities and Exchange Act of 1934,
(2) the Virginia Securities Laws,
(3) common law fraud,
(4) breach of contractual and fiduciaries duties, and
(5) gross negligence
The unlawful conduct perpetrated on the claimants, as alleged in the
complaint, reflects what appears be a complete failure of supervision
and compliance at the Salomon Smith Barney, Atlanta, Georgia, PeachTree
Road branch office.
The sole purpose of this release is to investigate, on behalf of our
clients, sales practice violations of licensed brokers at Salomon Smith
Barney as well as other major investment firms. The firm is
investigating securities violations including:
(i) misuse of margin,
(ii) misuse of stock option plans,
(iii) failure to supervise,
(iv) unsuitability claims,
(v) misrepresentation and material admissions of fact,
(vi) unauthorized transactions, and
(vii) excessive trading/churning of customers' accounts.
For more information, contact Lawrence L. Klayman by Phone: 888-997-
9956 by E-mail: dhuff@nasd-law.com or visit the firm's Website:
http://www.nasd-law.com.
SUNBEAM CORPORATION: Former CEO to Pay $15M to Settle Securities Suit
---------------------------------------------------------------------
Former Sunbeam Corporation Chief, Al Dunlap agreed to settle for $15
million a 1998 securities class action alleging that Mr. Dunlap and
three other officers artificially inflated the price of the Company's
common stock to make several acquisitions, according to a CNNMoney
report
The suit was commenced after the mergers of First Alert Inc. and
Signature Brands. The Company's share price fell sharply when it
revealed that merger-related costs and a shortfall in sales would
reduce the earnings guidance it had issued just weeks before. Sunbeam
ended up restating its earnings during Mr. Dunlap's 18-month tenure
after an investigation by the Securities and Exchange Commission.
Mr. Dunlap was fired in 1998 after he failed to deliver profits and the
Company's share price tumbled. The Company is now reorganizing under
Chapter 11 bankruptcy protection.
Under the terms of the settlement, Mr. Dunlap will pay the settlement
to hundreds of Sunbeam shareholders who purchased the company's stock
during a two-week period in the spring of 1998.
"The counsel for the shareholders were very pleased with the terms of
the settlement," said Robert Adler, an associate at Milberg Weiss
Bershad Hynes & Lerach. The settlement does not represent an admission
of guilt by Dunlap, he added.
TAKE-TWO INTERACTIVE: Much Shelist Mulls Possible Securities Fraud Suit
-----------------------------------------------------------------------
Much Shelist Freed Denenberg Ament & Rubenstein PC is investigating
Take-Two Interactive Software, Inc. (Nasdaq:TTWO) for possible
securities act violations. Also being investigated are:
(1) Ryan A. Brant, CEO until February 26, 2001, thereafter
Chairman,
(2) Kelly G. Sumner, a director until February 26, 2001,
thereafter CEO,
(3) James H. David Jr., CFO since third quarter of fiscal year
2000,
(4) Paul Eibeler, President and director and
(5) Larry Muller, CFO until the third quarter of the Company's
fiscal year 2000
The firm is looking into potential violations of Sections 10(b) and
20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder, by issuing a series of materially false and
misleading statements to the market between February 24, 2000 and
December 17, 2001, concerning its financial performance for its fiscal
year 2000 and the first three quarters of its fiscal year 2001.
Throughout the class period, defendants issued press releases reporting
the Company's quarterly and year-end financial performance, and filed
reports confirming such performance with the United States Securities
and Exchange Commission. These reports positively portrayed the
Company's performance during the class period and discussed several
quarters of supposedly "record" results. It is believed that these
statements were materially false and misleading because the company
had, throughout the Class Period, improperly recognized revenues,
thereby inflating its reported sales and earnings.
On December 14, 2001, the price of Company stock plunged 31%, falling
from $15.05 to $10.33, as news leaked that the Company would likely
restate previously filed financial reports. On December 17, 2001 the
Company issued a press release announcing that it will restate its
financial results for its fiscal year 2000 and the first three quarters
of its fiscal year 2001. According to the press release, the Company
had improperly recognized revenue on products that were subsequently
returned to it.
For fiscal year 2000, the restatement will have the effect of
decreasing net sales by $12-$15 million and decreasing net income by
$3.1-$3.7 million. For the three quarters of 2001, the restatement will
have the effect of decreasing net sales by approximately $9.5 million
and increasing net income by $0.3 million.
For more information, contact Carol V. Gilden by Phone: 800-0470-6824
or by E-mail: cgilden@muchlaw.com
VAN WAGONER: Schatz Nobel Commences Securities Suit in E.D. Wisconsin
---------------------------------------------------------------------
Schatz and Nobel PC filed a securities class action in the United
States District Court for the Eastern District of Wisconsin on behalf
of all persons who purchased shares of the Van Wagoner Emerging Growth
Fund (Nasdaq: VWEGX) between April 28, 2000, and June 30, 2001 against
the Fund and:
(1) Van Wagoner Funds, Inc.,
(2) Van Wagoner Capital Management Inc.,
(3) Garrett Van Wagoner,
(4) Sunstone Financial Group, Inc., and
(5) Ernst & Young, LLP.
The suit alleges the Fund failed to decrease the valuation of its stock
holdings in 23 private companies, which it had purchased in late 1999
and early 2000 and held throughout the class period - a span of time
that saw upstart companies losing most of their value. As a result,
the Fund's Net Asset Value (NAV), its total rate of return, and the
risks associated with investment in the Fund were misrepresented in the
Fund's public disclosures, including its prospectus.
As of September 30, 2001, the Fund lost 88.06% of its value. The suit
alleges the defendants are responsible for the harm caused by the
misrepresentations.
For more information, contact Andrew M. Schatz, Patrick A. Klingman or
Wayne T. Boulton by Phone: 800-797-5499 by E-mail: sn06106@aol.com or
visit the firm's Website: http://www.snlaw.net
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S U B S C R I P T I O N I N F O R M A T I O N
Class Action Reporter is a daily newsletter, co-published by
Bankruptcy Creditors' Service, Inc., Trenton, New Jersey, and
Beard Group, Inc., Washington, D.C. Enid Sterling, Aurora Fatima
Antonio and Lyndsey Resnick, Editors.
Copyright 2002. All rights reserved. ISSN 1525-2272.
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