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/raid1/www/Hosts/bankrupt/CAR_Public/020701.mbx C L A S S A C T I O N R E P O R T E R Monday, July 1, 2002, Vol. 4, No. 128 Headlines ACXIOM CORPORATION: 8th Circuit Yet To Rule on Appeal of Suit Dismissal AMDOCS LIMITED: Mounting Vigorous Defense V. Securities Suit in S.D. NY APARTHEID LITIGATION: Victims File Reparations Suit Against Officials ASTRAZENECA: NY Court Dismisses Antitrust Suits Over Heartburn Drug BROADVISION INC.: Asks CA Court To Dismiss Consolidated Securities Suit CATHOLIC CHURCH: Albany Diocese Reveals Confidential $900T Settlement CORAM HEALTHCARE: NJ Court Dismisses With Prejudice Securities Suit EFS NATIONAL: Inks Settlement of TN Suit Over Rate And Fee Changes FINITY HOLDINGS: Agrees To Settle Securities Fraud Suits in S.D. CA IN-SINK-ERATOR: Recalls 252,000 Hot Water Dispensers For Fire Hazard L90 INC.: Mounting Vigorous Defense V. Securities Suits in C.D. CA L90 INC.: Faces Two Shareholder Derivative Suits in California Court LERNOUT HASPIE: NY Court Refuses To Dismiss Accounting Fraud Suit MARINERS HEALTH: Plaintiffs Limiting Recovery To Lift Suit's Stay MDI ENTERTAINMENT: Labels Suits "Moot" Due to Merger Termination MODELING FIRMS: Models Sue Eight NY Firms Alleging Price-Fixing NCAA: Two High School Basketball Stars File Suit Over Limiting Rule OHIO: Dublin School Board Repeals Athletes Random Drug Testing Program RICA FOODS: Asks FL Court To Dismiss Remaining Securities Fraud Suit SAF T LOK: Intends To Vigorously Oppose Securities Suits in S.D. FL SEAVIEW VIDEO: Reaches Agreement To Settle Securities Suit in M.D. FL TEXAS: Oak Park Residents Receive Share of $8M Settlement THEGLOBE.COM: Plaintiffs File Consolidated Securities Suit in S.D. NY TIDEL TECHNOLOGIES: Moves For Securities Fraud Suit Dismissal in TX WILLIAMS COMMUNICATIONS: OK Court Consolidates Securities Fraud Suits * Junk Food Companies To Follow Big Tobacco as Class Action Gold Mines New Securities Fraud Cases AMDOCS LIMITED: Milberg Weiss Commences Securities Suit in E.D. MO AMDOCS LIMITED: Kirby McInerney Commences Securities Suit in S.D. NY DUKE ENERGY: Weiss & Yourman Commences Securities Fraud Suit in W.D. NC HALLIBURTON COMPANY: Weiss & Yourman Commences Securities Suit in TX MERRILL LYNCH: Schiffrin & Barroway Commences Securities Suit in NY OMNICOM GROUP: Wolf Haldenstein Commences Securities Suit in S.D. NY VERISIGN INC.: Schiffrin & Barroway Commences Securities Suit in CA WORLDCOM INC.: Wolf Haldenstein Launches Securities Suit in Mississippi WORLDCOM INC.: Keller Rohrback Files 401(K) Fiduciary Duty Breach Suit ********* ACXIOM CORPORATION: 8th Circuit Yet To Rule on Appeal of Suit Dismissal ----------------------------------------------------------------------- The Eight Circuit Court of Appeals has yet to decide on the motion appealing the dismissal of securities class actions against Acxiom Corporation and certain of its directors. Oral arguments have already been conducted. The suits were commenced in September 1999 in the United States District Court for the Eastern District of Arkansas, alleging that the defendants violated Section 11 of the Securities Act of 1933 in connection with the July 23, 1999 public offering of 5,421,000 shares of the Company's common. In addition, the action seeks to assert liability against the Company's leader pursuant to Section 15 of the 1933 Act. Two additional suits were subsequently filed in the same venue against the same defendants and asserting the same allegations. The defendants asked the court to dismiss the suit and the court granted the motion in March 2001. The plaintiffs then appealed the decision. The Company continues to believe the allegations are without merit and will continue to vigorously contest the cases. The Company is confident that none of the suits are material in their nature or scope. AMDOCS LIMITED: Mounting Vigorous Defense V. Securities Suit in S.D. NY ----------------------------------------------------------------------- Amdocs Limited faces two securities class actions pending in the United States District Court for the Southern District of New York on behalf of all persons who purchased the Company's securities between July 18, 2000 and June 20, 2002, inclusive. The suit charges the Company and certain of its officers and directors with violations of federal securities laws. Among other things, plaintiff claims that defendants overstated the Company's orders backlog and misrepresented the demand for the Company's products and services. The complaint alleges that defendants' material omissions and the dissemination of materially false and misleading statements regarding the nature of Company revenue and business prospects caused the Company's stock price to become artificially inflated, inflicting damages on investors. The Company stated that it believed the allegations made in the complaint are without merit and that it intended to defend itself vigorously. APARTHEID LITIGATION: Victims File Reparations Suit Against Officials --------------------------------------------------------------------- Several of South Africa's top government officials faces a class action filed by an advocacy support group in Cape Town, on behalf thousands of victims of the country's 40-year apartheid regime who have waited four years for compensation, BBC News reports. The suit accuses several officials of delaying compensation payments. "Many of these people are destitute and have serious health problems. They want to know what the government will do for them in terms of reparations," Alison Tilley, lawyer for the Khulumani victims' right group, told Reuters. The suit names as defendants Nobel prize winner Bishop Desmond Tutu and South African President Thabo Mbeki. Bishop Tutu was named in the suit, relating to his role as Truth and Reconciliation Commission (TRC) chairman, which recommended in 1998 that the state pay nearly $300 million to over 21,000 victims of apartheid. According to a BBC report, the TRC had finished its work earlier this year, and have distributed interim payments to some of the victims. However, the Khulumani group said the payments were not enough and that the final compensation was taking too long. The TRC was expected to give its final report to the president at the end of June, but a spokesman for the Ministry of Justice the report was now expected in August. "We are finalizing the policy and waiting for the final report of the Truth commission," the spokesman, Paul Setsetse, told BBC. The suit is among several class actions seeking reparations for apartheid. Earlier, US lawyer Ed Fagan announced that a lawsuit would be filed seeking damages from US and Swiss companies. Some analysts say that delays with the compensation could lead to more lawsuits against the government and local companies, which benefited from more than 40 years of white-minority rule. ASTRAZENECA: NY Court Dismisses Antitrust Suits Over Heartburn Drug ------------------------------------------------------------------- The United States District Court of New York dismissed with prejudice two class actions filed against pharmaceutical firm AstraZeneca, by consumers and third-party payers relating to the sale of heartburn and ulcer drug Prilosec. Judge Jed Rakoff ruled that the plaintiffs failed to demonstrate that a separate Prilosec patent infringement litigation brought by the Company against 10 generic manufacturers was a "sham" or an unlawful attempt to prevent generic competitors from entering the market, the Philadelphia Business Journal reports. The patent infringement trial against four of the generic manufacturers is in its final stages before Judge Barbara Jones, also in the US District Court for the Southern District of New York, the Company said. Last week, a Food and Drug Administration advisory panel ruled in favor of allowing Prilosec, used to treat heartburn and ulcers, to be sold without a prescription. If the FDA approves that request, the Company will supply the drug to Procter & Gamble, which will market the over- the-counter product. BROADVISION INC.: Asks CA Court To Dismiss Consolidated Securities Suit ----------------------------------------------------------------------- BroadVision, Inc. asked the United States District Court in California to dismiss the second amended consolidated class action filed against the Company and certain of its officers and directors, on behalf of all persons who purchased the Company's securities between January 26, 2001 and April 2, 2001. Several suits were commenced early last year, alleging that the Company and the individual defendants violated federal securities laws in connection with its reporting of financial results for the quarter ended December 31, 2000. The suits were later consolidated. The Company then asked the court to dismiss the suit, which the court did on February 22, 2002. The court however gave the plaintiffs leave to file an amended suit. In March 2002, the plaintiff filed its second amended suit, which added claims for breach of fiduciary duty and named members of the Company's board of directors as additional defendants. All defendants filed motions to dismiss the second amended suit on May 10, 2002. The hearing on this motion to dismiss is scheduled for July 26, 2002. The Company believes that the lawsuits are without merit and continues to defend itself vigorously. CATHOLIC CHURCH: Albany Diocese Reveals Confidential $900T Settlement --------------------------------------------------------------------- The Diocese of Albany in New York confirmed that it settled a 1997 sexual abuse for nearly US$1 million, a settlement that Bishop Howard Hubbard of Albany labeled as "atypical and unusually" high, Reuters reported. The suit involved Father Mark Haight, a priest who had already been transferred over sexual abuse of a minor. Bishop Hubbard did not elaborate why the settlement was higher than normal. The confidential US$997,500 settlement, the latest revelation in the sex-abuse scandal that has rocked the Catholic Church, fell just short of the $1 million ceiling above which the Albany diocese would have been required to get consent of its finance council, the New York Times reported. The victim who filed the suit claimed to have endured six years of sexual abuse by the priest, starting at age 12, while plied with drugs and alcohol. The abuse, which was alleged to have occurred in the late 1970s and 1980s, came to light in 1996 when the victim notified Glens Falls Hospital, where Mr. Haight was serving as chaplain, the church told the New York Times. Bishop Hubbard also revealed that nine of the diocese's 450 priests over the last 25 years had admitted to sexually abusing minors and that a total of 11 settlements reached with victims amounted to about US$2.36 million, all covered by the diocese's liability insurance fund, according to Reuters. A conference of US Catholic bishops earlier this month in Dallas, called after American cardinals were summoned to the Vatican for a special meeting, passed a policy on sexual abuse that ends secret settlements. Reuters stated Rev. Kenneth Doyle, chancellor of the Diocese of Albany, said the diocese announced in May that it would no longer seek confidential settlements. CORAM HEALTHCARE: NJ Court Dismisses With Prejudice Securities Suit ------------------------------------------------------------------- The United States District Court for the District of New Jersey dismissed with prejudice the class action pending against Coram Healthcare Corporation, alleging that certain current and former Company officers and directors and the company's principal lenders implemented a scheme to perpetrate fraud upon the stock market related to the Company's common stock. The amended suit named as defendants: (1) The Company's Chief Executive Officer, (2) a former member of the Company's Board of Directors, (3) Cerberus Partners, LP, one of the Company's principal lenders, (2) Foothill Capital Corporation, one of its principal lenders and (3) Goldman, Sachs & Co., one of its principal lenders The plaintiffs allege that the defendants artificially depressed the trading price of the Company's publicly traded shares and created the false impression that stockholders' equity was decreasing in value and was ultimately worthless. The plaintiffs further allege that members of the class sustained total investment losses of $50 million or more. The suit was later amended to eliminate references to the Company's corporate assets. The defendants then filed motions to dismiss the suit, as they believed the claims are inadequately pleaded and "meritless." On May 6, 2002 the judge dismissed the plaintiffs' claims with prejudice. The plaintiffs have filed a notice of appeal in this matter with the United States Court of Appeals for the Third Circuit. The Company cannot predict the outcome of this case nor can it predict the scope and nature of any indemnification that the directors and officers may have with its insurance carrier. The Company intends to vigorously oppose the suit. EFS NATIONAL: Inks Settlement of TN Suit Over Rate And Fee Changes ------------------------------------------------------------------ EFS National Bank has agreed to settle the amended class action pending in the Circuit Court of Tennessee for the Thirtieth Judicial District at Memphis alleging that certain of the Company's rate and fee changes were improper under Tennessee law due to allegedly deficient notice. The suit was filed on behalf of over 100,000 merchants who were subjected to the allegedly improper rate and fee changes over a several-year period. The suit seeks damages in excess of US$70 million as well as injunctive relief and unspecified punitive damages, treble damages, attorney fees, and costs. On May 16, 2002, the parties entered into a settlement agreement relating to this litigation and received preliminary approval from the court. The principal terms of the settlement agreement are: (1) every member of the proposed class seeking a monetary recovery would be required to submit a written claim, verified under penalty of perjury; (2) the Company would admit no liability; (3) the proposed settlement would cover all claims relating to specific rate increases or changes and the imposition of certain fees; (4) the proposed settlement would cover claims by former and current merchants. Former merchants who return to the Company in connection with the proposed settlement would receive a premium over what non-returning former merchants would receive; (5) credits and payments would be made annually in 2002, 2003, 2004, 2005, and 2006. Claimants would have to remain with the Company through 2006 to receive the maximum available financial benefit from the proposed settlement; (6) the maximum amount of the credits and payments by the Company under the proposed settlement would be $37.55 million. A portion of such amount would be used to pay plaintiffs' counsel and certain claims administration expenses; (7) if more than 4% of the potential class members opt out of the monetary aspects of the proposed settlement, the Company would have the right to withdraw from the proposed settlement. The Company would receive releases from all potential class members who do not opt out of the monetary aspects of the proposed settlement; and (8) the Company would agree to certain injunctive relief regarding notice of new fees and rate increases and the content of monthly statements sent to merchants. A number of steps must be undertaken before the settlement agreement would become final. These include, without limitation, sending notices to all potential class members and allowing time for potential class members to opt out of the class or to submit a claim and to object to the proposed settlement and to attempt to persuade the court not to approve the proposed settlement. A final hearing at which the court would be asked to give final approval to the proposed settlement has been scheduled for August 5, 2002. A purported class action complaint with similar allegations and requests for relief has been filed in St. Charles County, Missouri, but there has not been a substantial amount of activity in the Missouri case. The proposed settlement would also resolve the issues in the Missouri case. Notwithstanding the described settlement agreement, the Company believes it has various defenses to the claims against it, and if these matters cannot be resolved by settlement, the Company intends to vigorously defend against all claims. FINITY HOLDINGS: Agrees To Settle Securities Fraud Suits in S.D. CA ------------------------------------------------------------------- Finity Holdings, Inc. reached an agreement to settle two securities class actions pending in the United States District Court for the Southern District of California, alleging federal securities violations. The suit was commenced in July 2000 against the Company and: (1) Douglas R. Baetz, (2) Glenn M. Gallant, (3) Columbia Capital Corp. (the Company's predecessor in interest), (4) First Independent Computers and (5) Does 1-100 The suit was filed on behalf of purchasers of the common stock of the Company from January 1, 1998 through and including March 13, 2001, and alleges: (i) violations of the anti-fraud provisions of the Securities Exchange Act of 1934, (ii) violations of California securities laws, (iii) violations of the Racketeer Influenced Corrupt Organizations Act, (iv) fraud, and (v) conspiracy The Company filed a motion in mid-2001 to dismiss the entire case because the plaintiff's attorneys were not pursuing the case, which the court granted with prejudice in July 2001. Pursuant to the terms of the order, the suit was dismissed with prejudice based upon the failure to prosecute and plaintiff's inaction and failure to comply with the court's Order to serve an amended complaint upon the defendants by March 23, 2001. This would have ended the litigation, except that in early August of 2001, plaintiffs in this case submitted a motion for reconsideration of the court's ruling. The court ruled in the Company's favor. However, the plaintiffs filed a notice of appeal in April 2002 the 9th circuit Court Of Appeals. The plaintiff's attorneys then filed a second case following their failure in the first matter, in the United States District Court for the Southern District of California naming as defendants: (1) Douglas R. Baetz, (2) Glenn M. Gallant, (3) Finity Holdings, Inc., (4) Finity Corporation, (5) Chuck LaMontagne and (6) Kenneth Klotz The suit is essentially the same case as the first case, with a new lead plaintiff. The Company has not answered the complaint in the case, because it agreed to settle and avoid prolonged litigation. The settlement agreement requires court approval to be final, and the Company expects court approval in 30 to 60 days. IN-SINK-ERATOR: Recalls 252,000 Hot Water Dispensers For Fire Hazard -------------------------------------------------------------------- In-Sink-Erator is cooperating with the United States Consumer Product Safety Commission (CPSC) by voluntarily recalling about 252,000 half- gallon instant hot water dispensers. Water can leak from the metal holding tank, wet insulating material and cause electrical arcing and heat build-up. This poses a fire hazard. The Company has received three reports of holes in the electrical insulation or outer cover of the hot water dispenser. One report involved a kitchen fire that caused nearly $7,000 in property damage. No injuries have been reported. The recalled hot water dispensers are half-gallon capacity models, made in the USA and sold under various brand names, including In-Sink- Erator, ISE, Steamin' Hot, Emerson, Dayton, ACE, Kenmore and Kohler. The serial number (S/N) is printed on a specification plate attached to the metal holding tank. This recall involves instant hot water dispensers with serial numbers (some begin with two letters) 999-10 or those that fall between 1000 and 3084000. Plumbers, building contractors, home centers and hardware stores sold these instant hot water dispensers from January 1972 through December 1996 for between $100 and $250. For more information, contact the Company by Phone: 800-295-8727 from 8 am to 8 pm ET Monday through Friday or visit the firm's Website at http://www.insinkerator.com L90 INC.: Mounting Vigorous Defense V. Securities Suits in C.D. CA ------------------------------------------------------------------ L90, Inc. faces several securities class actions in the United States District Court for the Central District of California on behalf of purchasers of the Company's common stock during the period starting July 26, 2001 and ending March 12, 2002. The suits generally allege that during 2000 and 2001, the Company, and the other named defendants, made false or misleading statements of material fact about the Company's financial statements, including its revenues, revenue recognition policies, business operations and prospects for the years 2000, 2001 and beyond. The actions are still in the preliminary stages and management is unable to assess at this time the merits of the actions. Therefore, it is not possible for management to quantify the extent of the Company's potential liability, if any. The Company intends to vigorously defend against the suits. L90 INC.: Faces Two Shareholder Derivative Suits in California Court -------------------------------------------------------------------- L90, Inc. faces two shareholder derivative suits, purportedly brought on the Company's behalf in the Superior Court of the State of California for the County of Los Angeles. The suits name the Company as nominal defendant, and its current and former officers as defendants. The derivative suits allege that certain of the Company's current and former officers and directors: (1) breached their fiduciary duties to the Company, (2) engaged in abuses of their control of the Company, (3) wasted corporate assets, and (4) grossly mismanaged the Company Because of the nature of derivative litigation, any recovery in the action would inure to the Company's benefit. The actions are still in the preliminary stages and management is unable to assess at this time the merits of the actions. The Company intends to vigorously oppose the suit. LERNOUT HASPIE: NY Court Refuses To Dismiss Accounting Fraud Suit ----------------------------------------------------------------- A New York federal court denied the dismissal of a class action pending against the executives of bankrupt speech-recognition software maker Lernout & Haspie Speech Products, NV, the Boston Business Journal reports. The suit was filed in 2000 after accounting errors forced the company to restate two-and-a-half years of earnings. Plaintiffs claim the executives and others at the Company overstated and fabricated the Company's revenue and earnings. The defendants, which include founders Jozef Lernout and Pol Hauspie, moved for the suit's dismissal saying it failed to show they were individually responsible for the Company's accounting fraud, the Boston Business Journal reports. Mr. Lernout and Mr. Hauspie, both Belgian citizens, also asked for the case to be tried in Belgium. Judge Patti Saris denied the motion saying, the defendants "each exercised control over the decision-making processes of L&H. The complaint contains sufficient allegations that the individual defendants were actively involved in the perpetration of the underlying fraud." Lernout & Hauspie, whose software enables computers to understand the human voice, was declared bankrupt by a Belgian court last year and sought protection from creditors in the U.S. in 2000. MARINERS HEALTH: Plaintiffs Limiting Recovery To Lift Suit's Stay ----------------------------------------------------------------- Plaintiffs in the class action against certain of Mariners Health Care, Inc.'s predecessor entities and affiliates have agreed to limit recovery in the suit to insurance proceeds, in exchange for a lifting of the stay of the suit due to the Company's bankruptcy filing. The suit was commenced in October 1998 in Tampa, Florida, Circuit Court, asserting claims for: (1) breach of fiduciary duty against one group of defendants, (2) breach of fiduciary duty against another group of defendants, and (3) civil conspiracy arising out of issues involving facilities previously operated by the Brian Center Corporation or one of its subsidiaries, and later by a subsidiary of LCA, a wholly- owned subsidiary of the Company, as a result of the merger with Brian Center Corporation. The defendants submitted motions to dismiss the suit, and in December 1999, the court granted one of the defendant's motion to dismiss. The Company later voluntarily filed for Chapter 11 bankruptcy and under chapter 11 of the Bankruptcy Code and more particularly, Section 362 of that Code, this matter was stayed. MDI ENTERTAINMENT: Labels Suits "Moot" Due to Merger Termination ---------------------------------------------------------------- MDI Entertainment, Inc. faces two class actions pending in the Delaware Court of Chancery on behalf of the Company's public stockholders, seeking to enjoin the proposed merger with Scientific Games Corporation. The merger has since been terminated. The suit names as defendants the Company, all of the members of the Company's Board of directors and Scientific Games Corporation. The suit alleges that the consideration offered to the Company's stockholders in the proposed acquisition is unfair and inadequate because the plaintiff believes that the intrinsic value of the Company's common stock is materially in excess of the amount offered, considering the Company's growth and anticipated operating results, net asset value, and future profitability. The plaintiff requested the court to preliminarily and permanently enjoin the Company from proceeding with, consummating or closing the proposed transaction and in the event the proposed transaction is consummated, to rescind it and award rescissory damages. On May 6, 2002, a second complaint was filed in the same court containing nearly identical allegations. The plaintiffs' lawyers requested an order consolidating the two cases. The Company believes that the lawsuits lack merit and intends to contest them vigorously. They also believe that the termination of its merger negotiations with Scientific Games has mooted the suits. MODELING FIRMS: Models Sue Eight NY Firms Alleging Price-Fixing --------------------------------------------------------------- Eight top modeling agencies were accused in a class action of violating federal antitrust laws since the 1970s by fixing the fees they charge models for finding them work, according to a report by the Los Angeles Times. Several Californian models filed the suit: (1) Amanda Masters, (2) Justin Klentner, (3) Carolyn Fears, (4) Lorelei Shellist, (5) Barbara Cheeseborough and (6) Carla Gross. The defendants include Elite Models Inc., Ford Models Inc., the Wilhemina Model Agency Inc. and five other New York-based agencies. The lawsuit contends that these eight New York model agencies formed an association in the 1970s and held monthly meetings to keep each other and smaller competitors from underpricing each other. The eight agencies, who together control the lion's share of the modeling market, currently charge models 20 percent of their pay per job, 10 percent more than employment agencies are allowed to charge under New York law, lawyers for the models said. In addition to the fees from models, agencies also charge the employers who hire them 20 percent. Katie Ford, chief executive of Ford Models, said she had not seen the lawsuit and denied the allegations. "There has been absolutely no price-fixing in the industry," she said. Part of the alleged conspiracy involves an agreement in the 1970s to describe themselves as managers instead of employment agents, in order to circumvent the New York law, the lawyers said. "If you procure employment, you are an agent," said Brian Rishwain, a Los Angeles lawyer representing the models. "They charge 100 percent more than they are allowed to in New York, and, in order to maintain that, they have all gotten together and colluded to set a price." The models who filed the suit are "representative of the 95 percent of models who are out there - the non-supermodel who can't negotiate (like) the big players can," Mr. Rishwain said. "They are not Christy Turlingtons." Models sign such disadvantageous contracts with modeling agencies because they typically start out young, are not well represented and fear getting blackballed from the business, said Andrew Hayes, a New York lawyer for the models, who is a partner in the law firm of David Boies. "The only way models can get jobs is to be listed with a modeling agency," said Mr. Hayes. The relatively few models who do attain supermodel status hire managers and lawyers who recognize the unfairness of the contracts and negotiate their clients out of them, he said. If the lawsuit succeeds in obtaining class action status, it could result in damages awarded to thousands of current and former models who have worked for the agencies since the alleged conspiracy began. Mr. Hayes said the lawsuit is unprecedented, but is similar to litigation brought by his firm against auction houses Sotheby's and Christie's, both were convicted of price fixing in 2000. Usually, lawsuits by injured parties follow the criminal prosecutions in antitrust cases, as has happened with the auction houses, which have faced claims from customers in the wake of the conviction. However, it can also work the other way, said Tom Campbell, an antitrust law professor at Stanford University. If the models prove their case, the lawsuit could lead to prosecution under criminal antitrust laws. NCAA: Two High School Basketball Stars File Suit Over Limiting Rule ------------------------------------------------------------------- Two high school basketball stars from rural states recently filed a class action against the NCAA, seeking relief from a rule that would bar them from playing this summer on out-of-state teams more than 100 miles from their homes, the Associated Press Newswires reports. In the suit, Eric Henkel, 18, of Missoula, Montana, and Tyler Koenig, 17, of Fargo, North Dakota, have asked a federal judge to do away with NCAA regulations recently enacted to prevent amateur squads from treating young players like semiprofessional free agents. The lawsuit, filed in the US District Court in Philadelphia, said the rule became effective April 1 of this year. Mr. Henkel, a senior at Missoula Sentinel High School, travels about 200 miles from his home to play ball with the Easter Washington Elite team in Spokane, Washington. Mr. Koenig, a senior at Fargo North High School, plays for the Dakota Schoolers in Sioux Falls, South Dakota, about 240 miles from his home. Both those teams then travel to high-level basketball tournaments in Los Angeles, Las Vegas and Seattle, where the young players said they need to play if they are to get noticed by college recruiters. Neither Montana nor North Dakota are known for high-level high school basketball. To get a chance at a scholarship, the boys say they need to play against other top players, and that usually means joining a traveling team in another state. "The NCAA," said the boys' attorney, Richard Meltzer, "has enacted this rule because they believe there are kids playing as hired guns, who are recruited because these teams want an all star who they can win a lot of games with and take all over the country during the summer." "Eliminating that kind of scenario is a very admirable goal, but I think they have thrown out the baby with the bath water here. The ones who are hurt are the kids, especially the kids in rural areas," he added. Technically, the NCAA has no jurisdiction over high school players or non-collegiate tournaments, but its regulations generally carry great weight throughout amateur sports and are widely observed. In the case of the 100-mile rule, the NCAA has barred its coaches from attending basketball camps and tournaments that don't follow the NCAA guidelines. Many operators of such camps say they need those coaches to attend if they are to attract high-level players. OHIO: Dublin School Board Repeals Athletes Random Drug Testing Program ---------------------------------------------------------------------- With positive results of less than one percent, the Board of Education in the Columbus suburb of Dublin repealed its two-year-old random drug- testing program for student athletes, the Associated Press reports. A class action, which had been filed against the Dublin district by the American Civil Liberties Union (ACLU) of Ohio, challenging the legality of the drug-testing policy, could be dropped, according to a school Board spokeswoman. The class action was put on hold until the US Supreme Court decides a similar case from Oklahoma. The decision to repeal the drug-testing program ended all testing, including testing for substances such as amphetamines, marijuana, steroids and alcohol, at the district's two high schools. The administrator of the program was the only vocal opponent of the unanimous decision. During the past school year, 11 of the 1,473 students had positive results, mostly for marijuana. The Board said the savings of the $35,000 budgeted for the program will pay for an additional full-time drug and alcohol counselor to work in the middle schools. RICA FOODS: Asks FL Court To Dismiss Remaining Securities Fraud Suit -------------------------------------------------------------------- Rica Foods, Inc. asked the United States District Court for the Southern District of Florida to dismiss the single remaining securities class action, alleging federal securities violations against the Company and: (1) Calixto Chaves, (2) Jose Pablo Chaves, (3) Randall Piedra, and (4) Monica Chaves Five securities suits were commenced in early 2002. These virtually identical suits all allege violations of Section 10(b) and Section 20(A) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On April 29, 2002, four of the suits were voluntarily dismissed without prejudice. The Company then filed a motion to dismiss complaint and supporting memorandum of law seeking dismissal of the remaining suit on numerous grounds and requesting the court to strike all of the suit's class action allegations. A ruling on the motion is currently pending and all discovery has been stayed until the court rules on all motions to dismiss. Regardless of the Court's ruling, the Company believes the remaining suit is without merit and will continue to contest it and vigorously defend itself. SAF T LOK: Intends To Vigorously Oppose Securities Suits in S.D. FL ------------------------------------------------------------------- Saf T Lok Corporation faces several securities class actions pending in the United States District Court for the Southern District of Florida, on behalf of purchasers of the Company's securities between April 14, 2000 and April 16, 2001, inclusive. The suit names as defendants the Company and: (1) Franklin W. Brooks, (2) Jeffrey W. Brooks, (3) William Schmidt, (4) James E. Winner, Jr., (5) John F. Hornbostel, Jr. and (6) Goldberg Wagner Stump and Jacobs LLP. 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 a series of material misrepresentations to the market between April 14, 2000 and April 16, 2001, thereby artificially inflating the price of Company securities. The Company denies the allegations and plans to defend itself vigorously. SEAVIEW VIDEO: Reaches Agreement To Settle Securities Suit in M.D. FL --------------------------------------------------------------------- Seaview Video Technology, Inc. reached an agreement in principle to settle a consolidated class action pending in the United States District Court for the Middle District of Florida against the Company and Richard McBride, its former chief executive officer. Five suits were originally commenced in May 2001, alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. In the five initial complaints, the plaintiffs to those actions alleged, among other things, that from March 30, 2000 to March 19, 2001, the Company and Mr. McBride: (1) misstated the Company's sales and revenue figures; (2) improperly recognized revenues; (3) misrepresented the nature and extent of the Company's dealer network; (4) falsely touted purported sales contracts and agreements with large retailers; (5) misrepresented the Company's ability to manufacture, or to have manufactured, its products; and (6) misrepresented the Company's likelihood of achieving certain publicly announced sales targets. The suits were later consolidated. The consolidated suit seeks compensatory and other damages, and costs and expenses associated with the litigation and now also seeks relief against James Cox, the Company's Secretary and Treasurer, on the same grounds as the claims against the Company and Mr. McBride. In February 2002, the Company filed its motion to dismiss. On May 17, 2002, the Company reached an agreement in principle, in the form of a memorandum of understanding, to settle the action. In the settlement, the Company would tender 6,000,000 shares of its free trading common stock to the class participants. In addition, the Company would pay, up to a maximum of $125,000, for costs incurred by the plaintiffs in the litigation, plus the costs of settlement notice and administration. In the aforementioned memorandum of understanding, the Company and the plaintiffs' counsel have agreed to prepare and execute a definitive stipulation of settlement and jointly seek preliminary and final court approval. The settlement is conditional upon receiving final judicial approval of the stipulation. TEXAS: Oak Park Residents Receive Share of $8M Settlement ---------------------------------------------------------- Residents of Oak Park, Corpus Christi, Texas finally received their portions of the $8 million settlement they reached in the suit against three refineries, over the devaluation of their area properties. The settlement involves three refineries: (1) Koch Refining Company, now operating in Corpus Christi as Flint Hills Resources), (2) Coastal Refining, and (3) American Chrome and Chemicals, Inc. The suits were filed on behalf of 3,800 residents, alleging the refineries had devalued the properties in the Oak Park area. Four other refineries reached a $12.5 million settlement in 1998. Of the refineries named in the suit, only Citgo hasn't settled, the Caller.com reports. Albert Huerta, attorney for the plaintiffs told Caller.com that about 22 percent, or $2 million, of the settlement will pay the fees of three law firms. Patty Manzano, office administrator revealed that the Huerta law firm started handing out the settlement checks on June 18 and will continue to do so at the center until Friday. Less than half of all checks have been distributed, she added. Company spokesman Rich Tuttle told Caller.com the refinery settled because it was in the best interest of the company and the community. THEGLOBE.COM: Plaintiffs File Consolidated Securities Suit in S.D. NY --------------------------------------------------------------------- Plaintiffs in the securities class actions pending against TheGlobe.com, Inc. filed an amended securities suit in the United States District Court for the Southern District of New York. The consolidated suit names as defendants the Company, certain of its current and former officers and directors, and several investment banks that were the underwriters of its initial public offering and its May 19, 1999 secondary offering. The suit alleges that the underwriter defendants agreed to allocate stock in the Company's initial public offering and secondary offering to certain investors in exchange for excessive and undisclosed commissions and agreements by those investors to make additional purchases of stock in the aftermarket at pre-determined prices. The suit further alleges that the registration statements and prospectuses for the Company's initial public offering and secondary offering were false and misleading in violation of the securities laws because they did not disclose these arrangements. The Company and its current and former officers and directors intend to vigorously defend the actions. The action is being coordinated with more than three hundred other nearly identical actions filed against other companies and no date has been set for any response to the suit. Any unfavorable outcome of this litigation could have a material adverse impact on the Company's business, financial condition and results of operations. TIDEL TECHNOLOGIES: Moves For Securities Fraud Suit Dismissal in TX ------------------------------------------------------------------- Tidel Technologies asked the United States District Court for the Southern District of Texas to dismiss the consolidated securities class action pending against it and several of its officers and directors. The consolidated suit alleges that defendants made material misrepresentations and omissions concerning the Company's financial condition and prospects between January 14, 2000 and February 8, 2001. The lead plaintiff seeks unspecified amounts of compensatory damages, interest, and costs, including legal fees. The Company denied the allegations in the suit, and on May 10, 2002, filed a motion to dismiss the suit. The Company anticipates that the lead plaintiff will file a response in June 2002, and the court will issue a ruling on the motion sometime in the fourth quarter of fiscal 2002 or the first quarter of fiscal 2003. The suit is still in the early stages of litigation. Consequently, it is not possible at this time to predict whether the Company will incur any liability or to estimate the damages, or the range of damages, if any, that the Company might incur in connection with these lawsuits. WILLIAMS COMMUNICATIONS: OK Court Consolidates Securities Fraud Suits --------------------------------------------------------------------- The securities class actions pending against Williams Communications Group and certain of its officers and subsidiaries have been consolidated into one suit in the United States District Court for the Northern District of Oklahoma. The suits were commenced in January 2002, on behalf of purchasers of the securities of Williams Companies, Inc. or the Williams Communications Group, Inc. between July 24, 2000, and January 29, 2002. The suits allege that the defendants violated federal securities acts by issuing a series of alleged misrepresentations to the market during the class period, thus violating Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The Company believes that the allegations are without merit, and intends to defend against the suit vigorously. * Junk Food Companies To Follow Big Tobacco as Class Action Gold Mines ---------------------------------------------------------------------- The surgeon general has declared obesity a national epidemic, and the Centers for Disease Control and Prevention says it is fast replacing smoking as public-health enemy No. 1. Beyond the human costs, the financial costs are staggering, some US$117 billion annually in healthcare and lost wages, according to a report by US News & World Report (July 1, 2002). How does America plan to trim the fat? It may be too late for Diet Cokes and treadmills. Some health advocates urge the taxation of all those french fries, Twinkies and their like, and if higher prices don't curtail the ingestion of fat, the next step, they say may be the suing of the junk-food vendors. None of this is unlikely, and certainly not to John Banzhaf, a law professor at George Washington University, who was a pioneer in the tobacco wars. When he suggested 30 years ago that Big Tobacco could be sued to recover healthcare costs for smokers, people laughed. Billions in settlements later, no one is laughing, according to US News & World Report. Mr. Banzhaf likes to pose this challenge to students who enroll in his graduate class on legal activism. Think of something that really irritates you or smacks of obvious civil injustice, then think of a way of using the law to right the wrong and seek redress. It is a unique approach to legal education that has had some astonishing results, most famously, of course, is his pioneering the notion of suing the tobacco companies. Today, after hundreds of millions of dollars have been pried out of the Big Five for health costs, consumers can thank Professor Banzhaf for this and for many related benefits that followed due to his 35 years of campaigning and his imaginative, but equally "savvy" application of public-interest law. Tobacco is now banned on television and smoking no longer tolerated on planes or in shops and restaurants in many parts of the United States, The Independent, of London, reports. Professor Banzhaf has a new target, the junk-food industry. An era of health conscious advertising could be around the corner as more and more US food and beverage manufacturers fear they are being set up to take the blame for the nation's ever-increasing waistline, the St. Petersburg Times states. Unfortunately, it is not just the increased waistline that poses the problem. Obesity, according to the surgeon general's recent figures, generates $117 billion dollars in annual medical bills and triggers 300,000 premature deaths each year. Professor Banzhaf believes these figures reflect a health problem on a par with the effects of tobacco smoking. He also believes the fast- food companies and agribusiness giants can be held responsible for the problem since they are certainly the ones providing the nation with fatty, sugary and chemical additive-laden foods. With a little statistical analysis, he believes it should be possible to assign specific shares of the blame to specific companies, The Independent of London reports. Therefore, Mr. Banzhaf is embarking on a new adventure in legal activism. Already, his graduate class has inspired one lawsuit, against McDonald's and at least three others are in the works around the country. However, Mr. Banzhaf is not a stereotypical litigator looking for an opportunity to relieve a corporation or public institution of millions. Not only does he not take a penny from the lawsuits he inspires, but he says, he would much prefer not to have brought them in the first place. He would love it if the government would overhaul the food industry to make Americans healthier, just as he would have preferred the government to take action on smoking without prompting. However, America, he says, is a country where recourse to the courts is frequently the only way to effect social change, since Congress and the federal government are all too often beholden to powerful industry lobbies. Public activism is rarely is rarely effective on its own, he says, because of the country's sheer size and deep-rooted conservatism. As the mantra goes, he says, "If you can't regulate, litigate," and that is exactly what Professor Banzhaf has in mind, The Independent of London reported. The big question is how to go about it. Unlike smoking, there is nothing intrinsically unhealthy about eating. From the standpoint of food chemistry, the worst that can be said about junk food is that it contains large amounts of sugar and fat, both of which are actually important parts of a balanced diet as long as they are consumed in moderation. Can individual food companies really be held responsible for the immoderate appetites of their customer? At first glance, the answer is, probably not, says Mr. Banzhaf, in The Independent's report. However, Professor Banzhaf's approach is a gradualist one. Start with the relatively easy stuff and see how far one can take it. He proposes to approach litigation this way: (1) the first line of attack is to go after food companies that misrepresent their products by understating the fat content, say, or by omitting to mention certain ingredients that are present. That is the basis of all the lawsuits currently going through the courts; (2) the second line of attack, a slightly harder one, is to accuse the companies of making misleading health claims for their products, proclaiming pork to be "the other white meat," for example, when pork's fat and cholesterol content are, in fact, closer to beef than to chicken; (3) third approach would be to pick up on sins of omission, or failure to warn the consumers of certain health risks accompanying their product. Is it wrong of a fast-food chain to fail to point out that its triple-bacon double cheeseburger supersize meal contains more fat than any sane human being should consume in a month? The Professor said it is arguably so. He adds that it may become grounds for a lawsuit if the plaintiffs can work with laws on "clear and conspicuous disclosure of material facts;" (4) finally, if it's workable, wage an onslaught on the junk- food industry as a whole, in which McDonald's et al. would be made to pay their share of responsibility for the adult-onset diabetes, sclerotic arteries, heart attacks and strokes that fast food helps create; Legal analysts are highly skeptical whether such an approach could ever work, and Professor Banzhaf himself describes it as "a reach." However, there are some promising avenues to explore within the boundaries of this approach, including the possibility of describing fast food as something akin to an addiction deliberately fostered by manufacturers through their marketing, especially to children. How does the reasoning go? "We know that people can become biologically predisposed to getting overfed, that once they grow extra fat cells, their bodies become accustomed to having that fat," he said. "Those fat cells never die, and even if you lose weight they lie dormant and constantly try to get you to eat more. It is not an addiction exactly, but it does not leave people with a completely free choice in what they eat, either." He also would look to external pressures, such as, pushing for higher taxes. After all, if one of junk food's primary attraction is that it is cheap, taxation is a simple way for governments to ensure that it does not stay that way. His is undoubtedly an idea whose time has come. However, it could take years, or even, like the tobacco campaign, several decades. Professor Banzhaf is perfectly lucid about what he can and can't achieve. Suits are possible, and some are already successful. Though we can't predict which ones will go forward and which ones will fade quietly, we will soon find out. New Securities Fraud Cases AMDOCS LIMITED: Milberg Weiss Commences Securities Suit in E.D. MO ------------------------------------------------------------------ Milberg Weiss Bershad Hynes & Lerach LLP initiated a securities class action on behalf of purchasers of the securities of Amdocs Limited (NYSE:DOX) between July 24, 2001 and June 20, 2002, inclusive, in the United States District Court, Eastern District of Missouri against the Company and: (1) Bruce K. Anderson, (2) Robert A. Minucci, (3) Avinoam Naor, and (4) Dov Baharav The suit alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between July 24, 2001 and June 20, 2002, thereby artificially inflating the price of Company securities. As alleged in the suit, these statements were materially false and misleading because they failed to disclose, among other things, that the Company's business and operations were being negatively affected by a host of adverse factors, including, but not limited to: (i) that the Company was experiencing declining sales as its business began to be affected by adverse market forces. Throughout the class period, defendants repeatedly emphasized that the Company was not being affected by the slowdown in the communications industry when, in fact, that was not true; (ii) throughout the class period, the Company artificially inflated its financial statements by maintaining inadequate reserves for doubtful accounts and failing to disclose that the Company's revenue growth improperly included revenues from a recent acquisition; and (iii) defendants lacked a reasonable basis upon which to publish and/or affirm the revenue guidance they provided to analysts and investors. On June 4, 2002, the last day of the class period, defendants shocked the market when they finally revealed that the revenue for the third quarter and year end 2002 would be significantly lower than investors had been led to believe. The Company announced that pro forma earnings per share for the third quarter of 2002 would likely be only $0.20, a far cry from the previous guidance of $0.33. The Company also announced a massive lay-off and the resignation of the Company's Chief Executive Officer. As a result of the news, the stock plunged over 40% in one day on unusually large trading volumes. For more details, contact Steven G. Schulman or Samuel H. Rudman by Mail: One Pennsylvania Plaza, 49th fl. New York, NY 10119-0165 by Phone: 800-320-5081 by E-mail: Amdocscase@milbergNY.com or visit the firm's Website: http://www.milberg.com AMDOCS LIMITED: Kirby McInerney Commences Securities Suit in S.D. NY -------------------------------------------------------------------- Kirby McInerney & Squire, LLP initiated a securities class action in the United States District Court for the Southern District of New York on behalf all persons who purchased securities of Amdocs Limited (NYSE:DOX) in the period between July 18, 2000 and June 20, 2002, inclusive. The suit charges Amdocs, Ltd., Amdocs, Inc., and certain of its officers, during the specified time period, with violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Among other things, plaintiff claims that defendants' material omissions and materially false and misleading statements regarding the nature of the Company's revenue and business prospects caused its stock price to become artificially inflated, inflicting damages on investors. The suit alleges that, during the class period, defendants overstated the Company's orders backlog and misrepresented or failed to fully disclose the full extent of its problems, including a declining backlog, declining customer demand, inadequate Company technology, accounting irregularities and problem acquisitions. For more details, contact Ira M. Press or Diem Tran by Mail: 830 Third Avenue, 10th Floor, New York, New York 10022 by Phone: 212-317-2300 or Toll Free 888-529-4787 or by E-Mail: dtran@kmslaw.com DUKE ENERGY: Weiss & Yourman Commences Securities Fraud Suit in W.D. NC ----------------------------------------------------------------------- Weiss & Yourman initiated a securities class action against Duke Energy Corporation (NYSE:DUK), and certain of its officers and directors in the United States District Court for the Western District of North Carolina, Charlotte Division, on behalf of purchasers of Company securities between July 22, 1999 and May 17, 2002. The complaint charges the defendants with violations of the Securities Exchange Act of 1934. The complaint alleges that defendants issued false and misleading statements, which artificially inflated the stock. For more details, contact Mark D. Smilow, David C. Katz, and/or James E. Tullman by Phone: The French Building, 551 Fifth Avenue, Suite 1600, New York, New York 10176 by Phone: 888-593-4771 or 212-682-3025 or by E-mail: info@wynyc.com HALLIBURTON COMPANY: Weiss & Yourman Commences Securities Suit in TX -------------------------------------------------------------------- Weiss & Yourman initiated a securities class action against Halliburton Company (NYSE:HAL), was commenced in the United States District Court for the Southern District of Texas, Houston Division, on behalf of purchasers of Company securities between July 22, 1999 and May 28, 2002. The suit charges the defendant with violations of the Securities Exchange Act of 1934. The suit alleges that defendant issued false and misleading statements, which artificially inflated the stock. For more details, contact David C. Katz, James E. Tullman, and/or Mark D. Smilow by Mail: The French Building, 551 Fifth Avenue, Suite 1600, New York, New York 10176 by Phone: 888-593-4771 or 212-682-3025 or by E-mail: info@wynyc.com MERRILL LYNCH: Schiffrin & Barroway Commences Securities Suit in NY ------------------------------------------------------------------- Schiffrin & Barroway, LLP initiated a securities class action in the US District Court for the Southern District of New York claims that Pets.com, Inc. (formerly traded OTC Bulletin Board:IPET) misled shareholders about its business and financial condition. Plaintiff seeks damages for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (and/or the Securities Act of 1933) on behalf of all investors who bought Company securities between March 7, 2000 through November 7, 2000. The complaint alleges that Merrill Lynch & Co. Inc. and its former star Internet analyst and First Vice President of Merrill Lynch, Henry Blodget violated the federal securities laws by issuing analyst reports regarding Pets.com that recommended the purchase of Pets.com common stock and which set price targets for Pets.com common stock, which were materially false and misleading and lacked any reasonable factual basis. The complaint further alleges that, when issuing their Pets.com analyst reports, the Defendants failed to disclose significant, material conflicts of interest, which resulted from their use of Mr. Blodget's reputation and his ability to issue favorable analyst reports, to obtain investment banking business for Merrill Lynch. Furthermore, in issuing their Pets.com analyst reports, in which they recommended the purchase of Pets.com stock, the Defendants failed to disclose material, non-public, adverse information, which they possessed about Pets.com. Throughout the Class Period, the Defendants maintained "ACCUMULATE/ACCUMULATE" or "BUY/BUY" recommendations on Pets.com in order to obtain and support lucrative financial deal for Merrill Lynch. As a result of Defendants' false and misleading analyst reports, Pets.com's common stock traded at artificially inflated levels during the class period. For more details, contact Marc A. Topaz or Stuart L. Berman by Phone: 888-299-7706 (toll free) or 610-822-2221 or by E-mail: info@sbclasslaw.com OMNICOM GROUP: Wolf Haldenstein Commences Securities Suit in S.D. NY -------------------------------------------------------------------- Wolf Haldenstein Adler Freeman & Herz LLP initiated a securities class action in the United States District Court for the Southern District of New York, on behalf of purchasers of the common stock of Omnicom Group, Inc. (NYSE: OMC) between April 25, 2000 and June 11, 2002, inclusive, against the Company and certain of its officers. The complaint alleges that defendants violated the federal securities laws by issuing materially false and misleading statements throughout the class period that had the effect of artificially inflating the market price of the Company's securities. The complaint alleges that defendants described the Company's revenues and earnings as growing, regardless of the general economic slowdown and the largest decline in advertising revenue experienced by the industry. The complaint further alleges that the Company's development was mainly accredited from Omnicom's many acquisitions. On June 12, 2002, an article in The Wall Street Journal emphasized the Company's acquisition accounting and broached questions regarding the Company's formation of an off-balance sheet entity and the transferring of certain Internet investments. Specifically, concerning the Company's acquisition accounting, the article recognized that the Company directly integrated revenue and earnings from new acquisitions in its reported financial results, while its opposition excluded the results for the first year after the company was acquired, generating a materially misleading sense of the Company's performance. The article also noted that the Company continuously owed hundreds of millions of dollars in extra payments for companies that it had previously acquired and that the possibility of future acquisitions may be required regarding companies it had invested in, causing a prospective liability. For more details, contact Fred Taylor Isquith, Gustavo Bruckner, Michael Miske, George Peters or Derek Behnke by Mail: 270 Madison Avenue, New York, New York 10016 by Phone: 800-575-0735 by E-mail: classmember@whafh.com or visit the firm's Website: http://www.whafh.com. All e-mail correspondence should make reference to Omnicom. VERISIGN INC.: Schiffrin & Barroway Commences Securities Suit in CA ------------------------------------------------------------------- Schiffrin & Barroway LLP initiated a securities class action against VeriSign Inc. (Nasdaq:VRSN) claiming that the Company misled investors about its business and financial condition. The suit is pending in the US District Court for the Northern District of California laws on behalf of all investors who bought Company securities between January 25, 2001 through April 25, 2002. The suit alleges that the Company, during the class period, sought to artificially increase its revenue and margins and to create the perception that its deferred revenue growth was derived organically. In fact, approximately 10% of the Company's revenue was derived from sales to small companies in which it had invested and from dubious "barter transactions." The Company's revenues and earnings derived from related parties were dubious at best. Specifically, whenever a two-way set of transactions occurs in which a company acts as both the lender and service provider, an investor lacks assurance as to whether the related parties would have made similar decisions regarding purchases in the absence of financing from that company. Accordingly, despite the Company's claims that such transactions were separately negotiated and recorded at terms the Company considered to be at arm's length and fair value, the revenue and earnings that the Company recognized from its relationship with these customers was not an accurate measure of the "real" demand for its products. Equally dubious was the quality of the non-monetary portion of revenue recorded from reciprocal agreements. For more details, contact the Shareholder Relations Manager by Phone: 888-299-7706 (toll free) or 610-822-2221 by E-mail: info@sbclasslaw.com or visit the firm's Website: http://www.sbclasslaw.com WORLDCOM INC.: Wolf Haldenstein Launches Securities Suit in Mississippi ----------------------------------------------------------------------- Wolf Haldenstein Adler Freeman & Herz LLP initiated a securities class action on behalf of all persons who purchased or otherwise acquired the common stock of WorldCom, Inc. between April 26, 2001 and June 25, 2002, seeking to pursue remedies under the Securities Exchange Act of 1934. The suit is pending in the United States District Court for the District of Mississippi at Jackson against the Company and: (1) Bernard J. Ebbers, (2) Scott D. Sullivan and (3) Arthur Anderson, LLP The complaint details how during the class period, the Company, the nation's second-largest long-distance carrier, overstated its cash flow by $3.8 billion during the last five quarters in what may be the largest case of corporate fraud in history. As detailed in the complaint, instead of the $1.4 billion in profits the Company reported in 2001 and $130 million so far this year, the Company now admits it lost money during those periods but does not know how much. As further detailed in the complaint, the Company, under the guidance of Mr. Ebbers and Mr. Sullivan, booked basic operating costs like basic network maintenance as capital investments, a fictitious practice that hid expenses, inflated cash flow and allowed the Company to falsely report profits instead of losses. In short, this accounting machination boosted cash flow because it improperly treated costs as an asset that could be written down over time, not immediately. Importantly, this practice of moving certain transfers from line item expenses to capital accounts is a blatant violation of Generally Accepted Accounting Principles and Generally Accepted Accounting Standards. Absent this improper accounting practice, the Company would have reported a net loss for 2001, as well as the first quarter of 2002. WorldCom reported a profit of $1.4 billion for 2001 and $130 million for the first quarter of 2002, each patently false. Arthur Andersen also knew that this type of accounting practice was improper and, according to published reports, Andersen's audit reports "could not be relied upon for at least "the five quarters in question." As an experienced auditor charged with the responsibility of preparing disclosures to be filed with the SEC, Andersen knew the line cost transfers did not comport with GAAP and GAAS, but either intentionally or recklessly disregarded this pervasive fraud to the detriment of the class. Anderson, however, issued a March 7, 2002, "Report Of Independent Public Accountants" that was included in the Company's false 2001 Form 10-K that was filed with the SEC on March 13, 2002. Anderson's opinion letter falsely stated that it had properly audited the Company's 2001 balance sheet and that in Anderson's opinion "(w)e believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of WorldCom, Inc. and subsidiaries as of December 31, 2000 and 2001, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States." For more details, contact Gregory Nespole, Gustavo Bruckner, Michael Miske, George Peters or Derek Behnke by Mail: 270 Madison Avenue, New York, New York 10016 by Phone: 800-575-0735 by E-mail: classmember@whafh.com or visit the firm's Website: http://www.whafh.com WORLDCOM INC.: Keller Rohrback Files 401(K) Fiduciary Duty Breach Suit ---------------------------------------------------------------------- Keller Rohrback LLP initiated a 401(k) Breach of Fiduciary Duty class action against WorldCom, Inc. (NYSE:WCOM/WCOME) on behalf of participants and beneficiaries of the Company's 401(k) retirement plans from January 3, 2000 through the present. The complaint filed alleges that WorldCom, and its plan administrators, breached their fiduciary duties of loyalty and prudence. The complaint continues that the breach occurred when material information was withheld or concealed from the Plan participants and beneficiaries with respect to the Company's business, financial results and operations, thereby encouraging participants and beneficiaries to continue to make and maintain substantial investments in company stock and the Plans. For more details, contact Jennifer Tuato'o by Phone: 800-776-6044 by E- mail: investor@kellerrohrback.com or visit the Website: http://www.erisafraud.comor http://www.seattleclassaction.com ********* 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. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re- mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. * * * End of Transmission * * *