/raid1/www/Hosts/bankrupt/CAR_Public/040122.mbx
C L A S S A C T I O N R E P O R T E R
Thursday, January 22, 2004, Vol. 6, No. 15
Headlines
ALCOHOL FIRMS: Trade Group Seeks Dismissal From Consumer Lawsuit
ARKANSAS: Saline County In Dilemma Due To School Millage Rates
CANADA: Environment Minister Sees Shortcomings of Walkerton Plan
CANADA: Government Defends Appeal Of Ruling On Same-Sex Benefits
CAPITAL ACQUISITIONS: Trader Enters Guilty Plea For Ponzi Scheme
CHELTEN HOUSE: Recalls Apricot Spreads For Undeclared Sulfites
CORRPRO COMPANIES: SEC Lodges Injunctive Action For Stock Fraud
ELI LILLY: Drug Marketing Ruling To Pave Way For Landmark Suit
GRANT THORNTON: SEC Files Regulatory Action For Securities Fraud
GREECE: Appeals Court Awards Athens Earthquake Victims EUR2M
HEALTHSOUTH CORPORATION: Reveals Fraud Could Reach $4.6 Billion
HOLLINGER INTERNATIONAL: SEC Obtains Court Order For Committee
ILLINOIS: Chicago Residents Sue Haulers Over Oct. Garbage Strike
JACKWEST CORPORATION: Judge Metes Sanctions For Securities Fraud
K'NEX INDUSTRIES: Recalls Children's Toys For Production Defect
KEARNEY-NATIONAL: Recalls 118 Flagpoles Due To Injury Hazard
KENYA BOMBING: High Court Won't Reinstate 1998 Bombing Lawsuit
METROPOLITAN MORTGAGE: Faces Lawsuit Over Alleged Ponzi Scheme
PARMALAT FINANZIARIA: 11th Arrest Made In Stock Investigation
PARMALAT FINANZIARIA: Bank Says $7.7B Fund 'Never Existed'
SASSI AMERICA: Recalls Acrylic Primer Due To Wrong Packaging
SUPERIOR OPPORTUNITIES: SEC Files Civil Action For Stock Fraud
U-HAUL CO.: Court Upholds Refusal To Dismiss Consumer Lawsuit
VIRGINIA: State GOP Proposes Legislation To Curb Lawsuits
WASHINGTON: Seattle To Pay Protesters $250T To Settle WTO Suit
New Securities Fraud Cases
ACCREDO HEALTH: Marc Henzel Lodges Securities Lawsuit in W.D. TN
ADECCO SA: Milberg Weiss Lodges Securities Fraud Suit in S.D. CA
ADECCO SA: Marc Henzel Launches Securities Fraud Suit in E.D. NY
ADECCO SA: Bull & Lifshitz Commences Securities Lawsuit in NY
ADVANCED MARKETING: Stull Stull Files Securities Lawsuit in CA
AEROSONIC CORPORATION: Marc Henzel Lodges Securities Suit in FL
AMERICAN PHARMACEUTICALS: Marc Henzel Launches Stock Suit in IL
AMERICAN PHYSICIANS: Kirby McInerney File Securities Suit in MI
BEST BUY: Marc Henzel Lodges Securities Fraud Suit in MN Court
BIOPURE CORPORATION: Spector Roseman Files Securities Suit in MA
BOSTON COMMUNICATIONS: Marc Henzel Lodges Securities Suit in MA
CAREER EDUCATION: Bernstein Liebhard Files Securities Suit in IL
CAREER EDUCATION: Wechsler Harwood Files Securities Suit in IL
MICROMUSE INC.: Federman & Sherwood Launches CA Securities Suit
MICROMUSE INC: Weinstein Kitchenoff Files Securities Suit in CA
PARMALAT FINANZIARIA: Much Shelist Files Securities Suit in NY
VIRBAC CORPORATION: Kirby McInerney Files Securities Suit in TX
XL CAPITAL: Cauley Geller Commences Securities Fraud Suit in CT
XL CAPITAL: Weinstein Kitchenoff Files Securities Suit in CT
XL CAPITAL: Schiffrin & Barroway Files Securities CT Fraud Suit
*********
ALCOHOL FIRMS: Trade Group Seeks Dismissal From Consumer Lawsuit
----------------------------------------------------------------
The Beer Institute, the trade association for the malt beverage
industry, asked the Washington DC Superior Court to dismiss it
as defendant from a class action suit filed against it and a
group of alcohol beverage suppliers, including the largest
distiller Diageo, the Beer Marketers' Insights reports.
The suit asks to represent two huge classes of parents of
underage drinkers that stretch back to 1982. They want the
industry to "disgorge" billions of dollars in "unlawful"
revenues/profits from illegal underage sales and "stop the
abusive marketing practices that contributed to those sales."
Those practices allegedly include advertising material,
promotions, internet sites and placement practices that the
plaintiff charges are "wrongful, unjust and illegal conduct,"
and from which defendants "knowingly and systematically profit."
The Beer Marketers' Insight states that "many observers compared
the suit to early attacks on tobacco advertising, which
eventually led to a massive financial settlement in 1998 and
severe restrictions on tobacco marketing." The suit claims not
to be a "broad brush" attack on the industry, but it goes on for
45 pages to claim at length that the industry members knowingly
and effectively target those below 21, that they fraudulently
conceal and lie about their methods, and so on. Most of the
particulars could have been culled from any number of reports
and public statements from CSPI, CAMY, CASA and other advocacy
groups stretching back before 1982, the Beer Marketers' Insight
states.
Beer giant Coors filed a notice asking for the case to be moved
from DC Superior Court to U.S. District Court. The Beer
Institute filed motion to dismiss itself as a defendant.
According to Coors, the case should be moved because amounts at
stake are far in excess of the $75,000 threshold to move the
case. Additionally, the defendants except Beer Institute have
"diverse citizenship" in various states and countries. Lastly,
the "Beer Institute was "fraudulently joined" in the complaint,
since it "does not manufacture, sell, advertise or market any
alcohol bev-erage brand or product.
As a non-profit association, Beer Institute is not liable under
DC Consumer Protection Act, the association argued. There was
no "commercial transaction" between it and the plaintiff. In
fact, BI has no relationship with the plaintiff and no legal
duty to "prevent the illegal acts of plaintiff's children."
Finally, BI's comments in [the] underage drinking debate are
protected by 1st Amendment, and other law, it claims.
Coors and Beer Institute also gave a clue to a broader weakness
in the lawsuit. Coors argues, "Plaintiff's complaint thus fails
to plead any causal nexus between him and defendants' alleged
acts . But such a casual nexus is a fundamental element of all
plaintiff's causes of action. Because he has failed to plead
this causal element, all his claims must fail."
ARKANSAS: Saline County In Dilemma Due To School Millage Rates
--------------------------------------------------------------
Saline County, Arkansas attorney D. Derrell Davis says the
county is in a "Catch-22" over complying with the Arkansas
Constitution Amendment 74 and sticking to a settlement agreement
made with taxpayers in Fountain Lake School District last
January, the Benton Courier reports. The county must find a
solution this month.
According to the constitution, all Arkansas school districts
must pay "a uniform rate of ad valorem tax of 25 mills to be
levied on the assessed value of all taxable real, personal and
utility property in the state to be used solely for maintenance
and operation of the schools."
The constitution requires Saline County Quorum Court to impose a
millage rate of 37.8 mills - tacking on the additional 7.55
mills necessary to turn Fountain Lake's 17.45 maintenance and
operations mills into 25 maintenance and operations mills - by
November 2003's quorum court meeting.
Currently, the Fountain Lake School District, which includes
students in Garland and Saline counties, has 17.45 mills going
toward maintenance and operations of the schools. Fountain Lake
District voters have shot down a September proposal to raise the
millage rate to 37.8 mills.
Many of the voters also participated in a class action that
charged the district with illegally exacting taxes between 1994
and 2002. After nine years of litigation, the parties reached
an agreement to roll back its millage rate 0.75 mills and
collect only 30.25 mills for 2003 through 2005. The Saline
County Circuit Court approved the settlement on February 20,
2003.
Mr. Davis told the Courier the settlement and the constitution
are in direct conflict with each other. "If (Saline County
Quorum Court) pass(es) the millage, (the plaintiffs from the
nine-year lawsuit)'s complaint will be that we've violated their
agreement. If we don't then we will be in violation of the
constitution," he said.
Saline County Quorum Court's November meeting is currently
recessed because the county received a 60-day extension
allowance on the requirement, meaning come January 16, the
conflict must be resolved. Mr. Davis must answer the complaint
by January 5. After his answer is filed, a public hearing will
be scheduled, The Courier reports.
CANADA: Environment Minister Sees Shortcomings of Walkerton Plan
----------------------------------------------------------------
Ontario Environment Minister Leona Dombrowsky acknowledged that
the compensation plan for victims of the Walkerton water tragedy
didn't seem to be working properly, The Canadian Press reports.
Approximately 2,500 people fell ill and seven were killed when
they were stricken by E. coli from contaminated drinking water.
Speaking after a visit to Walkerton, Ms. Dombrowsky told the
Canadian Press that the government has a lot of work to do to
address the issue. "The priority for our government is to
ensure that the people who have been affected by the tragedy
have their outstanding issues addressed," Ms. Dombrowsky said in
an interview. "I've heard many stories about situations where
they do not feel that the system that is in place is in fact
addressing their serious concerns and issues."
The major complaint against the compensation plan - which
settled a class action against the provincial government - was
that it was not responsive to their needs. Several plaintiffs
have been unable to access interim funding even in cases where
they have incurred significant costs getting medical treatment.
Others say the adjusters overseeing the payouts are demanding
mountains of paperwork that may not always be available, while
others worry about what will happen if they settle now but end
up with long-term health problems. Some are also having trouble
finding a lawyer to pursue their claims because the fees are too
low.
Bruce Davidson, vice-chairman of the grassroots group Concerned
Walkerton Citizens, told the Canadian Press he was "cautiously
optimistic" after a 90-minute meeting with the minister and some
of those affected. Mr. Davidson said it's imperative to "change
the tone from an adversarial one to a compassionate one" when it
comes to compensation.
CANADA: Government Defends Appeal Of Ruling On Same-Sex Benefits
----------------------------------------------------------------
Justice Minister Irwin Cotler insisted that the federal
government is committed to equal rights for homosexuals, despite
its decision to fight a court ruling that gave retroactive
pension benefits to same-sex partners, Associated Press reports.
The federal minister defended his government's announcement
Monday that it would appeal an Ontario court order that Ottawa
must make Canada Pension Plan survivor payments to those widowed
after April 1985.
Mr. Cotler, known for his strong position on equality rights
before being named justice minister by Prime Minister Paul
Martin last month, said Ottawa wants to clarify the time frame
that would be covered under any retroactive benefit plan.
"We're seeking guidance because right now we've got competing
views from the courts as to when the time line should be drawn,"
Mr. Cotler told reporters after speaking to students at
Dalhousie University's law school. "We have no quarrel about
the rights. The question is what is the just remedy in terms of
protecting the broadest number of people for the longest period
of time."
He added there has to be clarification on the two differing
opinions of the Ontario Superior Court and the Ontario Court of
Appeal. The Superior Court ruled last month that Ottawa has
discriminated against the survivors of same-sex couples by
denying them benefits under the CPP if their partner died before
January 1, 1998.
The judgment, touted as a huge leap for same-sex rights, made
such benefits retroactive to April 17, 1985, when equality
guarantees were included in the Charter of Rights and Freedoms.
That went well beyond 1998 cutoff date the federal government
imposed in 2000 when it modernized its benefits package in Bill
C-23, which granted various economic rights to same-sex couples.
Mr. Cotler told AP Ottawa chose 1998 based on an Ontario Court
of Appeal decision that suggested that was appropriate. "Now
we've got a court that says, no, that's not the time frame. The
time frame is back in 1985," he said. "So we're saying we have
to go back to the courts and say, 'Guys which is it?' "
He insisted the decision to appeal was not about money, even
though the Ontario court ruling was expected to cost taxpayers
between $100 million and $400 million.
Four hundred people have registered for the class action so far,
but it is estimated that some 1,500 gays and lesbians across
Canada are eligible for survivor benefits. Gay rights activists
and opposition members decried the move, accusing the Martin
Liberals of denying basic human rights and backtracking on
pledges to advance the rights of same-sex partners.
NDP MP Svend Robinson, who is gay, said the decision showed the
Prime Minister was continuing "to drift to the right" while
widowers die or sink into poverty as they wait for a resolution.
The case will move to the Ontario Court of Appeal, where it will
likely drag on for at least six months.
CAPITAL ACQUISITIONS: Trader Enters Guilty Plea For Ponzi Scheme
----------------------------------------------------------------
Clealon B. Mann entered a plea of guilty to conspiracy to commit
mail and wire fraud and the sale of unregistered securities in
connection with an investment scheme called Capital
Acquisitions. The indictment, U.S. v. Mann, No. 2:02-0741TC
(D. Utah) alleged that Mr. Mann and others conspired to solicit
and obtain money from investors through misrepresentations, and
that the investment program promoted by Mr. Mann operated as a
Ponzi scheme.
Mr. Mann has consented to entry of an injunction in a civil case
filed by the Commission concerning the same scheme and a similar
scheme called Laser Leasing, SEC v. Capital Acquisitions, Inc.,
et al., No. 2:97-0977B (D. Utah). The injunction prohibits
future violations of the registration and antifraud provisions
of the federal securities laws.
The Commission's case and the criminal case alleged that Mr.
Mann was primarily responsible for selling interests in the
Capital Acquisitions program, and raised approximately $24
million from investors nationwide. It was further alleged that
Mr. Mann represented to investors that the money would be used
to finance acquisition of properties to produce oil and gas, but
instead Mr. Mann used most of the investor proceeds to make
interest payments to earlier investors and to finance other
ventures that Mr. Mann or co-defendant Peter J. Buffo
controlled. Mr. Buffo previously pleaded guilty to criminal
charges and consented to a permanent injunction involving the
same scheme. Sentencing in the criminal case is scheduled for
April 15, 2004.
The suit is styled "SEC v. Capital Acquisitions, Inc, et al.,
Civil Action No. 2:97-0977B (D. Utah)." The criminal action is
styled "U.S. v. Clealon B. Mann, Criminal Action No. 2:02-0741TC
(D. Utah)."
CHELTEN HOUSE: Recalls Apricot Spreads For Undeclared Sulfites
---------------------------------------------------------------
Chelten House Products of Bridgeport, New Jersey, in cooperation
with the U.S. Food and Drug Administration (FDA), is recalling
"Fifty 50 Apricot Spread," because it may contain undeclared
sulfites.
People who have an allergy or severe sensitivity to sulfites run
the risk of serious allergic reaction if they consume this
product. Product was shipped to 54 distribution areas and
reaches consumers through retail stores throughout the entire
U.S. Chelten House Products received no complaint or illness
history while producing this product.
The product was packed in a 12 oz glass container under the
Fifty 50 Brand "Apricot Spread" with no expiration date.
The recall was initiated after it was discovered that the
product contained higher levels of sulfites, and the packaging
label statement did not reveal the presence of sulfites.
Subsequent investigation indicates the problem was caused by a
temporary breakdown in the company's packaging guidelines.
Consumers who have purchased Fifty 50 "Apricot Spread" are urged
to return it to the place of purchase for a full refund.
Consumers with questions may contact the company at 856-467-
1600.
CORRPRO COMPANIES: SEC Lodges Injunctive Action For Stock Fraud
---------------------------------------------------------------
The Securities and Exchange Commission filed an injunctive
action against Corrpro Companies, Inc., a U.S. public
corporation based in Medina Ohio, alleging that Corrpro had
inadequate internal controls during its fiscal years 2001 and
the first three quarters of 2002.
The complaint alleges that Corrpro engaged in reporting, record
keeping and internal control violations. The Commission further
announced that, simultaneously with the filing of the Complaint,
Corrpro consented to the entry of an injunction from future
violations of these provisions. Corrpro's offer of settlement
will be submitted to the Court for its approval.
According to the complaint, Corrpro misstated its financial
statements during 2001 and the first three quarters of 2002, due
to fraud in Corrpro's Australian subsidiary, which took place
during approximately October 2000 through February 2002. The
complaint alleges that the Australian subsidiary's chief
executive officer and chief financial officer were falsifying
certain of the subsidiary's financial records, and submitting
the falsified information to Corrpro for inclusion in Corrpro's
financial statements.
The complaint alleges that Corrpro discovered the fraud through
its own investigation in February 2002. The complaint further
alleges, however, that Corrpro failed to discover the
falsification of Corrpro Australia's statements until February
2002 due to its inadequate internal controls. Finally, the
complaint alleges that following its discovery of the fraud in
its Australian subsidiary, Corrpro undertook remedial measures
to strengthen its financial reporting policies and internal
control structure.
The complaint alleges that, as a result of the foregoing,
Corrpro violated Section 13(a) of the Securities Exchange Act of
1934 (Exchange Act) and Rules 12b-20, 13a-1 and 13a-13
thereunder, by filing financial statements that contained false
financial data. The complaint also alleges that Corrpro
violated Section 13(b)(2)(A) and 13(b)(2)(B) of the Exchange
Act, by failing to devise and maintain an adequate system of
internal accounting controls.
In the current action, Corrpro has consented to the entry of a
final judgment that permanently enjoins it from further
violations of the provisions of the federal securities laws
described above. Corrpro has also agreed to the imposition of
certain undertakings during its fiscal years ended March 2004,
2005 and 2006, designed to ensure its compliance with the
federal securities laws. In determining to accept Corrpro's
settlement offer, the Commission considered that Corrpro
undertook remedial actions and substantial cooperation with
Commission staff.
In 1998, Corrpro was previously sanctioned by the Commission for
unrelated reporting and internal control violations. The
Commission has also brought separate charges against the two
officers of Corrpro's Australian subsidiary in connection with
this matter (Securities and Exchange Commission v. Waring and
Treloar, Case No. 1:03-cv-2030, N. D. Ohio), which are still
pending.
The suit is styled, "SEC v. Corrpro Companies, Inc., 1:04CV0085
(N.D. Ohio)."
ELI LILLY: Drug Marketing Ruling To Pave Way For Landmark Suit
--------------------------------------------------------------
A Broward Circuit judge's recent ruling allowing the vast
majority of plaintiffs' 32 count complaint in a drug marketing
lawsuit to stand has paved the way for plaintiffs to seek class
action status for a potentially landmark drug marketing case,
Pharmalive.com reports.
The complaint claims that the defendants schemed to use
information from confidential patient records to send direct
mail marketing materials of the prescription drug Prozac weekly
to patients without their prior consent, said Gary Farmer, lead
plaintiff counsel in the case and a partner with Freedland,
Glassman, Farmer & Sheller, in Weston, Fla. One plaintiff is a
16-year-old boy with no medical history, diagnosis or condition
calling for use of the drug.
"This ruling is significant and detailed in its perspective of
the actions," said Mr. Farmer, who is a vanguard in the area of
consumer protection litigation. "In the 17-page order, the
judge essentially denied 90% of their motions."
Judge Robert Andrews of the 17th Judicial Circuit in Broward
County denied the motions brought by defendant drug maker Eli
Lilly & Co., drug retailer Walgreens Co., Holy Cross Hospital,
and four doctors and a physician's assistant from South Florida.
The defendants had argued that the recently amended federal
Health Insurance Portability and Protection Act, or HIPPA,
allows use of private patient information for marketing purposes
without patient consent. The new HIPPA regulations relied upon
by the defendants were enacted, however, long after the Florida
direct marketing scheme had been implemented.
Moreover, the court found, as have other courts, that HIPPA
notes that where state law is more stringent, state law takes
precedent. Florida law requires written consent from any
patients before a doctor or health care provider can release
information for solicitation or marketing purposes.
Among other claims, the judge let stand plaintiffs' claims of
invasion of privacy, breach of duty of confidentiality and
fiduciary duty, violation of Florida's Deceptive and Unfair
Trade Practices Act, and conspiracy among the defendants.
With three plaintiffs currently on board, the class status could
eventually include upward of 300 patients, Mr. Farmer said. The
action seeks both injunctive relief to stop the release of
confidential patient information for marketing purposes, as well
as compensation for the plaintiffs whose rights to privacy were
violated. Mr. Farmer also plans to move for an award of
punitive damages.
Mr. Farmer said, "No one was physically injured, but people's
privacy was invaded and their trust in their doctors ruined. A
message has to be sent that confidential patient information is
just that - confidential. And privacy rights supercede any drug
maker, pharmacist or doctor's schemes to use that information
for their gain. Just think, what if someone took the medication
and it had a fatal interaction with another prescribed
medication?"
With the defendants' arguments gutted, plaintiff counsel now is
preparing for class action certification. A hearing is slated
for April.
For more details, contact Lisa Buyer of the Moxie Group, for
Freedland, Glassman, Farmer & Sheller, Weston by Phone:
954/354-1410 ext. 14 or by E-mail: lbuyer@moxie-group.com
GRANT THORNTON: SEC Files Regulatory Action For Securities Fraud
----------------------------------------------------------------
The Securities and Exchange Commission filed a regulatory action
against accounting firm Grant Thornton LLP, over the firm's
audit of MCA Financial Corporation's 1998 financial statements,
the Associated Press reports. The action also names as
defendants:
(1) Doeren Mayhew & Co.,
(2) Doeren Mayhew director Marvin Morris,
(3) Doeren Mayhew director Benedict Rybicki and
(4) Peter Behrens, a partner in Grant Thornton's Detroit
office
The suit alleges that Grant Thornton contributed to MCA's
fraudulent reporting by lending its name and prestige to the
work of Doeren Mayhew, a smaller auditing firm without fully
checking its accuracy.
The SEC alleged that the auditors and firms of MCA failed to
reveal millions of dollars of third party transactions, failed
to take action and approved the statements, causing investors to
lose millions.
"In Grant Thornton's case, the firm rented out its name and
prestige to the audit work of a smaller firm without taking
adequate care to ensure that the audit was properly staffed and
performed," Stephen Cutler, the SEC's enforcement director, said
in a statement, AP reports. "In Doeren Mayhew's case, the firm
failed to ensure that the personnel assigned to the audit had
the requisite expertise and acted with requisite care and
skepticism."
Both firms disputed the SEC's allegations and said they would
defend themselves in the agency's administrative proceeding, AP
states. An administrative law judge at the SEC, who will hear
the case, could order the firms or the individuals to repay
allegedly ill-gotten gains.
In a statement, Chicago-based Grant Thornton said MCA had
concealed its fraud and lied to the auditors, AP reports. "For
80 years, we have adhered to the highest standards of
professionalism and we will vigorously defend ourselves against
these charges," Grant Thornton said.
Rodger Young, an attorney representing Troy, Michigan-based
Doeren Mayhew, told AP the SEC was "dead wrong." Mr. Rybicki's
attorney disputed the allegations, while lawyers for Morris and
Behrens couldn't be reached for comment.
GREECE: Appeals Court Awards Athens Earthquake Victims EUR2M
---------------------------------------------------------------
A Greek appeals court awarded EUR2 million in damages to the
families of six people who died when an Athens factory collapsed
and killed 39 employees during a 1999 earthquake, IOL reports.
Ricomex, a detergent factory, was destroyed when an earthquake
measuring 5.9 on the Richter scale struck the Greek capital on
September 7, 1999, killing 143 people. The families of the
victims filed class actions seeking compensation.
The appeals court upheld earlier rulings convicting the owners
and civil engineers of detergent factory Ricomex of "extreme
negligence" in the building's construction and maintenance.
Ricomex board members and civil engineers face manslaughter
charges in a criminal trial set to start on March 24, the semi-
official Athens News Agency (ANA) reported.
HEALTHSOUTH CORPORATION: Reveals Fraud Could Reach $4.6 Billion
---------------------------------------------------------------
Officials for restructuring specialists Alvarez & Marsal
revealed that the massive accounting fraud at HealthSouth
Corporation could turn out to be much larger than earlier
estimated, probably exceeding $4 billion, Reuters reports.
Alvarez & Marsal, hired to turn around the rehabilitation and
surgical center operator, revealed at a financial update meeting
in New York that the total amount of fraudulent entries in the
Company's books totaled between $3.8 and $4.6 billion, as
compared to the Company's July 2003 estimate that it would have
to adjust its balance sheet downward by $2.5 billion.
Prosecutors have alleged that the fraud was at $2.7 billion.
According to the Company's acting Chief Financial Officer and
Alvarez & Marsal partner Guy Sansone, forensic accountants
pegged the overstatement of earning from 1992 to 2003 to be by
$2.5 billion because of fraudulent entries, $500 million from
improper acquisition accounting and between $800 million and
$1.6 billion from aggressive accounting.
Mr. Sansone told Reuters that most of the fraud appears to have
been conducted between 1999 and 2002 to inflate earnings in
order to meet Wall Street estimates. During that period, the
company's weakened share price after Medicare changes made it
difficult to buy companies.
Federal accounting fraud allegations in March 2003 triggered an
"adverse material change" clause that froze the company's credit
line and prevented the company from repaying a convertible bond
that matured on April 1, landing it in default, Reuters reports.
However, Alvarez & Marsal continue to believe that the Company
will remain financially viable and healthy despite expenses and
adjustments related to the scandal. They revealed that the
Company expects to generate revenues of nearly $4 billion in
2004, which could mean a rebound from the scandal, which caused
criminal charges to be leveled against 16 former executives.
"By the end of the second quarter, this company should be doing
business as usual," Mr. Sansone told Reuters. He added that by
that time, the Company should also have a new permanent
management team and a restructured balance sheet, and it should
have made progress in its dealings with regulators.
The Company, its former bankers including investment bank UBS AG
(UBSN) and its former auditors Ernst & Young face a class action
from shareholders and bondholders. Fifteen former executives
have pleaded guilty to taking part in the fraud scheme, and
HealthSouth founder Richard Scrushy is facing criminal charges
in the case. The Company allegedly perpetrated its fraud mainly
by inflating the amount it was receiving from the Medicare
program for the elderly and disabled.
HealthSouth's presentation to investors is the first since July
7, when company officials said it was likely to avoid
bankruptcy, calming investors after the company and its
executives were accused of accounting fraud. HealthSouth is
current on all of its payments under its borrowing agreements
that cover more than $3 billion of debt.
Alvarez & Marsal officials told Reuters HealthSouth is working
with the U.S. Centers for Medicare and Medicaid Services and the
Securities and Exchange Commission, which are investigating the
fraud. The company hopes to reach a global settlement with the
Medicare office covering all potential wrongdoing.
HOLLINGER INTERNATIONAL: SEC Obtains Court Order For Committee
--------------------------------------------------------------
The Securities and Exchange Commission obtained a federal court
order against Hollinger International, Inc. to ensure that the
work of the Special Committee of Hollinger International's board
of directors - including its efforts to recover and preserve
corporate assets - continues under the jurisdiction and
oversight of the court, and without regard to whether there is a
change in control at the company.
Hollinger International consented to the entry of the order,
which also permanently enjoins the company from violating the
reporting and internal control provisions of the federal
securities laws. The Commission filed a civil injunctive
complaint against the Chicago-based Hollinger International in
the U.S. District Court for the Northern District of Illinois
alleging that, from at least 1999 through 2001, the company's
Commission filings contained misstatements and omitted to state
material facts regarding transfers of corporate assets to
certain of Hollinger International's insiders and related
entities.
Under the order, Hollinger International is required to maintain
its Special Committee to, among other things, continue its
investigation of alleged misconduct and its efforts to recover
and maintain corporate assets. In the event the Special
Committee's authority were in any way impaired, including
through a change in control of the company, Richard C. Breeden
(the current Counsel to the Special Committee) would serve as a
court-ordered Special Monitor to protect the interests of
Hollinger International shareholders. A hearing will be set at
a later date to determine whether it is appropriate to require
Hollinger International to pay disgorgement, prejudgment
interest and civil penalties. In addition, Hollinger
International has expressly agreed that the Commission may file
additional charges against it at a later time, including for the
same conduct alleged in the complaint.
Stephen M. Cutler, Director of the Commission's Division of
Enforcement, said, "This matter involves the improper transfer
of corporate assets to corporate insiders and related entities.
We are taking these immediate steps to protect the interests of
Hollinger International shareholders and to ensure that the
ongoing work to recover and protect corporate assets may
continue unimpeded. Our work, however, is not finished."
Timothy L. Warren, Associate Regional Director of the
Commission's Midwest Regional Office, said, "We are taking steps
to ensure that the Special Committee of Hollinger International
can continue its work under the Court's oversight. The SEC's
investigation continues and we intend to bring to justice those
responsible for the company's violations."
ILLINOIS: Chicago Residents Sue Haulers Over Oct. Garbage Strike
----------------------------------------------------------------
A group of local residents are suing six waste haulers for
reimbursement for garbage pickups they paid for but never got
during last October's 10-day strike, the Daily Herald reports.
About 8 million customers in more than 1 million homes and
businesses in Chicago and its suburbs were affected by the
strike and are deserving of monetary damages between $4 to $100,
according to a statement from Robert Shelist and Mark Schwartz,
the attorneys who filed the lawsuit Friday in Cook County
Circuit Court. "The most striking thing is the arrogance of the
garbage industry in refusing to provide credits for missed
pickups," Mr. Shelist told the Herald.
However, industry representatives say customers aren't owed any
money because the garbage was hauled away eventually. "In the
end all of the waste was collected," Bill Plunkett, a spokesman
for the Chicago Area Refuse Haulers, the group formed to
negotiate last fall with Teamsters locals 731 and 301, told the
Herald. "The companies worked very hard and put in a lot of
overtime and incurred the cost of disposal for all that waste
that had piled up."
"The point is people contracted for garbage service at a
particular day and time and that's not what they got," Mr.
Shelist countered.
The haulers named in the suit include Waste Management of
Illinois, Groot Recycling and Waste, Onyx Waste Services,
Homewood Disposal Service, Allied Waste and BFI.
JACKWEST CORPORATION: Judge Metes Sanctions For Securities Fraud
----------------------------------------------------------------
An Administrative Law Judge has issued an Initial Decision
imposing sanctions against Kevin H. Goldstein and Jackwest
Corporation for violating the antifraud provisions of the
federal securities laws.
The Initial Decision finds that Mr. Goldstein and Jackwest made
material misrepresentations and omissions in connection with the
purchase or sale of Jackwest securities. At the time of the
misconduct, Mr. Goldstein was associated with a registered
broker and dealer. The Initial Decision concludes that Mr.
Goldstein and Jackwest violated Section 17(a) of the Securities
Act of 1933, Section 10(b) of the Securities Exchange Act of
1934, and Exchange Act Rule 10b-5.
The Initial Decision imposes a cease-and-desist order against
Mr. Goldstein and Jackwest and orders them to disgorge $516,000
in ill-gotten gains plus $142,409 in prejudgment interest,
jointly and severally. The Initial Decision also bars Mr.
Goldstein from associating with any broker or dealer and
assesses a civil penalty of $120,000 against him.
K'NEX INDUSTRIES: Recalls Children's Toys For Production Defect
---------------------------------------------------------------
K'NEX Industries Inc., of Hatfield, Pa., in cooperation with the
U.S. Consumer Product Safety Commission (CPSC), is voluntarily
recalling 14,000 "Mud Boggers" and "Street Shredders" Pump Up
Racers since the air motor in the toy cars can burst while being
pumped up, causing parts of the motor or car to break off. Some
of these parts can have sharp points and pose a risk of eye or
laceration injuries.
K'NEX has received two reports of bursting air motors, though no
injuries have been reported.
The recalled K'NEX Pump Up Racers come in two models: the "Mud
Bogger," which has a yellow car body and the "Street Shredder,"
which has a red car body. Both models have a date code beginning
with 7803, which is located on the bottom of the air motor,
directly under the name "K'NEX Industries Inc." The toy cars
come with a pump attachment that helps project the car forward.
The toys, manufactured in China, were sold at Toys R Us, Wal-
Mart, and Target stores nationwide between November 2003 and
December 2003 for about $10.
Consumers should stop children from using these toy cars
immediately and contact the company for a free replacement air
motor or alternative product. For more information, contact Call
K'NEX Industries at (800) 543-5639 between 8:30 a.m. and 4:30
p.m. or log on to the company's Web site at www.knex.com.
KEARNEY-NATIONAL: Recalls 118 Flagpoles Due To Injury Hazard
------------------------------------------------------------
Kearney-National, Hapco Division, of Abingdon, Va., in
cooperation with the U.S. Consumer Product Safety Commission
(CPSC), is recalling 118 Internal Halyard Flagpoles since a
partially crimped sleeve on these flagpoles can allow the cable
to pull through the sleeve causing the loop to release. When the
assembly is raised with no flag attached, it can allow a seven
pound counter weight to drop to the ground, possibly hitting
people nearby.
Kearney-National is aware of three incidents of a counter weight
falling, including with one incident resulting in a minor
injury. These Internal Halyard flagpoles have a hinged door and
a metal cable on the outside of the pole.
The flagpoles, manufactured in the U.S., were sold at Hardware
and flag stores nationwide from August 2003 through October 2003
for between $1,000 and $1,500.
Hapco is directly notifying consumers who purchased these
flagpoles about the recall and providing free repair kits. For
more information, contact Hapco at (800) 368-7171, between 8
a.m. and 6 p.m. ET Monday through Friday, or visit their Web
site: http://www.americanflagpole.com.
KENYA BOMBING: High Court Won't Reinstate 1998 Bombing Lawsuit
--------------------------------------------------------------
The United States Supreme Court refused to reinstate a lawsuit
seeking to hold the United States responsible for failing to
protect the American embassy in Kenya from the 1998 bombing that
killed 219 people, including 12 Americans, Associated Press
reports. The high court did not comment in turning down an
appeal from Kenyans injured or affected by the Nairobi bombing.
The Kenyans alleged the United States failed to keep the embassy
and its employees safe and failed to warn of the potential for a
terrorist attack. "That failure ... was the result of garden
variety, mundane, yet critical neglect by headquarters
employees, and by a security contractor employed and supervised
by the United States," the appeal said, according to AP.
A federal judge had thrown out the lawsuit, and an appeals court
upheld that ruling in July. The suit could not be brought
against the government under U.S. law, those courts found. The
Bush administration had urged the Supreme Court to stay out of
the case.
The case is Macharia v. United States, 03-562.
METROPOLITAN MORTGAGE: Faces Lawsuit Over Alleged Ponzi Scheme
--------------------------------------------------------------
Owners of securities in Metropolitan Mortgage and Securities
Company, Inc. and Summit Securities, Inc. filed a class action
complaint in federal court in Spokane seeking up to $300 million
in damages, on behalf of investors who bought or held securities
issued by Metropolitan Mortgage or Summit Securities between
January 1, 2001 and December 15, 2003.
Also named as defendants were Metropolitan Investment Securities
Company, Inc., the brokerage firm that sold most of the
securities, and Cantwell Paul Sandifur, Jr., the controlling
shareholder of Metropolitan Mortgage and of the parent company
of Summit Securities.
The complaint alleges that Metropolitan Mortgage and Summit
fraudulently marketed preferred stock, debentures and investment
certificates as safe, conservative investments. In reality,
according to the complaint, the securities were risky and nearly
impossible to resell. "They told investors their securities were
comparable to bank notes," said Mike Shaffer, a partner in the
Tacoma law firm of Gordon, Thomas, Honeywell, Malanca, Peterson
& Daheim that filed the lawsuit. "The truth is they were
comparable to junk bonds."
The plaintiffs allege that Sandifur, using the companies he
controlled, created a sophisticated financial shell game
involving hundreds of millions of dollars. "The only way he
could keep paying his investors was to find new investors," said
Shaffer. "It became a Ponzi scheme and it was primarily aimed at
retired and elderly investors lured by promises of a safe
investment."
In October 2003, Metropolitan Investment Securities, the
brokerage that sold securities for Metropolitan Mortgage and
Summit, agreed that it had committed securities fraud in
connection with the sale of Metropolitan Mortgage and Summit
securities between January 1, 2001 and March 31, 2003.
Metropolitan Investment Securities admitted to the National
Association of Securities Dealers that it "engaged in fraudulent
and deceptive sales practices" and misrepresented and omitted
key facts concerning the Metropolitan and Summit securities. It
also agreed that it had misled investors about the risks of
Metropolitan and Summit.
Metropolitan Investment Securities stipulated to a $500,000 fine
and payment of nearly $3 million in refunds to specified
investors, and agreed to maintain a $1 million escrow account to
repay additional investors.
On December 15, 2003, Metropolitan Investment Securities closed
its doors. On December 26, 2003, Metropolitan and Summit
defaulted on their securities, suspending all principal,
interest and dividend payments. This included securities sold
prior to January 1, 2001.
Shaffer noted that a significant percentage of investors are
from the Spokane area. "This is a huge blow to this community,
especially folks who are retired or about to retire," he said.
According to Mr. Shaffer, some clients fear they may need to
sell their homes, or they are seeking support from family
members. "Mr. Sandifur and his companies abused the trust of
investors who came to them seeking a secure, fixed income for
retirement. This lawsuit will hold him accountable for the fraud
he inflicted on the public," said Shaffer.
PARMALAT FINANZIARIA: 11th Arrest Made In Stock Investigation
-------------------------------------------------------------
Italian police arrested former Parmalat Finanziaria SpA finance
director Franco Gorreri, as a fraud probe into the dairy group
widened further to include Italian auditing firms linked to two
global accountancy groups, Reuters reports.
Mr. Gorreri, 51, who remained head of the company's Italian
treasury department, was detained by police at his home in
Parma, taking the number of people arrested so far to 11. He
was already being investigated for fraudulent bankruptcy and
making false corporate statements as a former Parmalat director,
and his home and offices were searched recently. He stood down
temporarily last week as head of regional bank Monte Parma as
investigators focused on his possible role in a suspected
multibillion-euro fraud at the now insolvent giant.
An investigative source said between 2000 and 2003, Mr. Gorreri
diverted 500 million euros out of Parmalat's accounts and into
tourism firms owned by Parmalat's controlling Tanzi family.
"Gorreri would go over (ex-CFO Fausto) Tonna's head," an
investigative source told Reuters. "Because when (Tonna) said
something couldn't be done, Calisto Tanzi would turn to Gorreri
as head of the treasury and he would open the purse strings."
Mr. Tonna - considered by prosecutors to be a key player in the
scandal - and an internal auditor of Parmalat were taken from
prison to the group's headquarters Monday as investigators tried
to reconstruct its accounts. "They explained how they modified
the accounts," the source told Reutes.
Investigators in Parma and Milan say Parmalat's top management
for years concealed a hole in the multinational's accounts that
could surpass $12.70 billion. The near-collapse of one of
Italy's best-known brand names has prompted calls for reform and
Economy Minister Giulio Tremonti has pointed his finger at the
Bank of Italy which is run by the minister's rival, Governor
Antonio Fazio.
However, in a sign of how heated the political debate has
become, Tremonti's own deputy, Mario Baldassarri, said on Monday
that Italy's financial police -- controlled by the Economy
Ministry -- should have begun investigating Parmalat years ago,
Reuters reports. "If two years, one year, three years ago the
financial police had done some checks . then obviously things
would have come to light before it reached a point where there
was a hole of 11 or 12 billion euros," Mr. Baldassarri told
Reuters.
Mr. Baldassarri, whose National Alliance party is close to Fazio
said Parmalat's debacle would hit Italian economic growth in
2004, but gave no specific indication.
Pressure on Parmalat's former auditors intensified on Monday
when the Italian affiliate of Deloitte & Touche and the recently
expelled unit of Grant Thornton in Italy were formally included
in the investigation, judicial sources in Milan told Reuters.
Four top executives from the two companies were already being
investigated as individuals, but now the two Italian firms
themselves were included in the probe, they said. The former
chairman of Grant Thornton's Italy office and a senior partner
were arrested on New Year's Eve.
PARMALAT FINANZIARIA: Bank Says $7.7Billion Fund 'Never Existed'
----------------------------------------------------------------
Bank of America revealed that an account apparently containing
$7.7 billion of Parmalat funds never existed, Reuters news
reports.
Earlier this month, Carlo Zauli, a lawyer for a group of
Parmalat creditors, told Reuters he had traced about $7.7
billion of Parmalat's funds to a Bank of America branch in New
York, but had no documented proof. "We have completed our
system-wide search of deposit accounts and that account does not
exist and never existed at Bank of America," a Bank of America
spokeswoman said in London, Reuters reports.
Italian dairy company Parmalat was declared insolvent last month
and filed for bankruptcy protection. Parmalat's simmering
financial scandal erupted when Bank of America rejected a
document showing that a Parmalat subsidiary had four billion
euros in an account at the bank. Investigators have arrested 10
people, including Parmalat's founder Calisto Tanzi. No charges
have been brought so far.
Last Friday, Mr. Zauli had said he was able to provide the
number of an account at a Bank of America branch in New York
where, he said, Parmalat had deposited seven billion euros
($8.72 billion) worth of U.S. government bonds.
Bank of America had already told Parmalat's administrator Enrico
Bondi it had begun an internal investigation into these claims
and denied the existence of the account. Parmalat had said
earlier in January that it was not aware of these funds.
SASSI AMERICA: Recalls Acrylic Primer Due To Wrong Packaging
------------------------------------------------------------
Sassi America Inc., of Elk Grove Village, Ill., in cooperation
with the U.S. Consumer Product Safety Commission (CPSC), is
voluntarily recalling about 72,000 bottles of acrylic primer
used to prepare fingernails before applying artificial nails
since the methacrylic acid primer is not packaged in child-
resistant packaging, as required by the Poison Prevention
Packaging Act.
Sassi America has received a report of a 2-year-old girl in
Pompano Beach, Fla., who sustained severe external and internal
chemical burns after swallowing the liquid primer.
The primer is packaged in amber-colored bottles with black caps.
The model number 508, 509, 510, 511 or 512 is written on the
front of the label. "SASSI" also is written on the labels. The
primer was sold in .25-ounce, .50-ounce, 1-ounce, 2-ounce and 4-
ounce size bottles. The acrylic primers were sold separately and
in kits.
The primer is sold at Grocery and beauty supply stores
nationwide from June 2000 through January 2004 for between $2
and $10.
Consumers should return the acrylic primer and kits to the store
where purchased to receive a refund. For more information call
Sassi collect at (847) 228-0334 between 8:00 a.m. and 5:00 p.m.
CT Monday through Friday.
SUPERIOR OPPORTUNITIES: SEC Files Civil Action For Stock Fraud
--------------------------------------------------------------
The Securities and Exchange Commission filed an emergency
federal civil action seeking to freeze the assets of two
companies and an individual involved in a fraudulent securities
offering. The emergency part of this action was filed against
defendants Superior Opportunities, Inc., J.F. Simms & Co., LLC
and Jon F. Simms. Also named in the civil action are William J.
Hickey and Sean A. Osborne, the principals of Superior. The
Company is headquartered in Boynton Beach, Florida. Mr. Simms
is based in Madison, Wisconsin.
On January 14th, the Honorable Daniel T.K. Hurley, U.S. District
Judge for the Southern District of Florida, entered, among other
things, a temporary order freezing the assets of Superior, J.F.
Simms and Simms.
The Commission alleged that Superior, through Mr. Hickey, Mr.
Osborne, J.F. Simms and Mr. Simms raised approximately $7.8
million from approximately 200 investors to fund a purported
business that purchased credit card debt and receivables. The
complaint alleges that in raising money for this enterprise from
investors, the defendants falsely represented that all investor
principal would be used to purchase the debt and receivables,
that the investment was low risk, and that returns could exceed
36%. According to the complaint, defendants J.F. Simms and Mr.
Simms misappropriated investor funds to the tune of $1.4
million.
The Commission's complaint charges J.F. Simms and Mr. Simms with
violating the antifraud and registration provisions of the
federal securities laws. Specifically, the Commission alleges
that J.F. Simms and Mr. Simms violated Sections 5(a), 5(c) and
17(a) of the Securities Act of 1933 and Section 10(b) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder. Further, the complaint charges Superior, Mr. Hickey
and Mr. Osborne with negligently making material false
statements and omissions, as well as violating the registration
provisions of the federal securities laws.
Specifically, the Commission alleges that Superior, Mr. Hickey
and Mr. Osborne violated Sections 5(a), 5(c) and 17(a)(2) and
(3) of the Securities Act of 1933. In addition to the emergency
relief, the complaint seeks permanent injunctions prohibiting
future violations of the securities laws, disgorgement, and
civil penalties against all the defendants.
The suit is styled "SEC v. Superior Opportunities, Inc., et al.,
Case No. 04 80021-CIV-HURLEY/HOPKINS, USDC/SDFL."
U-HAUL CO.: Court Upholds Refusal To Dismiss Consumer Lawsuit
-------------------------------------------------------------
The United States Sixth District Court of Appeal upheld the
California Superior Court in Santa Cruz's refusal to dismiss a
class action filed against U-Haul Co. of California, Inc.,
alleging that the Company's reservation system should be
dismissed on free speech grounds, Metropolitan-News Enterprise
reports.
The suit alleged that the company violated consumer protection
laws by failing to disclose in its advertising that reserving
equipment-for which the company charged a nonrefundable fee-did
not guarantee availability. The suit alleges that the Company's
Yellow Pages advertising, stating "Make your reservation - CALL
TODAY!" was misleading.
Plaintiff Alan Rosenberg asserts that when he called about
renting a trailer in 2001, he was charged $5 to make the
reservation, but when he called back on the day of the
reservation he was informed no trailer was available. The
Company also charged him a $50 cancellation fee when he made
arrangements to rent the equipment he needed elsewhere, he
claimed.
In an unpublished opinion made public Friday, the court said
Judge Richard McAdams, who has since been elevated to the Sixth
District, was correct to deny U-Haul's motion to strike the
complaint as a strategic lawsuit against public participation
under Code of Civil Procedure Sec. 425.16.
Writing for the appeals court, Justice Nathan D. Mihara said U-
Haul failed to establish that the suit implicated its protected
speech rights, Metropolitan-News Enterprise reports. "At issue
here is whether U-Haul's statements were made in connection with
an issue of public interest," the justice declared. "U-Haul
points to the complaint, which alleges that U-Haul's advertising
activities affect the public at large and their ability to move
their households. Thus, U-Haul contends that its claims about
reservations impact a broad segment of society."
Not so, Justice Mihara rejoined, citing Consumer Justice Center
v. Trimedica International, Inc. (2003) 107 Cal.App.4th 595.
Though equipment reservations systems, like the herbal remedies
that came before the court in Consumer Justice, may be in
general a matter of public interest, he said, Rosenberg's suit
challenged only U-Haul's specific system. "As in Consumer
Justice, here the topic of reservations is not a matter of
public interest," he wrote.
U-Haul's argument that its advertising was a matter of public
interest because it reached the general public was also
unavailing, the justice said, adding that even if U-Haul could
have surmounted that hurdle, McAdams' ruling would still have
been correct since Rosenberg showed he was likely to prevail on
his claim.
He explained, "Here U-Haul represented on its Web site and in
the Yellow Pages that a consumer could make reservations to rent
equipment. The declarations that were submitted in opposition to
the motion to strike showed that various consumers made
reservations to rent equipment from U-Haul and that these
reservations were not honored..When the declarations are
considered together, Rosenberg has made a prima facie showing
that U-Haul did not intend to supply reasonably expectable
demand. U-Haul also contends that there is no proof of any
advertising by U-Haul. This contention is meritless. Rosenberg's
declaration refers to advertising in the Yellow Pages and two of
the declarations refer to making reservations online and the Web
site advertises reservations. Thus, Rosenberg has shown a
probability that he will prevail on this claim."
The case is Rosenberg v. U-Haul Co. of California, Inc.,
H025381.
VIRGINIA: State GOP Proposes Legislation To Curb Lawsuits
---------------------------------------------------------
A legislation proposed by Virginia's House Republic leaders
seeks to limit the circumstances under which injured people can
bring lawsuits and would encourage settlements, the Washington
Post reports. Under the legislation, Virginians would not be
able to sue gun manufacturers, tobacco companies, fast food
restaurants or other companies making "inherently unsafe
products" whose dangers are well known to the public.
In recent years, litigation has extended from the cigarette
industry to other areas such as gun manufacturers. Last year,
several lawsuits were filed against fast food giant McDonalds,
charging it with misleading consumers about the obesity dangers
of its products.
The proposed program would be beneficial to manufacturers, as it
includes a provision that makes it harder to sue a company whose
product is defective if the product was manufactured according
to state or federal standards and the manufacturer had no
knowledge of the defect.
Although controversial, efforts to prevent individual smokers
from bringing the type of lawsuits that net states billions per
year have succeeded elsewhere: California, for instance,
exempted tobacco, alcohol and other companies from lawsuits
arising out of injuries and deaths caused by the proper use of
their products, The Washington Post reports.
Supporters of the legislation believe the measures would help
prevent frivolous lawsuits. "Individuals suffer from the
increased cost of insurance and the increased costs of goods and
services," House Speaker William J. Howell (R-Stafford), a
proponent of the legislation, told the Post.
Del. William R. Janis (R-Goochland), who is sponsoring the
exemption for makers of cigarettes, guns and fast food in
Virginia, told the Washington Post the legal system is no
substitute for "personal responsibility and personal
accountability."
Among the groups backing the legislation are the Virginia
Chamber of Commerce, Virginia Association of Defense Attorneys
and the Medical Society of Virginia, which represents doctors.
Rep. Robert F. McDonnell, a Virginia Beach Republican who plans
to run for attorney general in 2005, said that's only fair. "Not
every injury is legally redressable," he told the Post.
However, opponents of the legislation said the efforts were a
"set of solutions looking for a problem." David Anderson,
lobbyist for the Virginia Trial Lawyers Association, told The
Post, "A number of provisions in this package would palpably
curtail the rights of individuals."
He added that the provision was among the most troubling in the
package. "State and federal regulations are promulgated with
the heavy input of industry, so in effect this would be industry
creating its own legal standards under which it can be sued," he
said.
WASHINGTON: Seattle To Pay Protesters $250T To Settle WTO Suit
--------------------------------------------------------------
The City of Seattle has settled a lawsuit brought by World Trade
Organization (WTO) protesters for $250,000, just before the case
was scheduled to go to trial next week, the Seattle Times
reports. The lawsuit stemmed from the arrest of 157 people
outside a "no-protest zone" on December 1, 1999.
U.S. District Judge Marsha Pechman ruled last month that Seattle
police lacked probable cause to arrest the protesters, leaving
the city vulnerable to damages from the class action.
Since that decision was handed down, the city has been trying to
settle, according to City Attorney Tom Carr. "We had potential
liability, and we paid less than $2,000 per person and ended the
risk that the city would face substantial exposure," he said.
New Securities Fraud Cases
ACCREDO HEALTH: Marc Henzel Lodges Securities Lawsuit in W.D. TN
----------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class
action in the United States District Court for the Western
District of Tennessee on behalf of all purchasers of the common
stock of Accredo Health, Inc. (NasdaqNM: ACDO) from June 16,
2002 through April 7, 2003, inclusive.
The Complaint alleges that defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder, by issuing a series of material
misrepresentations to the market between June 16, 2002 and April
7, 2003, thereby artificially inflating the price of Accredo
common stock.
The Complaint alleges that these statements were materially
false and misleading because they failed to disclose and
misrepresented the following adverse facts, among others:
(1) that the Company was failing to timely record an
impairment in the value of certain receivables that it
had acquired in a recent acquisition. As a result, the
Company's reported financial results were artificially
inflated throughout the Class Period;
(2) as a result of the foregoing, the Company's financial
statements published during the Class Period were not
prepared in accordance with Generally Accepted
Accounting Principles and were therefore materially
false and misleading;
(3) that the Company would not have been able to meet its
stated earnings guidance had it properly reserved for
its accounts receivables; and
(4) based on (a)-(c), defendants' earnings guidance and
positive statements concerning the Company was lacking
in a reasonable and therefore materially false and
misleading.
On April 8, 2002, prior to the opening of the market, Accredo
shocked the market by announcing that it was reducing its
previously issued earning guidance and that it was examining the
adequacy of reserves for accounts receivables that it acquired
in a recent acquisition. In response to this announcement, the
price of Accredo Health common stock declined precipitously
falling from $25.40 per share to as low as $13.76 per share, on
extremely heavy volume.
During the Class Period, Accredo insiders sold more than $12
million worth of their personally-held Accredo stock while in
possession of the true facts about the Company.
For more details, 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 or by E-Mail:
mhenzel182@aol.com
ADECCO SA: Milberg Weiss Lodges Securities Fraud Suit in S.D. CA
----------------------------------------------------------------
Milberg Weiss Bershad Hynes & Lerach LLP initiated a class
action in the United States District Court for the Southern
District of California, on behalf of purchasers of Adecco S.A.
publicly traded securities during the period between June 24,
2003 and January 9, 2004, against Adecco and certain of its
officers and directors with violations of the Securities
Exchange Act of 1934. Adecco is primarily engaged in providing
personnel services to companies and industry worldwide.
The complaint alleges that during the Class Period, defendants
caused Adecco's shares to trade at artificially inflated levels
through the issuance of false and misleading financial
statements. As a result of this inflation, Adecco was able to
complete a public offering of $533 million worth of convertible
bonds on July 23, 2003. On January 12, 2004, the Company issued
a press release entitled "Adecco S.A. Delays Announcement of FY
2003 Audited Results." The press release stated that "Adecco ...
does not expect the audit of its consolidated financial
statements for the 2003 fiscal year, ended on December 28, 2003,
to be completed by Adecco's auditors, by the previously
announced release date of February 4, 2004."
The press release included the following reasons for the delay
in completion of the audit:
(1) the identification of material weaknesses in internal
controls in the Company's North American operations of
Adecco Staffing;
(2) the resolution of possible accounting, control and
compliance issues in the Company's operations in
certain countries; and
(3) the completion of the Company's efforts to address
these matters and determine their effect on the
Company's consolidated financial statements.
On this news, Adecco's stock price dropped from a close of
$16.93 on January 9, 2004 to below $10 per share.
For more information, visit the firm's Website:
http://www.milberg.com.
ADECCO SA: Marc Henzel Launches Securities Fraud Suit in E.D. NY
----------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class
action in the United States District Court for the Eastern
District of New York on behalf of purchasers of Adecco SA.
(NYSE: ADO) publicly traded securities during the period between
March 16, 2000 and January 9, 2004, inclusive.
The Complaint alleges that defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder, by issuing a series of material
misrepresentations to the market between March 16, 2000 and
January 9, 2004, thereby artificially inflating the price of
Adecco common stock.
Specifically, the complaint alleges that, throughout the Class
Period, defendants issued numerous positive statements and filed
reports with the SEC which described the Company's increasing
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:
(1) that the Company lacked adequate internal controls and
was therefore unable to ascertain the true financial
condition of the Company;
(2) more specifically, that the Company's North American
operations had material weaknesses in its internal
controls; and
(3) as a result, the values of the Company's net income and
financial results were materially overstated at all
relevant times.
On January 12, 2004, Adecco shocked the market when it announced
that it did not expect the audit of its consolidated financial
statements for the 2003 fiscal year, ended on December 28, 2003,
to be completed by Adecco's auditors, by the previously
announced release date of February 4, 2004.
The Company identified the following reasons for the delay:
(i) the identification of material weaknesses in internal
controls in the Company's North American operations of
Adecco Staffing;
(ii) the resolution of possible accounting, control and
compliance issues in the Company's operations in
certain countries; and
(iii) the completion of the Company's efforts to address
these matters and determine their effect on the
Company's consolidated financial statements.
In response to this announcement, the prices of all Adecco
securities dropped sharply, with Adecco shares traded on the New
York Stock Exchange tumbling more than 30%, or $5.23 per share,
to close at $11.70 per share on extremely heavy volume.
For more details, 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 or by E-Mail:
mhenzel182@aol.com
ADECCO SA: Bull & Lifshitz Commences Securities Lawsuit in NY
-------------------------------------------------------------
Bull & Lifshitz, LLP initiated a securities class action lawsuit
in the United States District Court for the Eastern District of
New York, on behalf of purchasers of all persons or entities who
purchased or otherwise acquired one or more of the shares of
Adecco S.A., between March 16,2000 and January 12, 2004,
inclusive, against the Company and:
(1) John Bowmer,
(2) Jerome Caille, and
(3) Felix A. Weber
The lawsuit charges the Defendants with violations of Sections
10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule
10b-5 promulgated thereunder. Between March 16, 2000 and January
9, 2004, the defendants issued a series of material
misrepresentations to the market concerning the Company's
financial results.
Specifically, defendants' statements during the Class Period
were materially false and misleading because they failed to
disclose and/or misrepresented:
(i) that the Company lacked adequate internal controls and
was therefore unable to ascertain the true financial
condition of the Company;
(ii) more specifically, that its North American operations
had a material weaknesses in internal controls;
(iii) because of this the Company's net income was materially
overstated in violation of Generally Accepted
Accounting Principals; and
(iv) the value of the Company's net income and financial
results were materially overstated at all relevant
times.
On January 12, 2004, Adecco announced that it did not expect the
audit of its consolidated financial statements for the 2003
fiscal year to be completed by Adecco's auditors, by the
previously announced release date of February 4, 2004. The
Company identified the following reasons for the delay:
(a) the identification of material weaknesses in internal
controls in the Company's North American operations of
Adecco Staffing;
(b) the resolution of possible accounting, control and
compliance issues in the Company's operations in
certain countries; and
(c) the completion of the Company's efforts to address
these matters and determine their effect on the
Company's consolidated financial statements.
News of this caused Adecco securities to decrease more than 30%
or $5.23 per share to close at $11.70 per share on extremely
heavy volume.
For more information, contact Peter D. Bull, by Phone:
(212) 213-6222, or Joshua M. Lifshitz, by Phone:(212) 213-6222
ADVANCED MARKETING: Stull Stull Files Securities Lawsuit in CA
--------------------------------------------------------------
Stull Stull & Brody, LLP initiated a class action lawsuit in
U.S. District Court for the Southern District of California, on
behalf of purchasers of Advanced Marketing Services, Inc.
between January 16, 1999 and January 13, 2004, inclusive,
against the Company, and:
(1) Michael Nicita, and
(2) Edward Leonard
The Complaint charges that defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934 and Rule 10-
b(5). The Complaint alleges that Defendants issued a series of
false and misleading statements to the investing community
regarding the financial status of the Company. On January 14,
2004, AMS announced that it would restate its previously filed
financial statements for the fiscal years in the five-year
period ended March 31, 2003. The restatement relates primarily
to the timing and quantification of recognition of revenue and
reversal of accrued liabilities. The effect of the restatement
currently is expected to be a total reduction to cumulative net
income for the five-year period of between approximately $3.0
million and $9.0 million.
For more information, contact Michael D. Braun, by Phone:
310-209-2468 or 888-388-4605 (toll free), by E-mail:
info@secfraud.com, or visit the firm's Website:
http://www.secfraud.com.
AEROSONIC CORPORATION: Marc Henzel Lodges Securities Suit in FL
---------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class
action in the United States District Court for the Middle
District of Florida on behalf of purchasers of Aerosonic
Corporation (Amex: AIM) publicly traded securities during the
period between November 13, 1998 through March 17, 2003.
The complaint alleges that the Defendants violated sections
10(b) and 20(a) of the Securities Exchange Act of 1934, and SEC
Rule 10b-5, by engaging in a fraudulent scheme which
artificially inflated the price of Aerosonic common stock during
the Class Period. In sum, the complaint alleges that Defendants
overstated by millions of dollars Aerosonic's revenue, earnings
and inventory for the fiscal years ended January 31, 2002, 2001,
2000 and 1999 and the first three fiscal quarters of the fiscal
year ended January 31, 2003.
Moreover, on October 31, 2003, Aerosonic finally filed with the
United States Securities and Exchange Commission (the "SEC") its
long-overdue 2003 Form 10-K for the fiscal year ending January
31, 2003, in which it admitted to misstating those periods and
provided financial restatements for same, as well as warned
investors that "the financial information previously reported by
the Company and included in reports on Form 10-K and Form 10-Q
previously filed by the Company for the fiscal years ended
January 31, 1999, 2000, 2001, and 2002, the quarters in such
fiscal years, and the first three quarters of the fiscal year
ended January 31, 2003 should not be relied upon".
In its 2003 Form 10-K, Aerosonic also made the disclosure that
the Company has determined that its previously reported
financial information overstated inventory, understated cost of
sales, overstated revenue and incorrectly reported other items.
Contributing to these misstatements, among other things, were
misstatements of the Company's financial statements, the
falsification of inventory records, improper adjustments for
obsolete and slow moving inventory, improper revenue
recognition, improper fixed asset capitalization, and errors in
the application of Staff Accounting Bulletin No. 101 (released
by the United States Securities and Exchange Commission in
December 1999) ("SAB 101") and generally accepted accounting
principles. Aerosonic has also recently reported that the SEC
is continuing its formal investigation of Company, which began
in May 2003.
For more details, 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 or by E-Mail:
mhenzel182@aol.com
AMERICAN PHARMACEUTICALS: Marc Henzel Launches Stock Suit in IL
---------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class
action on behalf of purchasers of the securities of American
Pharmaceuticals Partners, Inc. (NASDAQ: APPX) between February
19, 2002 and September 24, 2003, inclusive, seeking to pursue
remedies under the Securities Exchange Act of 1934. The action,
is pending in the United States District Court for the Northern
District of Illinois against the Company and:
(1) Patrick Soon-Shiong,
(2) Derek J. Brown,
(3) Jeffrey M. Yordon,
(4) Nicole S. Williams, and
(5) American Bioscience, Inc.
The Complaint alleges that defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder, by issuing a series of material
misrepresentations to the market between February 19, 2002 and
September 24, 2003.
The action alleges that defendants made materially false and
misleading statements with respect to the drug Abraxane, a
reformulated version of Taxol, under development for the
treatment of breast cancer. Throughout the Class Period,
defendants touted Abraxane as a safer and more effective
alternative to Taxol, the world's best-selling chemotherapy drug
for cancer. Defendants claimed that clinical studies had
indicated that:
(i) Abraxane could be administered without Cremophor, a
toxic substance with severe side-effects that limited
the tolerable dose and effectiveness of Taxol;
(ii) unlike Taxol, Abraxane could be administered without
the need for potentially harmful steroid pre-medication
and other drugs that reduce the loss of white blood
cells;
(iii) because Abraxane was not formulated with a toxic
substance it could be delivered in much higher doses
than Taxol and was therefore more effective than Taxol
with respect to reduction in tumor size; and
(4) because it can be injected intravenously directly to
the location of the tumor, Abraxane therapy is only
one-half hour, compared to 3 hours for Taxol.
The Company stated, repeatedly, that studies indicated that
"ABI-007 [Abraxane] is apparently well tolerated" at high doses
[. . .] without the need for steroid premedication and G-CSF
support.
The truth began to emerge on September 24, 2003. On that date,
defendants issued an ostensibly positive news release to
announce the preliminary results of Phase III testing of
Abraxane. However, commentators noted that the news release did
not include the data underlying the trial results, and that the
trial lacked a common safeguard known as double blinding
designed to prevent research bias, since doctors and patients
both knew whether Abraxane or Taxol was in use. Moreover, in the
release APP narrowed some of its claims for Abraxane, stating
not that Abraxane was well tolerated without the need for
steroid premedication and G-CSF support [to reduce loss of white
blood cells] but rather, noted the absence of "severe
hypersensitivity reactions despite no routine pre-medication in
patients receiving Abraxane" and stated that the procedure was
to administer Abraxane "without routine steroid pretreatment or
growth factor support."
The lack of backup data, and the distinction between "no steroid
pretreatment" and "no routine steroid pretreatment" was not lost
on investors; as the market digested the release and its
implications, APP's share price fell 32% from a Class Period
high of $44.14 on September 24, 2003 to a closing price of
$29.59 on September 26, 2003. Two trading days before the
announcement --- but after APP had seen the Phase III trial
results --- defendant Patrick Soon-Shiong ("Soon-Shiong")
disposed of 300,000 shares of his personally held APP stock
while the stock was trading at between $38.68 and $35.47.
For more details, 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 or by E-Mail:
mhenzel182@aol.com
AMERICAN PHYSICIANS: Kirby McInerney File Securities Suit in MI
---------------------------------------------------------------
Kirby, McInerney & Squire, LLP initiated a class action lawsuit
in the United States District Court for the Western District of
Michigan, on behalf of all purchasers of American Physicians
Capital, Inc. securities during the period from February 13,
2003 through November 6, 2003, inclusive.
The action charges American Physicians and certain of its senior
officers with violations of Sections 10(b) and Rule 10b-5 of the
Securities Exchange Act of 1934. The alleged violations stem
from the dissemination of false and misleading statements, which
had the effect - during the Class Period - of artificially
inflating the price of American Physician's shares.
Investors allege that AP Captial and certain of its officers
violated Sections 10(b) and 20 (a) of the Securities and
Exchange Act of 1934, and Rule 10b-5 promulgated thereunder.
More specifically, the complaint alleges that defendants failed
to disclose
(1) that the Company's provisions for loss reserves were
inadequate;
(2) that defendants failed to sufficiently increase the
Company's loss reserves during the Class Period; and
(3) as a result of the foregoing, the Company's operating
results were overstated at all relevant times.
For more information, contact Aaron Hovan, or Vivian Lee, by
Mail: 830 Third Avenue, 10th Floor, New York, New York 10022,
by Phone: (212) 317-2300 or (888) 529-4787 toll free, or by E-
mail: vlee@kmslaw.com.
BEST BUY: Marc Henzel Lodges Securities Fraud Suit 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 Best Buy Co., Inc. (NYSE:
BBY) publicly traded securities during the period between
January 9, 2002 to August 7, 2002, inclusive.
The Complaint alleges that defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder, by issuing a series of material
misrepresentations to the market between January 9, 2002 and
August 7, 2002, thereby artificially inflating the price of Best
Buy common stock.
The Complaint alleges that these statements were materially
false and misleading because they failed to disclose and
misrepresented the following adverse facts, among others:
(1) that Best Buy Co.'s mall-based Sam Goody stores
(acquired as part of its acquisition of Musicland) were
performing worse than Best Buy's expectations,
requiring that Best Buy shrink the sizes of such Sam
Goody stores and close some Sam Goody stores
altogether;
(2) that Best Buy's "remerchandising" of the Sam Goody
stores was failing badly, materially depressing Best
Buy's operations and earnings;
(3) based on the foregoing, the Musicland acquisition was a
failure as the Company was saddled with a money-losing
chain of stores;
(4) that Best Buy was experiencing growing competition from
mass discounters such as Wal-Mart, which was devoting
more advertising to electronics to increase consumer
awareness of its presence in the category and
materially impacting Best Buy's profit margins;
(5) that Best Buy's strategy of capital expenditures to
enhance the high-tech look of their stores and raising
the service level was not yielding expected increases
in revenues; and
(6) that, as a result of the foregoing, defendants lacked a
reasonable basis for their positive statements about
the Company and their earnings projections.
The Class Period ends on August 8, 2002. On that date, Best Buy
issued a press release announcing that it was lowering its
earnings outlook for its second fiscal quarter to a range of 17
to 21 cents per diluted share, compared with prior guidance of
30 to 32 cents per diluted share.
In response to this announcement, the price of Best Buy common
stock declined sharply, falling from $30.80 per share on August
7, 2002 to $19.55 per share on August 8, 2002, or a one-day
decline of more than 36%. During the Class Period, prior to the
disclosure of the true facts about the Company, Best Buy
insiders sold more than $35 million of their personally-held
Best Buy common stock to the unsuspecting market and the Company
completed a debt offering raising hundreds of millions of
dollars.
For more details, 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 or by E-Mail:
mhenzel182@aol.com
BIOPURE CORPORATION: Spector Roseman Files Securities Suit in MA
----------------------------------------------------------------
Spector, Roseman & Kodroff, P.C. initiated a securities class
action lawsuit in the United States District Court for the
District of Massachusetts, on behalf of purchasers of the common
stock of Biopure Corporation between March 17, 2003 through
December 24, 2003, against Biopure, and
(1) Thomas A. Moore,
(2) Carl W. Rausch, and
(3) Ronald F. Richards
The Complaint alleges that defendants violated the federal
securities laws by issuing materially false and misleading
statements contained in press releases and filings with the
Securities and Exchange Commission during the Class Period
concerning the progress of its application to the U.S. Food and
Drug Administration seeking regulatory approval to market
Hemopurer in the United States for patients undergoing
orthopedic surgery.
In truth, however, the FDA had informed defendants of flaws in
the Hemopurer application, citing "safety concerns" arising from
adverse clinical data submitted with the company's application.
The "safety concerns" made FDA approval of Hemopurer highly
unlikely. Prior to the disclosure of these facts, defendants
conducted at least two offerings of Biopure common stock and
insiders sold hundreds of thousands of Biopure common shares at
artificially inflated prices.
On December 24, 2003, defendants disclosed that the FDA had
halted further clinical trials of Hemopurer due to safety
concerns. Defendants also disclosed that commercial release of
Hemopurer in the United States would be delayed beyond mid-2004.
On December 26, 2003 the share price of Biopure plummeted,
falling 16%, to close at $2.43 per share.
For more information, contact Robert M. Roseman, by Phone: toll-
free at 888-844-5862, by E-mail: classaction@srk-law.com, or
visit the firm's Website: http://www.srk-law.com.
BOSTON COMMUNICATIONS: Marc Henzel Lodges Securities Suit in MA
---------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class
action in the United States District Court for the District of
Massachusetts on behalf of purchasers of Boston Communications
Group, Inc. (Nasdaq: BCGI) publicly traded securities during the
period between June 12, 2003 and July 16, 2003, inclusive.
The complaint alleges that Defendants violated Sections 10(b)
and 20(a) of the Securities and Exchange Act of 1934, and Rule
10b-5 promulgated thereunder, by issuing false and misleading
statements concerning the Company's business.
Specifically, the complaint alleges that the Defendants issued
false and misleading statements and had a duty to correct such
statements concerning Boston Communications' relationship with
Verizon Wireless.
In particular, analysts had raised concerns regarding the
Company's ability to maintain relationships with its primary
customers, which accounted for the majority of the Company's
revenue. Moreover, such concerns included the propensity for its
customers to take services outsourced to Boston Communications,
in-house. To allay investor fears concerning Boston
Communications' customer concentration, the Company attempted to
reassure investors that contract negotiations with Verizon
Wireless, and other customers, were continuing as planned,
despite a company policy not to do so.
On July 17, 2003, Verizon Wireless announced its intention to
"insource" the company's services. Announcement of the news
caused shares of Boston Communications to plummet, falling 40%
on heavy volume.
For more details, 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 or by E-Mail:
mhenzel182@aol.com
CAREER EDUCATION: Bernstein Liebhard Files Securities Suit in IL
----------------------------------------------------------------
Bernstein, Liebhard & Lifshitz, LLP initiated a securities class
action lawsuit in the United States District Court for the
Northern District of Illinois, on behalf of all persons who
purchased or acquired Career Education Corporation securities
between April 22, 2003 and December 2, 2003.
Plaintiff alleges that Career publicly touted its business and
financial performance, the performance of its stock price and
its industry leading position as reasons why investors should
purchase its stock. These, and other statements particularized
in the complaint, were materially false and misleading because
they failed to disclose that Career had been regularly
falsifying student records in order to increase graduation rates
and enrollment -- concealing problems that could have threatened
the accreditation of its schools.
On December 3, 2003, the market learned that the former
registrar of Career's Brooks Institute of Photography in Santa
Barbara, California alleged in a complaint filed with an
accreditation agency that the school falsified student records
to ensure that the school passed inspections by accreditation
auditors and to increase enrollment. In reaction to this
announcement, Career's stock price plummeted, falling from
$54.76 per share on December 2, 2003 to $39.48 per share on
December 3, 2003, a one-day drop of 28%, on trading volume of
18.2 million shares -- more than nine times the Company's three-
month daily average.
Throughout the Class Period, Career insiders, including the two
named individual defendants, John M. Larson and Patrick K.
Pesch, sold a total of 1.7 million (split-adjusted) shares of
Career common stock at artificially inflated prices, reaping
gross proceeds in excess of $69 million. Plaintiff seeks to
recover damages on behalf of all those who purchased or
otherwise acquired Career securities during the Class Period. If
you purchased or otherwise acquired Career securities during the
Class Period, and either lost money on the transaction or still
hold the securities, you may wish to join in the action to serve
as lead plaintiff. In order to do so, you must meet certain
requirements set forth in the applicable law and file
appropriate papers no later than February 9, 2004.
For more information, contact Ms. Linda Flood, Director of
Shareholder Relations, by Mail: 10 East 40th Street, New York,
New York 10016, by Phone: (800) 217-1522 or (212) 779-1414, or
by E-mail: CECO@bernlieb.com.
CAREER EDUCATION: Wechsler Harwood Files Securities Suit in IL
--------------------------------------------------------------
Wechsler Harwood LLP initiated a securities class action in the
United States District Court for the Northern District of
Illinois, on behalf of persons or entities who purchased or
otherwise acquired the securities of Career Education Corp.
between January 28, 2003 and December 2, 2003, inclusive,
against defendants CEC and certain of its officers.
The Complaint alleges that defendants made false and misleading
statements concerning its business and financial performance,
the performance of its stock price and its industry leading
position as reasons for why investors should purchase its stock.
Such representations were materially false and misleading
because, unbeknownst to investors, they failed to disclose that
CEC had been regularly falsifying student records in order to
increase graduation rates and enrollment, conceal problems that
could have threatened the accreditation of its schools, and
generally, to allow it to increase its profitability. Among
other things, CEC's schools graduated students who had not
completed required courses and regularly credited and billed
students for taking courses the students had never attended.
Because many of CEC's students receive federal financial aid,
the federal government footed tuition bills for courses not
attended or passed by students. CEC improperly recognized and
reported such payments as revenue.
On November 11, 2003, the Bergen Record, a local New Jersey
newspaper, reported that a former director of CEC's Gibbs
College in New Jersey had alleged that the school regularly
graduated students who did not complete required courses or
attend mandatory internships. These allegations were made in a
wrongful termination action filed by the former director of
Gibbs College in the Superior Court of New Jersey on November 5,
2003. Because the story appeared in a local New Jersey daily
with very limited circulation, it was not digested by the market
and did not immediately affect the Company's stock price.
On November 17, 2003, the Company issued a press release
announcing the filing of the wrongful termination action. The
Company's stock price plummeted on the news, falling from $52.70
per share on November 14, 2003 to $42.56 per share on November
17 (the next trading day), a one-day drop of 19.2%. However,
CEC's stock price rebounded over the next few weeks as the
market shrugged off the allegations in the lawsuit as isolated
and unlikely to have a materially negative impact on the
Company's overall operations.
However, on December 3, 2003, the market learned that a highly
placed employee of a different CEC school in California had
leveled similar accusations of wrongdoing. On December 3, 2003,
Bloomberg News reported that the former registrar of CEC's
Brooks Institute of Photography in Santa Barbara, California
filed a complaint with ACICS alleging that the school falsified
student records to ensure that the school passed inspections by
accreditation auditors and to increase enrollment.
In reaction to this latest revelation, CEC's stock price
plummeted again, falling from $54.76 per share on December 2,
2003 to $39.48 on December 3, 2003, a one-day drop of 28%, on
trading volume of 18.2 million shares -- more than nine times
the Company's three- month daily average.
For more information, contact Virgilio Soler, Shareholder
Relations Department, by Mail: 488 Madison Avenue, 8th Floor,
New York, New York 10022, by Phone: (877) 935-7400 toll free, or
by E-mail: vsoler@whesq.com.
MICROMUSE INC.: Federman & Sherwood Launches CA Securities Suit
---------------------------------------------------------------
Federman & Sherwood, LLP initiated a securities class action in
the United States District Court for the Northern District of
California, on behalf of purchasers of Micromuse Inc. common
stock during the period between October 24, 2000 and December
30, 2003, inclusive.
The Complaint alleges that defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder, by issuing a series of material
misrepresentations to the market between October 24, 2000 and
December 30, 2003, thereby artificially inflating the price of
Micromuse common stock.
Specifically, the complaint alleges that, throughout the Class
Period, defendants issued numerous positive statements and filed
quarterly reports with the SEC describing the Company's
increasing 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:
(1) that the Company had improperly accounted for the
timing of certain accrued expenses and the recognition
of certain other expenses;
(2) that the Company lacked adequate internal controls and
was therefore unable to ascertain the true financial
condition of the Company; and
(3) that as a result, the values of the Company's net
income and financial results were materially overstated
at all relevant times.
For more information, contact William B. Federman, by Mail: 120
N. Robinson, Suite 2720, Oklahoma City, OK 73102, by Phone:
(405) 235-1560, Fax: (405) 239-2112, or E-mail:
wfederman@aol.com.
MICROMUSE INC: Weinstein Kitchenoff Files Securities Suit in CA
----------------------------------------------------------------
Weinstein Kitchenoff Scarlato Karon & Goldman Ltd., initiated a
lawsuit in the United States District Court for the Northern
District of California, on behalf of persons who purchased or
otherwise acquired publicly traded securities of Micromuse Inc.
between October 24, 2000 and December 30, 2003, inclusive,
against Micromuse and certain officers and directors.
The complaint alleges that Defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder, by issuing a series of material
misrepresentations to the market during the Class Period.
Specifically, the complaint alleges that Defendants issued
numerous positive statements and filed reports with the SEC
describing the Company's financial performance.
As alleged in the complaint, these statements were false and
misleading because they failed to disclose or misrepresented
that the Company improperly accounted for the timing of certain
accrued expenses and the recognition of certain other expenses
and that the Company lacked adequate internal controls and was
therefore unable to ascertain its true financial condition.
On December 30, 2003, the Company announced that it had opened
an internal inquiry into its accounting which it expected would
lead to a restatement of its financial results for the last four
years. The company also announced that it would delay filing its
form 10-K with the SEC until it completed its restatement
process.
For more information, contact (888) 545- 7201 to speak to an
advisor.
PARMALAT FINANZIARIA: Much Shelist Files Securities Suit in NY
--------------------------------------------------------------
Much Shelist Freed Denenberg Ament & Rubenstein, P.C. initiated
a class action lawsuit in the United States District Court for
the Southern District of New York, on behalf of purchasers of
the securities (including American Depository Receipts "ADR's",
and bonds) of Parmalat Finanziaria SpA between January 5, 1999
and December 29, 2003, inclusive.
It has been alleged that Parmalat, Calisto Tanzi, Stefano Tanzi,
Luciano Del Soldato, Domenico Barili, Francesco Giuffredi,
Giovanni Tanzi, Fausto Tonna Deloitte & Touche Tohmatsu,
Deloitte & Touche SpA, Citigroup, Inc., Grant Thornton
International, Grant Thornton SpA, Bonlat Financing Corp.,
Coloniale SpA, Zini & Associates, and Buconero LLC violated the
federal securities laws by issuing a series of materially false
and misleading statements to the market. These misstatements
have had the effect of artificially inflating the market price
of Parmalat's securities.
Specifically, the Complaint alleges that throughout the Class
Period, the Company failed to disclose that: the defendants'
statements were materially false and misleading because they
failed to disclose and/or misrepresented the following adverse
facts:
(1) that its assets in its audited financial statements
were overstated;
(2) that Parmalat falsely stated that it had used its
"excess cash balances" -- which actually did not exist
-- to repurchase corporate debt securities worth 2.9
billion euros (approximately $3.6 billion), when in
fact it had not repurchased those debt obligations and
they remained outstanding;
(3) that the $625 million of Parmalat's cash allegedly
invested in a liquid investment fund in the Cayman
Islands could not be retrieved because it was
falsified;
(4) that the Company used off-shore shell companies, such
as Bonlat Financing Corp., Buconero LLC, and Epicurum
to falsify its financial results;
(5) that defendants C. Tanzi and S. Tanzi siphoned as much
as 800 million euros ($1 billion) from Parmalat
operations, mainly to finance other family businesses;
(6) that the Company lacked adequate internal controls and
was therefore unable to ascertain the true financial
condition of the Company; and
(7) that as a result, the value of the Company's net income
and financial results were materially overstated at all
relevant times.
On December 9, 2003, defendant Calisto Tanzi, then Parmalat's
Chairman and Chief Executive Officer, and his son, defendant
Stefano Tanzi, a senior Parmalat executive, met with
representatives from a New York City-based private equity and
financial advisory firm regarding a possible leveraged buyout of
Parmalat. During that meeting, in response to a comment by one
of the Tanzis about liquidity problems at Parmalat, one of the
New York firm's representatives noted that Parmalat's financial
statements showed that the company had a large amount of cash.
In response, defendant Stefano Tanzi stated that the cash was
not there, and that Parmalat really had only 500 million euros
in cash. Later, defendant Luciano Del Soldato, then Parmalat's
Chief Financial Officer, joined the meeting. During a discussion
of Parmalat's outstanding debt, Mr. Del Soldato stated that
Parmalat's debt was actually 10 billion euros, much higher than
the balance sheet showed. Mr. Del Soldato indicated that the
balance sheet was incorrect because the company had not
repurchased 2.9 billion euros of Parmalat bonds. The balance
sheet falsely reflected that the bonds had been repurchased.
These revelations ultimately lead to Parmalat announcing that it
had been declared insolvent by an Italian Court on December 29,
2003.
For more information, contact Carol V. Gilden, by Phone:
(800) 470-6824, or by E-mail: investorhelp@muchshelist.com.
VIRBAC CORPORATION: Kirby McInerney Files Securities Suit in TX
---------------------------------------------------------------
Kirby McInerney & Squire, LLP initiated a class action lawsuit
in the United States District Court for the Northern District of
Texas, Ft. Worth Division, on behalf of all purchasers of Virbac
Corporation securities during the period from May 3, 2001
through November 12, 2003, inclusive.
The action charges Virbac and certain of its senior officers
with violations of Sections 10(b) and Rule 10b-5 of the
Securities Exchange Act of 1934. The alleged violations stem
from the dissemination of false and misleading statements, which
had the effect -- during the Class Period -- of artificially
inflating the price of Virbac's shares.
Investors allege that during the class period, the Company
issued a series of material misrepresentations to the market
concerning the Company's financial results that materially
overstated Virbac's net income, earnings per share and inventory
in violation of Generally Accepted Accounting Principles.
For more information, contact Aaron Hovan, or Vivian Lee, 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: vlee@kmslaw.com.
XL CAPITAL: Cauley Geller Commences Securities Fraud Suit in CT
---------------------------------------------------------------
Cauley Geller Bowman & Rudman, LLP initiated a class action
lawsuit in the United States District Court for the District of
Connecticut, on behalf of purchasers of the publicly traded
securities of XL Capital Ltd. between November 1, 2001 and
October 16, 2003, inclusive, against XL Capital Ltd., and:
(1) Brian M. O'Hara,
(2) Jerry De St. Paer, and
(3) Ronald L. Bornhuetter
According to the lawsuit, Defendants violated Sections 10(b)and
20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder. More specifically, the Complaint alleges
that defendants failed to disclose and indicate
(i) that XL Capital maintained inadequate loss reserves for
its NAC Re subsidiary;
(ii) that the Company did not, contrary to its express
representations, establish adequate loss reserves to
cover claims by NAC Re policy holders;
(iii) that reserve increases for NAC Re announced during the
Class Period were materially insufficient; and
(iv) as a consequence of the understatement of loss
reserves, XL Capital's earnings and assets were
materially overstated at all relevant times.
On October 17, 2003, XL Capital announced that third quarter
results would be lower than anticipated due to higher than
expected losses in its North American reinsurance operations
primarily from new casualty claims for the 1997 to 2000
underwriting years. As a result of these losses, the Company
expected its third quarter 2003 net income to be reduced by
approximately $184 million pre-tax or $160 million after-tax, or
approximately $1.16 per ordinary share, compared to analysts'
current expectations. On news of this, shares of XL Capital
plunged 7.5% or $6.03 per share to close at $73.37 per share on
October 17, 2003.
For more information, contact Samuel H. Rudman, or David A.
Rosenfeld, Client Relations Department: Jackie Addison, Heather
Gann or Chandra West, by Mail: P.O. Box 25438, Little Rock, AR
72221-5438, by Phone: 1-888-551-9944 (toll free), Fax:
1-501-312-8505, or E-mail: info@cauleygeller.com.
XL CAPITAL: Weinstein Kitchenoff Files Securities Suit in CT
----------------------------------------------------------------
Weinstein Kitchenoff Scarlato Karon & Goldman Ltd., initiated a
law suit in the United States District Court for the District of
Connecticut, on behalf of persons who purchased or otherwise
acquired publicly traded securities of XL Capital Ltd. between
November 1, 2001 and October 16, 2003, inclusive, against XL
Capital, and:
(1) Brian M. O'Hara,
(2) Jerry De St. Paer, and
(3) Ronald L. Bornhuetter.
The complaint alleges that Defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder. Specifically, the complaint alleges that
Defendants failed to disclose that XL Capital maintained
inadequate loss reserves for its NAC Re subsidiary and that the
Company did not, contrary to its specific representations,
establish adequate loss reserves to cover claims by NAC Re
policy holders and that reserve increases for NAC Re, announced
during the Class Period were materially deficient.
On October 17, 2003, XL Capital revealed to the market that it
had to take a $160 million after-tax charge to boost reserves
for casualty policies written between 1997 and 2000 in its NAC
Re subsidiary. In reaction to this news, shares of XL Capital
fell 8% to close at $73.37 per share.
For more information, contact (888) 545-7201 to speak with an
advisor.
XL CAPITAL: Schiffrin & Barroway Files Securities CT Fraud Suit
---------------------------------------------------------------
Schiffrin & Barroway, LLP, initiated a class action lawsuit in
the United States District Court for the District of
Connecticut, on behalf of purchasers of the publicly traded
securities of XL Capital Ltd. between November 1, 2001 and
October 16, 2003, inclusive, against XL Capital Ltd., and:
(1) Brian M. O'Hara,
(2) Jerry De St. Paer, and
(3) Ronald L. Bornhuetter
According to the lawsuit, Defendants violated Sections 10(b)and
20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder. More specifically, the Complaint alleges
that defendants failed to disclose and indicate
(i) that XL Capital maintained inadequate loss reserves for
its NAC Re subsidiary;
(ii) that the Company did not, contrary to its express
representations, establish adequate loss reserves to
cover claims by NAC Re policy holders;
(iii) that reserve increases for NAC Re announced during the
Class Period were materially insufficient; and
(iv) as a consequence of the understatement of loss
reserves, XL Capital's earnings and assets were
materially overstated at all relevant times.
On October 17, 2003, XL Capital announced that third quarter
results would be lower than anticipated due to higher than
expected losses in its North American reinsurance operations
primarily from new casualty claims for the 1997 to 2000
underwriting years. As a result of these losses, the Company
expected its third quarter 2003 net income to be reduced by
approximately $184 million pre-tax or $160 million after-tax, or
approximately $1.16 per ordinary share, compared to analysts'
current expectations. On news of this, shares of XL Capital
plunged 7.5% or $6.03 per share to close at $73.37 per share on
October 17, 2003.
For more information, contact Marc A. Topaz, or Stuart L.
Berman, by Mail: Three Bala Plaza East, Suite 400, Bala Cynwyd,
PA 19004, by Phone: 1-888-299-7706 (toll free) or
1-610-667-7706, or by E-mail: info@sbclasslaw.com.
*********
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the Class Action Reporter. Submissions
via e-mail to carconf@beard.com are encouraged.
Each Friday's edition of the CAR includes a section featuring
news on asbestos-related litigation and profiles of target
asbestos defendants that, according to independent researches,
collectively face billions of dollars in asbestos-related
liabilities. The Asbestos Defendant Profiles is backed by an
online database created to respond to custom searches. Go to
http://litigationdatasource.com/asbestos_defendant_profiles.html
*********
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., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland
USA. Roberto Amor, Aurora Fatima Antonio and Lyndsey Resnick,
Editors.
Copyright 2004. 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 * * *