/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/021218.mbx C L A S S A C T I O N R E P O R T E R Wednesday, December 18, 2002, Vol. 4, No. 250 Headlines AETNA: President's SEC Nominee Accused Of Misleading Investors In Suit AIRNET COMMUNICATIONS: Asks NY Court To Dismiss Securities Fraud Suit APPLIED DIGITAL: Plaintiffs File Consolidated Securities Lawsuit in FL ARIZONA: Maricopa Judge Dismisses Alternative Fuels Suit Against State ENTERASYS NETWORKS: Pension Fund Charges Scheme To Show Unreal Earnings ESS TECHNOLOGY: Moving for Consolidation of Securities Lawsuits in CA ESS TECHNOLOGY: Investors File Shareholder Derivative Lawsuits in CA GEMSTAR-TV GUIDE: Plaintiffs To Amend Consolidated Securities Lawsuit GENERAL MEDIA: FL Court Dismisses Suit Over "Fake" Anna Kournikova Pics GREAT SOUTHERN: Denies Allegations in Consumer Fraud Suit in NM Court HMO LITIGATION: Doctors Criticize Adequacy of Cigna Lawsuit Settlement HONG KONG: High Court Moves To Protect Investors From Securities Fraud IBM CORPORATION: Conflict Stirs Over Conversion To Cash-Balance Pension ICN PHARMACEUTICALS: Expects CA Court To Consolidated Securities Suits INSIGHT ENTERPRISES: Named as Defendant in Securities Fraud Suits in AZ JDN REALTY: Faces Shareholder Lawsuit Opposing DDR Merger in GA Court KONOVER PROPERTY: Inks MOU To Settle Suit Opposing Partnership Mergers NEOPHARM INC.: Moves For Dismissal of Securities Fraud Suit in N.D. IL QUINTILES TRANSNATIONAL: Denies Allegations in Securities Fraud Suits RADIAN GROUP: Plaintiffs Appeal Dismissal of Suit For RESPA Violations RURAL/METRO: Securities Suit Moved From AZ State Court To Federal Court STATION CASINOS: Court To Rule on Appeal on Gambling Lawsuit Dismissal New Securities Fraud Cases 800AMERICA.COM: Marc Henzel Commences Securities Fraud Suit in S.D. NY ANNUITY AND LIFE: Wechsler Harwood Launches Securities Suit in CT Court H&R BLOCK: Marc Henzel Commences Securities Fraud Lawsuit in S.D. NY LEAP WIRELESS: Marc Henzel Commences Securities Fraud Suit in S.D. CA LEAP WIRELESS: Charles Piven Commences Securities Fraud Suit in S.D. CA NASH FINCH: Marc Henzel Commences Securities Fraud Lawsuit in MN Court SEACHANGE INTERNATIONAL: Marc Henzel Commences Securities Suit in MA SMARTFORCE PLC: Marc Henzel Commences Securities Fraud Suit in NH Court SPIEGEL INC.: Schiffrin & Barroway Commences Securities Suit in N.D. IL SPIEGEL INC.: Cauley Geller Commences Securities Fraud Suit in N.D. IL TENET HEALTHCARE: Berman DeValerio Commences Securities Suit in C.D. CA TENGASCO INC.: Marc Henzel Commences Securities Fraud Suit in E.D. TN TRANSACTION SYSTEMS: Marc Henzel Commences Securities Fraud Suit in NE ********* AETNA: President's SEC Nominee Accused Of Misleading Investors In Suit ---------------------------------------------------------------------- President George W. Bush's nominee to lead the Securities and Exchange Commission remains a target of a class action accusing him of fraud for failing to disclose financial problems at Aetna when he was the insurance company's top executive, according to a report by the Associated Press Newswires. William H. Donaldson was named, as Aetna's Chief Executive Officer, in a federal class action, filed a year ago in New York, by the investors against the Company and Mr. Donaldson. Mr. Donaldson's tenure at the helm of Aetna also sparked criticism this year from several investors unhappy about his $7 million in cash and bonuses, and about changes he made in rules governing the company. The investors' lawsuit, which also names Aetna and its current chief executive, John W. Rowe, accuses the company's leaders of falsely boasting of the insurance company's internal financial controls in 2000 and 2001, despite knowing about its serious problems. Specifically, the lawsuit says Mr. Donaldson and other Aetna executives knew about problems in how the company was handling medical claims. Those problems undermine the insurer's ability to maintain the cash reserves needed to pay such claims, the suits say. The lawsuit also alleges that a company vice president resigned because of his discomfort with the problems within Aetna in late 2000, and other executives urged Mr. Donaldson to disclose them to the public. Those requests were refused, the lawsuit says. Repeated upbeat statements by Mr. Donaldson and Mr. Rowe about the Company's financial health represented "a material deception of the investing public," the lawsuit says. In spring 2001, the company announced losses because of inadequate reserves and its stock price dropped sharply. Company spokesman David Carter, said, "Aetna believes the suit has no merit," adding that the company has filed a motion to dismiss the suit and is awaiting the judge's decision. AIRNET COMMUNICATIONS: Asks NY Court To Dismiss Securities Fraud Suit --------------------------------------------------------------------- Airnet Communications, Inc. asked the United States District Court for the Southern District of New York to dismiss the consolidated securities class action pending against it, the members of the underwriting syndicate involved in its initial public offering (IPO) and two of its former officers. The suit, filed on behalf of purchasers of the Company's securities between December 6,1999 and December 6,2000, alleges that the defendants violated federal securities laws. Specifically, the complaint charges the defendants with violations of Sections 11 and 15 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934. In substance, the allegations are that the underwriters of the Company's initial public offering charged commissions in excess of those disclosed in the initial public offering materials and that these actions were not properly disclosed. On July 15, 2002, the Company filed a motion to dismiss on behalf of all issuers and individual defendants. The claims against the two former officers named in the suit have been dismissed without prejudice. The Company does not know whether the claims of misconduct by the underwriters have merit but at this time it believes the claims against it are without merit. With respect to these matters, it is believed that the Company has adequate legal defenses such that the ultimate outcome will not have a material adverse effect on the Company's future financial position or results of operations. APPLIED DIGITAL: Plaintiffs File Consolidated Securities Lawsuit in FL ---------------------------------------------------------------------- Plaintiffs in the securities class actions pending against Applied Digital Solutions, Inc. filed a consolidated suit in the United States District Court for the Southern District of Florida on behalf of all persons who purchased the Company's common stock from February 11, 2000 through May 10, 2002, inclusive. The primary allegations in the recently filed amended consolidated suit include claims that: (1) the Company recklessly engaged in a strategy of acquiring subsidiaries without regard to any strategic worth; (2) the Company lacked the necessary accounting controls over its subsidiaries; (3) the Company manipulated its stock price through the issuance of press releases; and (4) the Company's statements about its Intellesale, Inc. and VeriChip Corporation subsidiaries were false and misleading. The Company believes these claims, and the action in general, are without merit, but cannot give any assurance of a favorable verdict for the Company. ARIZONA: Maricopa Judge Dismisses Alternative Fuels Suit Against State ---------------------------------------------------------------------- Cash-strapped Arizona recently received some good news when a Maricopa County Superior Court judge dismissed a class action in the alternative-fuels case, a move that could save Arizona about $100 million, The Arizona Republic reports. More than 22,000 consumers who bought a vehicle or applied for benefits under Arizona's alternative-fuels program are suing for damages. The consumers' lawsuit, and its dismissal, arises out of the alt-fuels program, which was touted as a way to improve air quality and reduce public reliance on foreign fuels. In April 2000, lawmakers adopted a statute that offered lucrative grants, tax subsidies and other incentives to consumers who bought vehicles capable of running on propane, natural gas or electricity. As many as 22,000 applications were in the pipeline when the state curtailed the program in late 2000, because of skyrocketing costs. Plaintiffs' attorney Robert Carey said that Judge Rebecca Albrecht's decision is just a procedural delay. Mr. Carey said he would ask Judge Albrecht to reconsider the case next week. Governor Jane Hull conceded that it is not the end of the litigation surrounding the botched clean-air program, but that it is a "step in the right direction." The legislators cut out all applicants but those buyers who had received their vehicles, and they refused to pay for expensive add-on's to the vehicles. That action decreased the cost to the state to "wrap- up" the consumer portion of the alt-fuels program to $120 million. ENTERASYS NETWORKS: Pension Fund Charges Scheme To Show Unreal Earnings ----------------------------------------------------------------------- The Los Angeles County Employees Retirement Association charged Enterasys Networks Inc. with using an array of maneuvers, including phony purchase orders and side letters to sales contracts that were hidden from auditors, to inflate revenue and profit from mid-2000 to early 2002, the Wall Street Journal reports. The pension fund is lead plaintiff in a lawsuit seeking class action status, filed this year against the Company, which is the successor company to Cabletron Systems Inc., the onetime computer-networking highflier that recently restated its results and is under investigation by the Securities and Exchange Commission (SEC). The Enterasys case has attracted special attention in the company's home state of New Hampshire, because one of its directors and audit- committee members is Governor-elect Craig Benson, a co-founder of Cabletron. Mr. Benson is not a defendant in the retirement fund's lawsuit, but has been named as a defendant in a separate shareholders suit. Both cases were filed in United States District Court in Concord, New Hampshire. A governor spokesman for Mr. Benson's gubernatorial transition team said that Mr. Benson was not involved in the day to day operations during the class period designated in the Los Angeles County suit and was not aware of any wrongdoing. In an amended complaint filed earlier this week, the Los Angeles retirement fund contends several top executives of Enterasys belonged to a "special teams unit" that met regularly to "orchestrate" phony deals and accounting shams intended to create artificial revenue at the end of fiscal quarters. The lawsuit says its allegations are based on information from a number of unnamed former Enterasys officials. Three of the defendants alleged to be members of the unit are Enrique Fiallo and Piyush Patel, both former chief executives of Enterasys and Cabletron, and David Kirkpatrick, a former chief financial officer. Among other things, the complaint further alleges that the "special teams unit" also would "create phantom deals" at the end of the quarter in which merchandise would be shipped to a reseller under a phony purchase order, and then forwarded by the reseller to a distributor that would sell the products at a steep discount on a "gray market" for Enterasys goods that has been developed away from authorized sellers. The pension fund says in the complaint that Enterasys booked those sales at full price even though the merchandise was heavily discounted and sometimes even returned. ESS TECHNOLOGY: Moving for Consolidation of Securities Lawsuits in CA --------------------------------------------------------------------- ESS Technology, Inc. intends to ask the United States District Court for the Northern District of California to consolidated the securities class actions commenced against it, after the Company revised its revenues and earnings guidance for the third quarter of 2002 on September 12, 2002. The suits allege that the Company issued misleading statements regarding its business and failed to disclose material facts, prior to announcing reduced revenues and earnings on September 12, 2002. To date, eight lawsuits have been filed, namely: (1) Daniel C. Rann v. ESS Technology, Inc., et al., filed September 13, 2002, (2) James W. Becker and Randy Bohart v. ESS Technology, Inc., et al., filed September 27, 2002, (3) Palmer Fauconnier v. ESS Technology, Inc., et al., filed September 30, 2002, (4) Mike Forrestal v. ESS Technology, Inc., et al., filed September 30, 2002, (5) Sandy Dorman v. ESS Technology, Inc., et al., filed September 30, 2002, (6) Patriot Shipping Corporation v. ESS Technology, Inc., et al., filed October 1, 2002, (7) Adam D. Saphier v. ESS Technology, Inc., et al., filed October 17, 2002 and (8) Mayer Abramowitz v. ESS Technology, Inc., et al., filed on November 7, 200 The Company has not yet answered any of the suits. Although the Company and its officers and directors have meritorious defenses to the action, the Company cannot predict with certainty these lawsuits' outcomes. ESS TECHNOLOGY: Investors File Shareholder Derivative Lawsuits in CA -------------------------------------------------------------------- ESS Technology, Inc. faces three shareholder derivative lawsuits filed relating to the Company's revision of its revenues and earnings guidance for the third quarter of 2002 on September 12, 2002, purporting to represent the Company. The suits name as defendants certain of the Company's officers and directors, and allege, among other things, breaches of fiduciary duty and insider trading. To date, three derivative suits have been filed in the California Superior Court, Alameda County: (1) Robert Haven, Derivatively on Behalf of ESS Technology v. Blair, et al., filed October 3, 2002, (2) James Shroff, Derivatively on Behalf of ESS Technology v. Blair, et al., filed October 10, 2002 and (3) David Chestnut, Derivatively on Behalf of ESS Technology v. Chan, et al., filed October 16, 2002 The Company has not yet answered any of the complaints. Although it believes believe that it and its officers and directors have meritorious defenses to the action, the Company cannot predict with certainty the outcome of these lawsuits. GEMSTAR-TV GUIDE: Plaintiffs To Amend Consolidated Securities Lawsuit --------------------------------------------------------------------- Plaintiffs in the securities class actions pending against Gemstar-TV Guide, International are expected to file an amended consolidated lawsuit this month in the United States District Court for the Central District of California. Several suits were commenced in April and May 2002 against the Company and its principal executive officers and directors, alleging violations of the Securities Exchange Act of 1934 and the Securities Act of 1933. Also named in several of the complaints is The News Corporation Limited, a shareholder of the Company. The complaints name some or all of the same parties as defendants, and purport to state claims on behalf of all persons who purchased the Company's common stock during various periods, the broadest of which is August 11, 1999 through April 4, 2002. More particularly, the alleged claims are brought under Sections 10(b) and 20(a) of the 1934 Act, Section 11 of the 1933 Act and SEC Rule 10b-5. The essence of the allegations is that the defendants allegedly: (1) intentionally failed to properly account for revenue accrued from Scientific-Atlanta; (2) failed to properly account for a non-monetary transaction, pursuant to which intellectual property rights were obtained, in exchange for cash and advertising credits; and (3) failed to properly record the fair value of technology investments and marketable securities acquired in connection with the Company's acquisition of TV Guide, Inc. Plaintiffs allege that this had the effect of materially overstating the Company's reported financial results. Pursuant to the parties' stipulation, the court has consolidated all of the lawsuits into one case. Several groups of plaintiffs and their counsel filed motions to be appointed lead plaintiff and lead plaintiff's counsel. Pursuant to an amended order dated August 9, 2002, the court appointed the Teachers Retirement System of Louisiana and the General Retirement System of the City of Detroit as co-lead plaintiffs, and appointed Bernstein, Litowitz, Berger & Grossman, LLP, as lead plaintiffs' counsel. Plaintiff Georgica Advisors has requested that the court reconsider that decision and appoint it as lead plaintiff. The motion was heard on November 18, 2002. Lead plaintiffs are expected to file their consolidated complaint on or before December 12, 2002. Defendants' response to the consolidated complaint is expected to be due on or before February 14, 2003. In addition, an Oklahoma limited partnership filed a lawsuit in the United States District Court for the Northern District of Oklahoma on October 7, 2002 against some of the same defendants, including the Company, based on the same core allegations and purported causes of action alleged in the consolidated class action. Also, the Company learned on or about November 1, 2002 that, based on these same core allegations, a separate lawsuit was filed in the federal district court for the Central District of California against the Company and some of the same defendants. The lawsuit alleges state law based derivative claims, including those based on various breaches of fiduciary duty. GENERAL MEDIA: FL Court Dismisses Suit Over "Fake" Anna Kournikova Pics ----------------------------------------------------------------------- The class action pending against General Media, Inc. has been dismissed due to the failure of plaintiffs to file an amended suit in the Circuit Court of Florida, 11th Judicial Circuit for Miami/Dade County. The suit alleges that the Company committed a "breach of duty" when it published photographs of a woman topless in the June 2002 issue of Penthouse Magazine, falsely representing them to be pictures of tennis star Anna Kournikova when they were in reality photographs of someone else. The plaintiffs claim they bought Penthouse prior to learning that the authenticity of the photographs was in question for the sole purpose of looking at these photographs. The action requested class action certification, a refund of the price of the Magazine, compensation for "lost value" of the Magazine, court costs and interest. On July 22, 2002, the company filed a motion to dismiss the action. On October 8, 2002, the court issued an order that gave the plaintiffs ten days to file an amended complaint or the case would be dismissed with prejudice. The plaintiffs failed to file an amended complaint within the ten-day period and have agreed to a dismissal of the action. Another similar suit was filed in the Circuit Court of Cook County, Illinois, an action alleging that the Company committed: (1) a breach of contract, (2) a breach of express warranty and (3) consumer fraud The plaintiffs in this suit have filed a request that the action be certified as a class action with the two plaintiffs as class representatives and their lawyer as class counsel. The Company has filed a motion to dismiss the action. It is still too early to determine the possible outcome of the proceedings. Therefore management cannot give an opinion as to the effect this suit will have on the Company's financial condition or results of operations. There can be no assurance, however, that the ultimate liability from these proceedings will not have a material adverse effect on its financial condition and results of operations. GREAT SOUTHERN: Denies Allegations in Consumer Fraud Suit in NM Court --------------------------------------------------------------------- Great Southern and Ohio Life Insurance Company faces a class action filed in the First Judicial District Court of Santa Fe, New Mexico, on behalf of all current owners of individual insurance policies issued by the Company who paid premiums on a monthly, quarterly, or semi- annual basis. The suit alleges that the Company Southern engaged in unfair, deceptive, and illegal practices by allegedly failing to disclose the dollar amount and effective annual percentage rate of the extra cost associated with paying premiums on a modal basis. The plaintiff has requested for herself and the putative class an award of damages, treble damages, punitive damages, attorneys' fees, interest, injunctive relief, and declaratory relief. The Company has denied all allegations of wrongdoing and damages and has requested the removal of the action to federal court. HMO LITIGATION: Doctors Criticize Adequacy of Cigna Lawsuit Settlement ----------------------------------------------------------------------- Medical societies from Maine and 18 other states have labeled the proposed settlement in a lawsuit involving Cigna Health Care "inadequate." The medical societies collectively represent 200,000 doctors, the Portland Press Herald reports. The proposed settlement in the Kaiser vs. Cigna case would bar almost all of the managed-care claims against Cigna pending in a class action being heard by US District Judge Federico Moreno in Miami, as well as in other state-court actions. These lawsuits argue that the insurer improperly exercises control over medical decisions in order to control costs. Defendants in the class action in Miami include Cigna, Aetna, United HealthCare, Humana, and other large, managed-care companies. The nation's doctors have been certified as a class in the case. Under the proposed settlement, Cigna would still be able to use financial criteria to overturn the decisions of the treating physician when it comes to determining whether a given course of treatment is medically necessary for a patient, the medical societies argue. HONG KONG: High Court Moves To Protect Investors From Securities Fraud ---------------------------------------------------------------------- The Supreme Court in the Hong Kong mainland is about to make it easier for investors to bring civil lawsuits against listed companies for misleading them with false information, The Standard (Hong Kong) reports. The move toward this goal comes as more and more small investors take legal action firms and brokerages over investment losses. "Establishing and improving the provisions for civil liabilities in the Securities Law is a matter of great urgency," said Li Guoguang, vice- president of the Supreme Court. Guo Feng, director of the Financial Law Research Institute of the Renmin University, said the interpretations, expected by the end of the month, would make three major changes: (1) Investors will be allowed to file a class action; (2) The burden of proof will rest with the defendant; (3) Provision for a clearer calculation of the compensation entitlements "With the new interpretations, hundreds, possibly thousands of individual investors will be allowed to file a class action suit, which will enhance the efficiency of the litigation process," Mr. Guo said. "The class-action suit will definitely put pressure on the listed companies to refrain from inflating their revenue." Until this innovation, investors only have been able to file suits individually. Mr. Guo said that the interpretations would make it easier for investors to press successful claims by placing the burden of proof on companies to establish that they were not responsible for the loss to their shareholders or clients. Mr. Guo added that compensation would be calculated on "the actual loss" including the difference between the shares bought and sold, in addition to the loss of commission and tax. IBM CORPORATION: Conflict Stirs Over Conversion To Cash-Balance Pension ----------------------------------------------------------------------- Kathi Cooper, 52, is lead plaintiff in a class action against her employer, International Business Machines Corporation (IBM), challenging IBM's decision to convert its traditional pension to a so- called cash-balance pension, the Chicago Tribune reports. Ms. Cooper says the IBM conversion would cost her $400,000 in retirement income. A traditional pension pays prescribed monthly income to retirees, based on age, years of service and, in a typical case, average compensation for the last five years of employment. Cash-balance pensions make no such promise. They provide company contributions for each employee to a hypothetical account that builds through annual employer contributions and interest. The phantom cash-balance account materializes at retirement. Critics charge that the method of establishing the initial cash contribution and the process for building the phantom account leave older workers short of what they would need to purchase, at age 65, an annuity equal to the previously promised pension benefit. The long-simmering controversy regarding cash-balance pensions received some additional ideas to toss about, as the Treasury Department reacted to complaints that employers recasting their pensions to save money were discriminating against older workers. The Treasury Department's response was to propose new regulations. The new rules affirm that pension plans and alterations in pension plans may not discriminate according to age. Ironically, the rules also make it easier for employers to abandon traditional pensions in favor of cash-balance pensions, a move that is likely to leave older workers worse off. "The new regulation does not guarantee that an older employee will receive a contribution to a cash-balance plan as valuable as the value of the benefit he would have accrued in a traditional defined benefit plan," said Ian Kopelman, a benefits lawyer in Chicago. The gap is likely to be especially evident in older workers near retirement. The Internal Revenue Service, in 1999, made a decision to stop issuing the required approvals for the plans as eligible for favorable tax treatment. William Sweetnam, benefits tax counsel in the Treasury Department, said that the Department wants to get the determination process up and running again. Meanwhile, the process of challenging cash-balance plans has been running full-steam, regardless of the IRS moratorium. Ms. Cooper said it took her and her fellow employees just a few days in 1999, to calculate their losses under the IBM pension conversion and set up a Web-based employee grapevine. "Almost overnight, we had a method of communicating," Ms. Cooper recalled. And the IBM plaintiffs later retained a public relations firm. Karen Ferguson of the Pension Rights Center in Washington, D.C. said, "The critical factor in the move to cash-balance plans has been to eliminate the early retirement plans." Ms. Ferguson added, "We anticipate there will be an avalanche of protests, because employees know now that this is wrong." Critical to the protest are the thousands of senior employees at companies who are well-educated and highly sensitive to retirement issues as they near their intended retirement. Some of the angriest workers claim their company's promise to subsidize their early retirement was betrayed in the cash-balance conversion. The issues are many and complex, so complex that a few years ago consultants promoting cash-balance plans to employers as cost-cutting schemes, boasted that workers would seldom figure out the losses they face, but those days are over. Extensive press coverage, congressional hearings, increasingly knowledgeable employees and plaintiffs lawyers, not to mention the numerous Web sites and chat rooms devoted to cash-balance complaints, have diminished chances for stealth pension conversions. ICN PHARMACEUTICALS: Expects CA Court To Consolidated Securities Suits ---------------------------------------------------------------------- ICN Pharmaceuticals, Inc. expects the securities class actions pending against it and certain of its current and former executive officers to be consolidated in the United States District Court for the Central District of California. The lawsuits allege that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing false and misleading financial results to the market during different class periods ranging from May 3, 2001 to July 10, 2002, thereby artificially inflating the price of the Company's stock. The lawsuits generally claim that the defendants improperly inflated the Company's sales volume and revenues through excess shipment of products to the Company's distributors and improper recognition of revenue from certain royalty payments. The plaintiffs generally seek to recover compensatory damages, including interest. On October 1, 2002, several former and current directors of the Company, as individuals, as well as the Company, as a nominal defendant, were named as defendants in a shareholder's derivative complaint filed in Delaware Chancery Court. The complaint purports to state causes of action for: (1) violation of Delaware General Corporate Law Section 144, (2) breach of fiduciary duties and (3) waste of corporate assets in connection with the defendants' management of the Company. Because it is a derivative lawsuit, the complaint does not seek recovery from the Company but rather on behalf or the Company. The allegations largely duplicate those contained in the derivative lawsuit filed in Orange County, California, but add a disclosure-based claim relating to the allegations of federal securities law violations made in the class actions. INSIGHT ENTERPRISES: Named as Defendant in Securities Fraud Suits in AZ ----------------------------------------------------------------------- Insight Enterprises, Inc. faces several securities class actions filed in the United States District Court, District of Arizona, by a stockholder alleging violations of Section 10(b) of the Securities Exchange Act of 1934, and SEC Rule 10b-5 promulgated thereunder. The suits uniformly allege the Company and certain of its officers made false and misleading statements pertaining to its business, operations and management in an effort to inflate the price of its common stock. The lawsuit also names as co-defendants: (1) Eric J. Crown, Chairman of the Board of Directors, (2) Timothy A. Crown, Chief Executive Officer and a director, and (3) Stanley Laybourne, Chief Financial Officer, Treasurer and a director In the complaint, the plaintiff seeks class action status to represent all buyers of the Company's common stock from April 26, 2002 to July 17, 2002. Three additional complaints have been filed against the Company with respect to these and related matters. The Company is preparing its response to the allegations as set forth in these lawsuits. The costs associated with defending the allegations in these lawsuits and the potential outcome cannot be determined at this time. JDN REALTY: Faces Shareholder Lawsuit Opposing DDR Merger in GA Court --------------------------------------------------------------------- JDN Realty, Inc. faces a shareholder class action and derivative suit commenced in the Superior Court of Fulton County, Atlanta, Georgia, relating to the proposed merger between the Company and Developers Diversified Realty Corporation (DDR). The suit charges the Company, its Board of Directors and DDR with: (1) breach of fiduciary duty, (2) waste, (3) abuse of control, and (4) unjust enrichment The complaint seeks declamatory relief, an order enjoining consummation of the merger, and an accounting for unspecified damages. Management believes that this lawsuit is without merit. The Company does not believe, based on information currently available, that any of these ordinary course legal proceedings would have a material effect on the results of operations or financial condition of the Company, nor is management aware of any material legal proceedings threatened against the Company. KONOVER PROPERTY: Inks MOU To Settle Suit Opposing Partnership Mergers ---------------------------------------------------------------------- Konover Property Trust, Inc. reached a memorandum of understanding to settle the consolidated class action filed to oppose the agreement the Company forged with Effell LLC and Atlantic RealVest LLC (entities under common ownership) to buyout their respective interest in Atlantic Realty LLC and Park Place KPT LLC (a separate venture with common ownership). Three suits were commenced in March and April 2002, and were later consolidated in the Circuit Court for Baltimore City, Maryland. The plaintiff in each action purports to represent a putative class of all the Company's public common stockholders who allegedly will be harmed by the proposed merger transaction. Excluded from the class are the defendants and any related or affiliated person, corporation, or other entity. The named defendants are the Company, certain directors and officers of the Company, and Prometheus Southeast Real Estate Trust. The primary claim against the defendants is an alleged breach of fiduciary duty. The plaintiffs allege that: (1) Prometheus, which owns approximately 66% of the Company's outstanding common stock, is engaging in self-dealing and not acting in good faith by offering to acquire all of the remaining outstanding common stock for an unreasonably low price; (2) Prometheus' offer is based on inside information known to the defendants regarding the Company's value and prospects that has not been publicly disclosed; and (3) Prometheus improperly is exerting its majority position and control over the directors, which has resulted in conflicts of interest between Prometheus and the Company's common stockholders and between the Company's directors and officers and the Company's common stockholders. While management believes that these lawsuits are without merit, the Company has determined that an early resolution of the claims, without admitting any liability, would avoid costly litigation expenses and would be in the best interests of the Company. On September 20, 2002, the parties, through their respective attorneys, entered into a memorandum of understanding setting forth the terms of the settlement of the lawsuits mentioned above. Under the terms of the memorandum of understanding, in exchange for the release by the plaintiffs of their claims related to the lawsuits, the merger, the merger agreement or any public filings in connection with these matters, against the defendants and certain other related persons, plaintiffs' counsel has been granted the opportunity to review and comment on the proxy materials relating to the merger to be filed by the Company with the Securities and Exchange Commission, and to perform reasonable discovery to confirm the fairness of the settlement. In addition, the defendants have agreed not to oppose a petition by plaintiffs' counsel for an award of attorneys' fees and expenses not to exceed $225,000 to be paid by the Company or its successor in interest. The consummation of the settlement described in the memorandum of understanding is subject to certain conditions, including consummation of the merger, the drafting and execution of final settlement documents, and obtaining final court approval of the settlement and dismissal of the lawsuits described above. NEOPHARM INC.: Moves For Dismissal of Securities Fraud Suit in N.D. IL ---------------------------------------------------------------------- Neopharm, Inc. asked the United States District Court for the Northern District of Illinois to dismissal the consolidated securities class action filed on behalf of all purchasers of the Company's common stock between September 25, 2000 and April 19, 2002, 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, an earlier Class Action Reporter story states. Specifically, the suit alleges that the Company issued a series of statements concerning its Liposome Encapsulated Parclitaxel (LEP) product, and that the defendants: (1) made materially false positive statements to Pharmacia Corporation in order to induce their participation in clinical trials of LEP; (2) failed to disclose that Pharmacia Corporation was studying a different formulation of LEP that would not necessarily support the approval of the Company's LEP product; and (3) failed to disclose that all of Pharmacia Corporation's clinical trails failed to produce any positive benefits to patients. The decision on the Company's motion to dismiss is expected in February 2003. The Company anticipates further increases in legal expenses during the remainder of 2002 as it pursues its objectives in the suits, but, at this time, the Company is unable to determine with any precision the amount or timing of these future legal expenses. In addition, the Company is unable to predict the outcome or potential liability related to the arbitration or class action suits at this time. QUINTILES TRANSNATIONAL: Denies Allegations in Securities Fraud Suits --------------------------------------------------------------------- Quintiles Transnational Corporation faces several class actions filed in Superior Court, Durham County, North Carolina by shareholders seeking to enjoin the consummation of the transaction contemplated by the non-binding proposal made by Pharma Services Company, a newly formed company wholly owned by Dennis B. Gillings, Ph.D., to acquire all of the outstanding shares of the Company for $11.25 per share in cash. In response to the proposal, which was received by the Company on October 13, 2002, the Company's Board of Directors established a special committee of independent directors to act on behalf of the Company with respect to the proposal or any alternatives in the context of evaluating what is in the best interest of the Company and its shareholders. On November 11, 2002, the special committee announced its rejection of the proposal and its intention to investigate strategic alternatives available to the Company for purposes of enhancing shareholder value, including the possibility of a sale of the Company and alternatives that would keep the Company independent and publicly owned. The lawsuits name as defendants Dr. Gillings, other members of the Company's Board of Directors, the Company and, in some cases, Pharma Services Company. The complaints allege, among other things, that the directors breached their duties with respect to the proposal. The complaints seek to enjoin the transaction proposed by Pharma Services Company, and the plaintiffs seek to recover damages. The Company is currently in the process of reviewing the complaints and considering an appropriate response. Based upon its preliminary review, the Company believes the lawsuits are without merit. In the opinion of management, based on consultation with its legal counsel, the outcome of such litigation currently pending will not have a material effect on the Company's consolidated financial statements. RADIAN GROUP: Plaintiffs Appeal Dismissal of Suit For RESPA Violations ---------------------------------------------------------------------- Plaintiffs in the class action filed against two of Radian Group, Inc.'s subsidiaries appealed the United States District Court for the Eastern District of Texas' dismissal of the suit. The suit names Radian Guaranty Inc. and Amerin Guaranty Corporation as defendants and alleges violations of Section 8 of the Real Estate Settlement Procedures Act (RESPA). Another similar suit is pending in the United States District Court for the Middle District of North Carolina. The Company is contesting the allegations in each such pending action and believes, based on current knowledge and after consultation with counsel, that the outcome of such litigation will not have a material adverse effect on the Company's consolidated financial position and results of operations. RURAL/METRO: Securities Suit Moved From AZ State Court To Federal Court ----------------------------------------------------------------------- The lawsuit filed against Rural/Metro Corporation has been moved to the United States District Court of Arizona, from the Maricopa County Superior Court. The suit also names as defendants Arthur Andersen LLP and John Does 1-50. The lawsuit was brought on behalf of a class of persons who purchased the Company's publicly traded securities including its common stock between July 1, 1996 through June 30, 2001. The primary allegations of the complaint include violations of: (1) various state and federal securities laws, (2) breach of contract, (3) common law fraud, and (4) mismanagement of the Company's 401(k) plan, (5) Employee Stock Purchase Plan and (6) Employee Stock Ownership Plan The Company has not yet been served with this complaint, and cannot give any assurance of a ruling in their favor. STATION CASINOS: Court To Rule on Appeal on Gambling Lawsuit Dismissal ---------------------------------------------------------------------- The United States Ninth Circuit Court of Appeals has yet to decide on the petition filed by plaintiffs in the class action against Station Casinos and 41 manufacturers, distributors and casino operators of video poker and electronic slot machines over the suit's dismissal. The suit was initially commenced in April 1994 in the United States District Court, Middle District of Florida. Another substantially identical suit was commenced in the United States District Court, Middle District of Florida. The lawsuits allege that the defendants have engaged in a course of fraudulent and misleading conduct intended to induce persons to play such games based on a false belief concerning how the gaming machines operate, as well as the extent to which there is an opportunity to win. The two lawsuits were later consolidated into a single action, and have been transferred to the United States District Court for the District of Nevada. On September 26, 1995, a lawsuit alleging substantially identical claims was filed in the Nevada District Court, naming 45 manufacturers, distributors, and casino operators of video poker and electronic slot machines, including the Company. Motions to dismiss the three suits were filed by defendants. On April 17, 1996, the first two suits were dismissed, but plaintiffs were given leave to file amended complaints. In May 1996, an amended complaint was filed, which the defendants later moved to dismiss. In August 1996, the third lawsuit was dismissed with leave to amend. In September 1996, plaintiffs in the third suit filed an amended complaint, which the defendants again moved to dismiss. In December 1996, the court consolidated all the suits and a third case not involving the Company and ordered all pending motions be deemed withdrawn without prejudice, including defendants' motions to dismiss the amended complaints. The plaintiffs filed a consolidated amended complaint on February 13, 1997. In December 1997, the court issued formal opinions granting in part and denying in part the defendants' motion to dismiss. In so doing, the court ordered plaintiffs to file an amended complaint in accordance with the court's orders in January of 1998. Accordingly, plaintiffs amended their complaint and filed it with the Nevada District Court in February 1998. The Company and all other defendants continue to deny the allegations contained in the amended complaint filed on behalf of plaintiffs. The plaintiffs are seeking compensatory, special, consequential, incidental, and punitive damages in unspecified amounts. In June 2002, the Nevada District Court denied plaintiffs' motion for class certification. In July 11, 2002, plaintiffs filed a petition for permission to appeal such class certification ruling with the United States Court of Appeals for the Ninth Circuit. The Ninth Circuit has yet to rule on that petition. While no assurances can be made with respect to any litigation, the Company believes that the plaintiffs' claims are without merit and does not expect that the lawsuits will have a material adverse effect on the Company's financial position or results of operations. New Securities Fraud Cases 800AMERICA.COM: Marc Henzel Commences Securities Fraud Suit in S.D. NY ---------------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United States District Court for the Southern District of New York against 800America.com (Other OTC: ACCO.PK) and three individual defendants on behalf of all persons or entities who purchased or otherwise acquired the securities of 800America during the period between January 17, 2001 and November 13, 2002. The lawsuit charges that defendants violated Sections 10(b) of the Securities Exchange Act of 1934 by engaging in a massive, multifaceted scheme to artificially inflate the value of 800America stock by "cooking" its books and records, and by issuing public filings that grossly distorted the Company's true state of affairs. The suit alleges that, throughout the class period, defendants engaged in fraudulent actions which included, among other things: (1) reporting millions of dollars in fictitious earnings, revenues, expenses and assets, deliberately concealed by defendants' creation of phony bank statements, checks, invoices and a general ledger, which they supplied to 800America's auditor; (2) the misappropriation and looting of substantial assets of the Company by defendants David Elie Rabi and Tillie Ruth Steeples through transfers of funds from 800America accounts to accounts controlled by Mr. Rabi and/or Ms. Staples; (3) the issuance of a press release falsely denying Rabi's criminal past and failing to disclose that Steeples was a control person of the Company; and (4) the filing of a 10-KSB which listed as officers and/or directors or ''significant employees`` several individuals who had either left the Company or could not be located by the Company. The suit further alleges that 800America maintained two separate sets of books in furtherance of their fraud, in which virtually all of its reported revenues in fiscal years 2001 and 2002 were fictitious. In addition, 800America reported approximately $13.2 million in cash assets for fiscal year 2001-supported by a phony bank statement provided to the Company's auditor reflecting approximately $12.67 million in cash-while the actual bank statement reflected that such account never contained more than $640.66 for that entire period. On November 13, 2002, the Securities & Exchange Commission (SEC) filed a civil action against 800America, Mr. Rabi and Ms. Steeples in the Southern District of New York, alleging that the Company falsified virtually all of its reported revenue, concealed the criminal histories of Mr. Rabi and Ms. Steeples, and otherwise perpetrated a massive fraud against investors. Both Mr. Rabi and Ms. Steeples were arrested on criminal charges in connection with this fraud. For more information, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 ANNUITY AND LIFE: Wechsler Harwood Launches Securities Suit in CT Court ----------------------------------------------------------------------- Wechsler Harwood LLP initiated a securities class action on behalf of shareholders who purchased, converted, exchanged or otherwise acquired the common stock of Annuity and Life Re (Holdings), Ltd. (NYSE:ANR) between February 12, 2001 and November 19, 2002, inclusive, in the United States District Court for the District of Connecticut against the Company and: (1) Frederick S. Hammer, (2) Lawrence S. Doyle and (3) John F. Burke The complaint 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, as alleged in the complaint, defendants issued numerous statements and filed quarterly and annual reports with the SEC which described the Company's increasing revenues and financial performance. As alleged in the complaint, these statements were materially false and misleading because they failed to disclose and/or misrepresented the following adverse facts, among others: (i) that the Company had failed to properly account for embedded derivatives contained in certain of its annuity reinsurance contracts in 2001; (ii) that, since at least 2001, the Company had understated a portion of its liabilities and expenses; (iii) that the Company lacked adequate internal controls and was therefore unable to ascertain the true financial condition of the Company; and (iv) that as a result, the values of the Company's balance sheet and financial results were materially overstated at all relevant times. On November 19, 2002, the last day of the class period, Annuity and Life announced that it would restate its financial results for years 2000, 2001 and the first and second quarters of 2002, the period ending June 30, 2002. As detailed in the announcement, the restatement was necessary because the Company had failed to properly account for embedded derivatives contained in certain of its annuity reinsurance contracts in 2001, and, that since at least 2001, the Company had understated a portion of its liabilities and expenses. Following this disclosure, shares of Annuity and Life fell as much as 44%, culminating a 91% decline in the price of the Company's common stock in the prior twelve months. For more details, contact Craig Lowther by Mail: 488 Madison Avenue, 8th Floor, New York, New York 10022 by Phone: (877) 935-7400 by E-mail: clowther@whesq.com or visit the firm's Website: http://www.whesq.com H&R BLOCK: Marc Henzel Commences Securities Fraud Lawsuit in S.D. NY -------------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United States District Court for the Southern District of New York on behalf of a class of all persons who purchased securities of H&R Block, Inc. (NYSE: HRB) between November 8, 1997 and November 1, 2002, inclusive. The suit names as defendants the Company and: (1) Mark A. Ernst, (2) Frank J. Cotroneo, (3) Frank L. Salizzoni, (4) Matthew A. Engel, (5) Cheryl L. Givens, (6) Ozzie Wenich, and (7) Partick D. Petrie 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 during the class period thereby artificially inflating the price of Company securities. For more information, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 LEAP WIRELESS: Marc Henzel Commences Securities Fraud Suit in S.D. CA --------------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United States District Court for the Southern District of California on behalf of a class of all persons or entities who purchased securities of Leap Wireless International, Inc. (OTCBB:LWIN) between February 11, 2002 and July 24, 2002, inclusive. The suit names as defendants the Company and: (1) Harvey P. White, Chairman and Chief Executive Officer, (2) Susan G. Swenson, President, Chief Operating Officer and director, (3) Manford Leonard, Vice President and Controller and (4) Jill E. Barad, Accounting Officer and director 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 during the class period thereby artificially inflating the price of Company securities. Specifically, the Complaint alleges that in starting on February 11, 2002, the day after the Company publicly announced its financial results for its fiscal year ending December 31, 2002, defendants concealed the deteriorated value of its wireless license assets by undertaking a fraudulent impairment test of those assets which grossly overstated the value of Leap's wireless license assets in its financial statements. The suit alleges that defendants were motivated by the need to preserve the image of Leap as a viable wireless company with valuable assets, sufficient to persuade lenders, investors and vendors to provide capital, loans and equipment to the Company. Defendants issued materially false and misleading statements on February 11, 2002, April 24, 2002 and May 2, 2002. On July 24, 2002, the last day of the class period, Leap announced its financial results for its second quarter of 2002 and admitted for the first time that circumstances existed throughout the year were adversely affecting the Company. On this news the market price of Leap shares fell from a class period high of $10.00 to below $1.00 and are presently trading at less that $.40 per share. For more information, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 LEAP WIRELESS: Charles Piven Commences Securities Fraud Suit in S.D. CA ----------------------------------------------------------------------- The Law Offices Of Charles J. Piven, PA initiated a securities class action on behalf of shareholders who purchased, converted, exchanged or otherwise acquired the common stock of Leap Wireless International, Inc. (OTCBB:LWIN) between February 11, 2002 and July 24, 2002, inclusive. The case is pending in the United States District Court for the Southern District of California and names the Company and: (1) Harvey P. White, Chairman and Chief Executive Officer, (2) Susan G. Swenson, President, Chief Operating Officer and director, (3) Manford Leonard, Vice President and Controller and (4) Jill E. Barad, director The action charges that defendants violated federal securities laws by issuing a series of materially false and misleading statements to the market throughout the class period which statements had the effect of artificially inflating the market price of the Company's securities. For more details, 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 by E-mail: hoffman@pivenlaw.com or visit the firm's Website: http://www.pivenlaw.com NASH FINCH: Marc Henzel Commences Securities Fraud Lawsuit in MN Court ---------------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United States District Court for the District of Minnesota on behalf of purchasers of Nash Finch Company (NASDAQ: NAFC; NAFCE) common stock during the period between July 15, 2002 and November 8, 2002. The complaint charges the Company and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Nash Finch is a food distribution and retail company in the United States. The complaint alleges that during the class period, Nash Finch issued false statements, including false financial results in which the Company included income from vendor promotions to which Nash Finch was not entitled, so as to maintain favorable credit ratings on its debt. As a result of defendants' false statements, the Company's stock traded at artificially inflated levels, permitting Nash Finch to maintain credit ratings on its $400 million in debt. Then, on November 8, 2002, Nash Finch issued a press release entitled "Nash Finch Explains Postponement of Earnings Release" which disclosed an SEC inquiry into its accounting practices. Once this news was revealed, Nash Finch's stock collapsed to $7.60 before closing at $8.18, some 70% below the Class Period high of $28.85. It was also noted in November 2002, that Nash Finch's former CFO had sued the Company claiming he was fired in 2000 for refusing to manipulate Nash Finch's reported financial results. For more information, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 SEACHANGE INTERNATIONAL: Marc Henzel Commences Securities Suit in MA -------------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United States District Court, District of Massachusetts, on behalf of all persons other than defendants who purchased the common shares of SeaChange International, Inc. (Nasdaq: SEAC) in or traceable to the offering conducted by SeaChange on or about January 29, 2002. The action, is pending against the Company, certain of its directors and officers and the lead underwriters of the offering. The suit alleges that defendants violated Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 by issuing a false and misleading prospectus on or about January 29, 2002. As alleged in the suit, at all relevant times, SeaChange purported to be a leading developer, manufacturer and marketer of video storage systems which purportedly automate the management and distribution of video streams, such as movies and other feature presentations and advertisements. The suit further alleges that the Prospectus was materially false and misleading because it failed to disclose, among other things, that the Company was unable to compete effectively due to its inability to provide server systems large enough to meet the needs of cable companies located in major metropolitan areas and that the Company's products were dependent on technology, developed and patented by a key competitor, as to which SeaChange did not have proprietary rights. For more information, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 SMARTFORCE PLC: Marc Henzel Commences Securities Fraud Suit in NH Court ----------------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United States District Court, District of New Hampshire against defendants SmartForce PLC d/b/a Skillsoft, and executives William McCabe and Gregory Priest, on behalf of all persons who purchased and/or acquired American Depository Shares (ADSs) of SmartForce PLC d/b/a Skillsoft between October 19, 1999 through and including November 18, 2002, to recover damages caused by the defendants' violation of federal securities laws. Specifically, this class period includes the following members: (1) all purchasers of SmartForce PLC's ADSs from October 19, 1999 through September 6, 2002, trading under the ticker symbol SMTF; (2) all persons who acquired shares of SmartForce PLC's ADSs as part of the merger between SmartForce PLC and Skillsoft Corporation completed on or around September 6, 2002; (3) all purchasers of SmartForce PLC's ADSs after September 6, 2002 when it began doing business as "Skillsoft" trading under the ticker symbols (Nasdaq: SKILD) and then (Nasdaq: SKIL). The complaint charges that during the class period, the defendants and its predecessors issued and/or failed to correct false and misleading financial statements and press releases concerning the Company's publicly reported revenues and earnings directed to the investing public. Specifically, (i) SmartForce improperly recognized revenue under a reseller arrangement, resulting in the booking of revenue before it was received from the resellers; (ii) SmartForce recognized revenue for software sales upon shipment, even though the payment schedules for those contracts extended over several years; (iii) SmartForce recognized revenue in connection with other customer contracts upon execution of those contracts, even though the terms were four to five years in length; (iv) lastly, SmartForce improperly accounted for bad debt, causing an increase in its reserve. On November 19, 2002, SmartForce shocked the market by announcing that it intended to restate the historical financial statements of SmartForce for 1999, 2000, 2001 and the first two quarters of 2002. In the process of preparing the closing balance sheet of SmartForce as of September 6, 2002, SmartForce identified several accounting issues that required the pre-merger SmartForce financial statements to be restated. In response to this announcement, the market reacted sharply and swiftly. The shares of SmartForce dropped 33.7% to close at $3.07. As a result of the restatement, SmartForce was forced to delay the release of its operating results for the quarter ended October 31, 2002. SmartForce stated that it could not currently determine when it would be in a position to file the Form 8-K amendment and report its third quarter results. For more information, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 SPIEGEL INC.: Schiffrin & Barroway Commences Securities Suit in N.D. IL ----------------------------------------------------------------------- Schiffrin & Barroway, LLP initiated a securities class action in the United States District Court for the Northern District of Illinois on behalf of all purchasers of the common stock of Spiegel, Inc. and Spiegel Holdings, Inc. (Pink Sheets: SPGLA.PK) (formerly traded as Nasdaq: SPGLA) from April 24, 2001 through April 19, 2002, inclusive. The complaint charges the Company and Spiegel Holdings, Inc. and certain of its officers and directors with issuing false and misleading statements concerning its business and financial condition. Specifically, the complaint alleges that: (1) the Company lacked sufficient internal controls and therefore was unable to understand its true financial standing, including the fact that FNCB had inadequate and improper internal and financial controls and accounting practices, including improperly inflated earnings, improper accounting for increasing charge-offs and seriously inflated the value of its securitized receivables; (2) that the Company's credit card accounts were seriously overstated and credit had been extended to certain high-risk market segments without appropriate disclosure of this liability; (3) because of these problems, the value of the Company's balance sheet and income statement were materially overstated at all relevant times; (4) Spiegel's Eddie Bauer division was mismanaged, and had significant over-inventory. The result of these problems was a rapid deterioration in the Company's credit portfolio and significant earnings shortfalls in fiscal 2001. For more details, contact Marc A. Topaz or Stuart L. Berman by Mail: Three Bala Plaza East, Suite 400, Bala Cynwyd, PA 19004 by Phone: 1-888-299-7706 (toll free) or 1-610-667-7706 or by E-mail: info@sbclasslaw.com SPIEGEL INC.: Cauley Geller Commences Securities Fraud Suit in N.D. IL ---------------------------------------------------------------------- Cauley Geller Bowman & Coates, LLP initiated a securities class action in the United States District Court for the Northern District of Illinois, Eastern Division on behalf of purchasers of Spiegel, Inc. (OTC Pink Sheets: SPGLA) (formerly traded as Nasdaq: SPGLA) common stock during the period between April 24, 2001 and April 19, 2002, inclusive. The complaint charges Spiegel, Inc., Spiegel Holdings, Inc. and certain officers and directors with issuing false and misleading statements concerning its business and financial condition. According to its press releases, throughout the class period, Spiegel was a "leading international specialty retailer marketing fashionable apparel and home furnishings to customers through catalogs, e-commerce sites, and more than 600 specialty retail and outlet stores. The Spiegel Group's businesses include Eddie Bauer, Newport News, Spiegel and First Consumers National Bank." Specifically, the complaint alleges that Spiegel's financial statements and results of operations were each and all false and misleading and prepared in violation of GAAP, including, but not limited to SFAS 140 "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities", due to the fact that Spiegel's accounting of its credit card business improperly inflated its income and earnings, failed to account for increasing charge-offs, and grossly inflated the value of its securitized receivables. On April 19, 2002, Spiegel finally revealed the true facts regarding the deterioration of its credit card business and the devastating impact of this deterioration on Spiegel's overall business health. On April 22, 2002, the next trading day following Spiegel's April 19, 2002 announcements, Spiegel's Class A Non-Voting Common Stock fell from a high of $3.15 on April 19, 2002 to a low of $1.01 on April 22, 2002 or a one-day decline of more than 67%, on ten times normal trading volume, and a decline of more than 90% from the Class Period high of $10.71. On June 3, 2002, the Nasdaq delisted "the company's Class A common stock on the Nasdaq National Market System effective with the open of business on June 3, 2002, based on the company's filing delinquencies and other public interest concerns." For more details, contact Jackie Addison, Heather Gann or Sue Null by Mail: P.O. Box 25438, Little Rock, AR 72221-5438 by Phone: 1-888-551-9944 by E-mail: info@cauleygeller.com or visit the firm's Website: http://www.cauleygeller.com TENET HEALTHCARE: Berman DeValerio Commences Securities Suit in C.D. CA ----------------------------------------------------------------------- Berman DeValerio Pease Tabacco Burt & Pucillo initiated a securities class action against Tenet Healthcare Corporation (NYSE:THC), claiming the for-profit hospital chain used Medicare payments to artificially boost its financial results. The lawsuit is pending in the United States District Court for the Central District of California, on behalf of all investors who bought Tenet securities from October 3, 2001 through October 31, 2002. The lawsuit claims that the Company artificially inflated its financial results by using aggressive pricing tactics to over-bill Medicare. Investors began to learn the truth about Tenet on October 28, 2002 when a UBS Warburg analyst revealed that the company was far more dependent than other hospitals on Medicare outlier payments, and that those payments had tripled over 3 years to total nearly a quarter of Tenet's projected revenue for this fiscal year. Outlier payments are reimbursements made from Medicare when patient care exceeds the normal cost. On October 31, 2002, news broke that the FBI was investigating two doctors at Tenet's Redding Medical Center in California for allegedly performing many unnecessary heart surgeries and billing Medicare for them, thus artificially boosting the hospital's revenue and profits. According to the news articles, the two doctors had performed these unnecessary and invasive procedures on as many as 25 to 50 percent of their patients since at least 1995. Three other doctors associated with Tenet had concluded that many of the procedures were "medically unnecessary," but Tenet refused to investigate or stop the practice after hearing of the complaints, according to the lawsuit. As a result of these revelations, Tenet's stock price has dropped from an all-time high of $52.50 per share on Oct. 3, 2002 to around $15 per share today, erasing a staggering $11 billion in market value. For more details, contact Joseph J. Tabacco, Jr., Nicole Lavallee or Jennifer S. Abrams by Mail: 425 California Street, Suite 2025, San Francisco, CA 94104 by Phone: (415) 433-3200 by E-mail: law@bermanesq.com or visit the firm's Website: http://www.bermanesq.com TENGASCO INC.: Marc Henzel Commences Securities Fraud Suit in E.D. TN --------------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United States District Court for the Eastern District of Tennessee on behalf of all shareholders who purchased Tengasco, Inc. (AMEX:TGC) common stock between August 1, 2001 and April 23, 2002. The complaint alleges that the Company and its Chief Executive Officer violated the Securities Exchange Act of 1934 by making materially false and misleading statements concerning hydrocarbon production, drilling success and prospects of the Company's Swan Creek Field and also made materially false and misleading statements concerning the Company's earnings potential during the class period. The defendants were motivated to make such false and materially misleading statements in order to secure a multi-million dollar loan from Bank One; certain of the proceeds of which were used to pay off loans made by the Company insiders. The complaint alleges that as a result of these false and misleading statements, the price of Company shares were artificially inflated throughout the class period causing plaintiff and the class to suffer damages. For more information, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 TRANSACTION SYSTEMS: Marc Henzel Commences Securities Fraud Suit in NE ---------------------------------------------------------------------- The Law Offices of Marc S. Henzel initiated a securities class action in the United States District Court for the District of Nebraska on behalf of all purchasers of the common stock of Transaction Systems Architects, Inc. (Nasdaq: TSAIE) between January 21, 1999 and November 18, 2002, inclusive. The suit charges that during the class period, Transaction Systems Architects and certain of its officers and directors issued and/or failed to correct false and misleading financial statements and press releases concerning the Company's publicly reported revenues and earnings directed to the investing public. Specifically, (1) the Company's software license revenues and net income for 1999, 2000, 2001 and for the ninth-month period ended June 30, 2002 have been seriously overstated; (2) the Company lacked sufficient internal controls and therefore was unable to understand its true financial standing; (3) and because of these problems, the value of the Company's balance sheet and income statement were materially overstated at all relevant times. On August 14, 2002, the Company shocked the market and revealed that management was reviewing several transactions involving the Company's customers that occurred during fiscal 1999 and 2000, to determine whether they had been accounted for appropriately. The Company announced that it would conduct a re-audit of the financial statements for fiscal years 1999, 2000 and 2001. In response to the news, the Company's shares plummeted more than 20%, falling $2.22 per share (from the previous day's closing price of $10.72 per share), to $8.50 per share on August 15, 2002. On November 19, 2002, the Company confirmed that in the course of the review of its financial statements, the Company identified certain accounting adjustments that will result in the restatements of the Company's financial statements for fiscal 1999, 2000 and 2001, as well as the restatements of previously announced 2002 quarterly results because it improperly recognized revenue in conjunction with its software licensing arrangements. As a result, previously reported Company's software license revenues and net income will decrease substantially in fiscal 1999, 2000 and 2001. The Company said that these adjustments may be material. Further, the Company announced that as a result of these adjustments, it is not possible to complete the re-audit prior to the November 29, 2002, deadline allowed by NASDAQ. The Company requested an extension from NASDAQ until December 31, 2002 to complete the re-audit process. After the market digested the November 19, 2002 announcement, TSA's shares fell to a low of $ 6.50, closing on November 20th at $7.35. For more information, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or 888-643-6735 by Fax: 610-660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 ********* 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 * * *