/raid1/www/Hosts/bankrupt/CAR_Public/040504.mbx
C L A S S A C T I O N R E P O R T E R
Tuesday, May 4, 2004, Vol. 6, No. 87
Headlines
AMERICAN SPECTRUM: CA Court Approves Shareholder Suit Settlement
AT&T CORPORATION: Florida AG Commences Consumer Fraud Lawsuit
BOCH MOTORS: Reaches $400T Settlement In MA Consumer Fraud Suit
CALIFORNIA AMPLIFIER: SEC Files Injunctive Suit v. Ex-Controller
CARY KHAN: SEC Institutes Cease-And-Desist Proceedings For Fraud
DAIMLERCHRYSLER AG: DE Court Approves Securities Suit Settlement
FLORIDA: Attorney General Praises Passage of Medicaid Fraud Bill
FLORIDA: Attorney General Crist Praises Passage of Anti-Spam Law
GEORGIA-PACIFIC: GA Court Approves Settlement For ERISA Lawsuit
LEATHER EXPERTS: CA Court Approves Overtime Wage Suit Settlement
HUDSON'S BAY: Consumers Launch Fraud Suit in Quebec State Court
HUDSON'S BAY: Employees Lodge Proceeding Over Dumai Pension Plan
L&N SALES: Recalls 59,400 Cordless Sweepers Due To Fire Hazard
METRIS COMPANIES: Discovery Proceeds in MN Shareholder Lawsuit
METRIS COMPANIES: MA State Court Dismisses Consumer Fraud Suit
RICHMARK CAPITAL: SEC Suspends Broker-Dealer Registration, Exec
SPX CORPORATION: Shareholders File Securities, ERISA Suits in NC
TELUS CORPORATION: Alberta Court Junks Motion Striking Lawsuits
WASHINGTON DC: Businessman Sentenced for Illegal Fireworks Sale
WYETH-AYERST: Freedland Farmer Launches Phen-fen Injury Lawsuit
New Securities Fraud Cases
ABATIX CORPORATION: Schiffrin & Barroway Lodges Stock Suit in TX
ACTERNA CORPORATION: Marc Henzel Launches Securities Suit in MD
AMERICAN PHARMACEUTICAL: Marc Henzel Files Securities Suit in IL
CANADIAN SUPERIOR: Scott + Scott Launches Securities Suit in NY
EXXON MOBIL: Wolf Haldenstein Lodges Securities Fraud Suit in NJ
GLOBAL CROSSING: Abbey Gardy Lodges Securities Fraud Suit in NJ
GLOBAL CROSSING: Geller Rudman Lodges Securities Suit in S.D. NY
GOODYEAR TIRE: Marc Henzel Lodges Securities Suit in N.D. Ohio
NORTEL NETWORKS: Wolf Haldenstein Launches Amended Stock Suit
NORTEL NETWORKS: Cauley Bowman Files Securities Fraud Suit in NY
NORTEL NETWORKS: Berger & Montague Launches NY Securities Suit
NOVASTAR FINANCIAL: Squitieri & Fearon Files Stock Lawsuit in MO
ODYSSEY HEALTHCARE: Cauley Geller Lodges Securities Suit in TX
*********
AMERICAN SPECTRUM: CA Court Approves Shareholder Suit Settlement
----------------------------------------------------------------
The Orange County Superior Court in California approved the
settlement proposed by American Spectrum Realty, Inc. for a
class action filed against it, and:
(1) CGS Real Estate Company, Inc.,
(2) William J. Carden,
(3) John N. Galardi and
(4) S-P Properties, Inc.
The suit, filed by Robert L. Lewis, Madison Liquidity
Investors 103 LLC and Madison Liquidity Investors 112 LLC,
purports alleged claims against the Company and others for
breach of fiduciary duty and breach of contract. Plaintiffs'
complaint challenged the Consolidation, although the
Consolidation was disclosed in a Prospectus/Consent Solicitation
filed with the Securities and Exchange Commission and was
approved by a majority vote of the limited partners of the
partnerships. Plaintiffs alleged that the approval was invalid
and that the Consolidation constituted a breach of fiduciary
duty by each of the defendants. Plaintiffs further alleged that
the Consolidation constituted breach of the partnership
agreements governing the partnerships.
Plaintiffs requested:
(i) an injunction prohibiting the defendants from
commingling;
(ii) imposition of a constructive trust providing for
liquidation of the assets of the partnerships and a
distribution of the assets to the former limited
partners therein;
(iii) a judicial declaration that the action may be
maintained as a class action;
(iv) monetary/compensatory damages;
(v) plaintiffs' costs of suit, including attorneys',
accountants' and expert fees; and
(vi) a judicial order of dissolution of the partnerships and
appointment of a liquidating trustee
On March 15, 2002, the Court sustained the Company's demurrer to
plaintiffs' complaint and held that the complaint failed to
state a cause of action for either breach of fiduciary duty or
breach of contract against the Company. The Court gave the
plaintiffs twenty days' leave to amend.
Subsequently, plaintiffs filed and served a Second Amended
Complaint alleging claims against the Company for breach of
fiduciary duty, breach of contract, intentional interference
with prospective economic advantage, and intentional
interference with contractual relations. On June 14, 2002, the
Court sustained the Company's demurrer on the grounds that
Plaintiffs' Second Amended Complaint failed to state a cause of
action against the Company for interference with contract or
interference with prospective economic advantage. The Court
gave Plaintiffs twenty days leave to amend.
Subsequently, the plaintiffs filed and served a Third Amended
Complaint on the Company alleging claims against the Company for
breach of fiduciary duty, breach of contract, intentional
interference with prospective economic advantage, and
intentional interference with contractual relations. On
September 6, 2002, the Court sustained the Company's demurrer on
the grounds that the Plaintiffs' Third Amended Compliant failed
to state a cause of action for either interference with contract
or interference with prospective economic advantage against the
Company. The Court gave the Plaintiffs twenty days to amend.
On September 25, 2002, the plaintiffs filed and served a Fourth
Amended Complaint on the Company alleging claims against the
Company for breach of fiduciary duty, breach of contract,
intentional interference with prospective economic advantage,
and intentional interference with contractual relations.
On October 29, 2002, the Company responded by answer and
asserted general and specific affirmative defenses to the
allegations in the Fourth Amended Complaint. On January 10,
2003, plaintiffs filed and served a Notice of Motion and Motion
for Class Certification. On January 31, 2003, the Company filed
an Opposition to Plaintiffs' Motion for Class Certification. On
March 7, 2003, the Court granted plaintiffs' Motion for Class
Certification but expressly reserved the right to visit the
issue of certification should rescission be chosen as a remedy
to determine whether it is still a viable procedure in the class
setting.
On October 16, 2003, counsel for the plaintiffs and counsel for
the defendants executed a Memorandum of Understanding regarding
the settlement in this matter. By the terms of that Memorandum,
the defendants agreed to pay a total of $6,500,000 to settle
this action and all other claims known and unknown relating to
the facts set forth in the Fourth Amended Complaint. Plaintiffs
have agreed to release such claims, pursuant to the Memorandum.
As this matter is a class action, the parties need to obtain
court approval to complete the settlement and to administer the
payment of the settlement amounts to the class members. The
settlement is funded, in its entirety, by insurance coverage.
On January 14, 2004, the Court granted preliminary approval of
the settlement, directed notice to the Class, and set a fairness
hearing for March 23, 2004. On February 26, 2004, the
defendants' insurers deposited $6,500,000 into an escrow account
for the purposes of settlement. On April 12, 2004, the Court
ruled that the settlement is fair, adequate and reasonable.
AT&T CORPORATION: Florida AG Commences Consumer Fraud Lawsuit
-------------------------------------------------------------
Florida Attorney General Charlie Crist filed a lawsuit against
AT&T Corporation to stop the company from wrongfully billing
consumers for unsolicited services and from coercing them into
signing up for the same services for which they were requesting
refunds.
"This practice is outrageous," AG Crist said in a statement.
"Consumers called AT&T seeking a refund, but instead of help,
they were told they must sign up with AT&T to get their own
money back. This certainly sounds like coercion, and we will
not stand for it."
A complaint, a motion for injunction, and a request for
immediate hearing were filed in Leon County Circuit Court
following more than 500 complaints filed by Floridians in the
Attorney General's office. The Attorney General will seek up to
$10,000 for each billing incident, restitution for victims, and
attorney fees for AT&T's alleged violation of Florida's Unfair
and Deceptive Business Practices Act, F.S. 501, Part II.
Approximately 1 million consumers nationwide were billed
incorrectly for AT&T long distance services. When some Florida
consumers called AT&T to complain about these unsolicited
charges, AT&T told them they would issue refunds only if
consumers signed up for the same AT&T long-distance services for
which they had been improperly billed.
AG Crist issued a consumer alert on April 23, and since that
time more than 500 Floridians have contacted the Attorney
General's office for assistance. On Tuesday of this week, AG
Crist sent a letter to AT&T that stated consumers were hitting a
"totally unacceptable" barrier in their efforts to receive
refunds. He called on the head of AT&T to implement "immediate
corrections" to the system and invited the chief executive to
meet in Tallahassee to discuss consumers' concerns.
AG Crist urges all telephone consumers to diligently check their
phone bills, the statement said. If they find evidence of this
conduct, please call the Attorney General's Office by Phone:
1-866-9NO-SCAM.
BOCH MOTORS: Reaches $400T Settlement In MA Consumer Fraud Suit
----------------------------------------------------------------
Popular Massachusetts car dealership Boch Motors reached a
settlement of a consumer class action filed in the Norfolk
Superior Court, on behalf of 6,000 customers who allegedly were
victims of the dealership's window-etching theft deterrent
service, in violation of the state law, thebostonchannel.com
reports.
The settlement amounting $400,000 will be issued to the members
of the class. The suit alleges that the dealership violated
state consumer law by failing to disclose a $145 etching fee as
part of the vehicle's finance charge. The suit also charged that
Boch forced the fee on unsuspecting customers.
Officials from Boch Motors have vehemently denied the charges,
the bostonchannel.com reports. According to reports the
dealership has reiterated that they are only settling to avoid
further legal expenses and risks.
CALIFORNIA AMPLIFIER: SEC Files Injunctive Suit v. Ex-Controller
----------------------------------------------------------------
The Securities and Exchange Commission filed an injunctive
action against Barry Richard Kusatzky, alleging that during the
period November 1999 through January 2001, Mr. Kusatzky, the
former controller of California Amplifier, Inc., engaged in
accounting fraud and insider trading.
Specifically, the complaint alleges that Mr. Kusatzky caused
California Amplifier to materially overstate income and equity
in its quarterly and annual financial statements for the period
November 27, 1999, through November 25, 2000, by hiding $7.8
million in Company expenses. Mr. Kusatzky accomplished this
fraud by fabricating financial statements and falsifying the
Company's books and records. He also concealed his fraud by
presenting false records to California Amplifier's auditors.
According to the complaint, in January 2000, before his fraud
was discovered, Mr. Kusatzky illegally profited from his
misdeeds. At that time, with full knowledge of his wrongdoing,
Mr. Kusatzky exercised all his vested options and sold all his
15,000 shares of California Amplifier stock while in possession
of material, non-public information that the Company's earnings
were materially overstated.
The complaint alleges Mr. Kusatzky knew that California
Amplifier's earnings for the quarter ended November 27, 1999,
were materially overstated because he was solely responsible for
overstating them. Mr. Kusatzky's illegal sales enabled him to
avoid losses of over $350,000. The complaint also alleges that
in March 2001, on the day before the Company's annual audit was
to begin, Mr. Kusatzky confessed to his fraud.
In a handwritten note provided to Company officials, Kusatzky
admitted to hiding expenses and to making California Amplifier's
"P+L look better." The complaint alleges that Kusatzky's
"confession," neither revealed the extent of his misstatement of
California Amplifier's financial statements, nor acknowledged
his insider trading.
The complaint alleges that Mr. Kusatzky violated Section 17(a)
of the Securities Act of 1933 (Securities Act), Sections 10(b)
and 13(b)(5) of the Securities Exchange Act of 1934 (Exchange
Act) and Rules 10b-5, 13b2-1 and 13b2-2 thereunder and aided and
abetted California Amplifier's violations of Sections 13(a),
13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-
20, 13a-1 and 13a-13 thereunder. The complaint seeks a
permanent injunction prohibiting future violations of these
provisions, disgorgement including prejudgment interest, and
civil penalties pursuant to Sections 21(d)(3) and 21A of the
Exchange Act, and Section 20(d)(1) of the Securities Act. The
Commission also seeks an order barring Kusatzky from serving as
an officer or director of a public company.
On April 29, the Commission issued a settled Order against
California Amplifier. The Order finds that during fiscal 2000
and much of fiscal 2001, California Amplifier failed to
establish or maintain internal accounting controls sufficient to
provide reasonable assurance that its financial statements were
prepared in accordance with generally accepted accounting
principles (GAAP). This lack of adequate internal controls
allowed Mr. Kusatzky to commit fraud, caused the failure of the
company to discover that Kusatzky was not a CPA as he had
represented, resulted in books and records that failed to
accurately reflect the company's transactions, caused numerous
other accounting errors, and caused California Amplifier to file
materially false and misleading periodic reports with the
Commission.
The Order requires that California Amplifier cease and desist
from committing or causing any violations and any future
violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the
Exchange Act and Rules 12b-20, 13a-1 and 13a-13 promulgated
thereunder. The Company consented to the entry of the Order
without admitting or denying the findings therein.
The suit, styled "SEC v. Barry Richard Kusatzky, Civil Action
No. 1:04CV00700 (JGP) D.D.C."
CARY KHAN: SEC Institutes Cease-And-Desist Proceedings For Fraud
----------------------------------------------------------------
The Securities and Exchange Commission instituted cease-and-
desist proceedings against Cary R. Kahn seeking a cease-and-
desist order and disgorgement of ill-gotten gains. Mr. Kahn is
a self-employed investor living in Boulder, Colorado.
The Division of Enforcement alleges Mr. Kahn engaged in a
fraudulent scheme to take advantage of the Commission's Limit
Order Display Rule and manipulate the National Best Bid and
Offer (NBBO) for several securities on 52 different occasions.
Mr. Kahn carried out the scheme, known in the industry as
"spoofing," by entering small market moving orders, either to
buy or to sell, at prices in between the best bid and offer for
a Nasdaq stock. This order became the new best bid or offer.
Mr. Kahn then entered a larger order on the other side of the
market.
The second orders were filled by Nasdaq market makers who
guaranteed execution of the security at the new NBBO up to a
maximum number of shares, regardless of the size of the NBBO
quote. Mr. Kahn then attempted to cancel the market moving
orders before they could be executed, to complete the
manipulative scheme. In 49 of the 52 spoofing incidents, Mr.
Kahn successfully canceled the market moving order.
A hearing will be scheduled before an administrative law judge
to determine whether the allegations contained in the Order are
true, to provide Kahn an opportunity to dispute these
allegations, and to determine whether Kahn should be ordered to
cease and desist from future violations and pay disgorgement.
DAIMLERCHRYSLER AG: DE Court Approves Securities Suit Settlement
----------------------------------------------------------------
The United States District Court for the District of Delaware
granted final approval to the settlement proposed by
DaimlerChrysler AG for the consolidated securities class action
filed against it and some of the members of its supervisory
board and board of management.
In the fourth quarter of 2000, Tracinda Corporation filed a
lawsuit in the United States District Court for the District of
Delaware against the same defendants. Shortly thereafter, other
plaintiffs filed a number of actions against the same
defendants, making claims similar to those in the Tracinda
complaint. Two individual lawsuits and one consolidated class
action lawsuit were originally pending.
The plaintiffs, current or former DaimlerChrysler shareholders,
alleged that the defendants violated U.S. securities law and
committed fraud in obtaining approval from Chrysler stockholders
of the business combination between Chrysler and Daimler-Benz in
1998. The consolidated class action contained additional
allegations that were later dismissed.
In March 2003, the Court granted an individual defendant's
motion to dismiss each of the complaints against him on the
ground that the Court lacked jurisdiction over him. In February
2003, the Daimler-Chrysler defendants filed motions seeking
summary judgment on all claims in the cases on several grounds,
including that the claims are barred by the statute of
limitations. In June 2003, the Court denied defendants' motion
relating to the statute of limitations.
In August 2003, the Company agreed to settle the consolidated
class action case for $300 million (approximately CND230 million
adjusted for currency effects), and shortly thereafter,
DaimlerChrysler concluded a settlement with Glickenhaus, one of
the two individual plaintiffs. On February 5, 2004, the Court
issued a final order approving the settlement of the
consolidated class action case and ordering its dismissal.
The settlements did not affect the case brought by Tracinda,
which claims to have suffered damages of approximately $1.35
billion. In November 2003, the Court denied the remaining
aspects of defendants' motion for summary judgment. The
Tracinda case went to trial in December 2003 and continued for
approximately two weeks. Trial of the case was suspended with
approximately two days of trial time remaining while the parties
addressed a discovery issue in a separate hearing. The trial
reconvened on February 9, 2004, and was completed on February
11, 2004.
FLORIDA: Attorney General Praises Passage of Medicaid Fraud Bill
----------------------------------------------------------------
Florida Attorney General Charlie Crist praised the Florida
Legislature for passing important new legislation that will
enhance the state's ability to target Medicaid prescription drug
fraud. Senate Bill 1064, which creates criminal penalties for
buying, selling or trafficking in Medicaid prescriptions, will
authorize the Attorney General's Office of Statewide Prosecution
to investigate and prosecute Medicaid prescription fraud.
"Prescription drug fraud has become an ever-increasing
contributor to drug addiction and drug deaths," AG Crist said in
a statement. "The increasing cost in human life and in taxpayer
dollars means that targeting this crime is an issue whose time
has come."
Under the bill, criminal charges would be classified according
to the value of the drugs: a third-degree felony for drugs
valued at less than $20,000, a second-degree felony for drugs
valued from $20,000 to $100,000, and a first-degree felony for
drugs valued at $100,000 or more. The legislation grew out of a
report by a statewide grand jury looking into prescription abuse
and fraud.
AG Crist thanked the bill's sponsors, Senators Mike Fasano, Burt
Saunders, and David Aronberg and Representatives Gus Bilirakis
and Frank Farkas, for their work in gaining passage of the
legislation, as well as Senate President King and House Speaker
Byrd.
FLORIDA: Attorney General Crist Praises Passage of Anti-Spam Law
----------------------------------------------------------------
Florida Attorney General Charlie Crist praised the Florida
Legislature following passage of a bill targeting the
undesirable form of email known as Spam. If signed by Governor
Bush, the bill would provide the Attorney General's Office with
authority to prosecute companies that send unsolicited,
deceitful commercial e-mail to unsuspecting Floridians.
"Spam is an annoying, intrusive form of e-mail that almost all
of us receive but few of us want. Much of it is just clutter,
but some of it can be downright offensive," AG Crist said.
"This legislation would give the state an effective tool to
protect Floridians and, most importantly, children from a flood
of unwanted and inappropriate e-mail messages."
The bill would authorize the Attorney General to seek fines for
as much as $500 for each piece of spam e-mail a company sends.
The bill allows the Attorney General to use Florida's "long-arm
jurisdiction" to prosecute out-of-state companies that are found
to have sent spam to Florida residents. This legislation was
sought by AG Crist in response to citizen complaints.
AG Crist praised and thanked the bill's sponsors, Senator Rudy
Garcia and Representative Holly Benson, for their support of the
bill, as well as Senate President King and House Speaker Byrd.
GEORGIA-PACIFIC: GA Court Approves Settlement For ERISA Lawsuit
---------------------------------------------------------------
The United States District Court in Atlanta, Georgia
preliminarily approved the settlement of the class action filed
against Georgia-Pacific Corporation and the Georgia-Pacific
Corporation Salaried Employees Retirement Plan. The suit seeks
recovery of alleged underpayments of lump-sum benefits to
persons taking early retirement.
In February 2004, the Court entered a preliminary order
approving the settlement, which, among other things, scheduled a
fairness hearing on the settlement. At the fairness hearing,
the Court will be requested to finally approve the settlement
agreement as fair, reasonable, and adequate. Under the
settlement, the Plan will pay $67 million in additional benefits
to certain class members plus 1% simple annual interest from
December 18, 2003 until the date of distribution, which includes
attorney and class representative fees, and costs to administer
the settlement. All claims against the Plan and us will be
dismissed with prejudice.
LEATHER EXPERTS: CA Court Approves Overtime Wage Suit Settlement
----------------------------------------------------------------
The California State Court granted final approval of the
settlement proposed by Wilsons, The Leather Experts, Inc. for
the class action filed against it on behalf of its current and
former store managers, regarding their classification as exempt
from overtime pay.
In July 2003, the Company reached a confidential settlement of
the class action through mediation. A charge of $1.9 million
related to this settlement was taken during the second quarter
of 2003. In October 2003, the court granted preliminary
approval of the settlement.
HUDSON'S BAY: Consumers Launch Fraud Suit in Quebec State Court
---------------------------------------------------------------
Hudson's Bay Company and four other companies, were served with
a motion seeking authorization from the Quebec Superior Court in
Canada to institute a class action in relation to the mailing
dates of the credit card statements. This motion alleges that
certain provisions of the Quebec Consumer Protection Act
relating to grace periods were not respected.
This matter has not yet been certified as a class proceeding.
Accordingly, it is premature to comment on the merits of the
claims, the Company stated in a disclosure to the Canadian
Securities and Exchange Commission.
HUDSON'S BAY: Employees Lodge Proceeding Over Dumai Pension Plan
----------------------------------------------------------------
Hudson's Bay Company faces a proceeding filed in the Superior
Court of Justice in Ontario, by an active Company employee and a
retired Company employee in relation to surplus assets in the
Dumai Pension Plan. The suit also names as defendants Royal
Trust Corporation and Investors Group Trust Company Limited.
This matter has not yet been certified by the Court as a class
proceeding nor has documentary production been made by any of
the parties or examinations for discovery commenced.
Accordingly, it is premature to comment on the merits of the
claims, the Company said in a disclosure to the Canadian
Securities and Exchange Commission.
L&N SALES: Recalls 59,400 Cordless Sweepers Due To Fire Hazard
--------------------------------------------------------------
L&N Sales and Marketing, Inc. is cooperating with the United
States Consumer Product Safety Commission by voluntarily
recalling 59,400 ProSweep Rechargeable Cordless Sweeper.
The sweeper can overheat, posing a fire hazard. L&N has
received about 80 reports of the sweepers overheating, including
11 reports of fires, some of which resulted in minor property
damage. No injuries have been reported.
The Prosweep Rechargeable Cordless Sweeper with Rotating Brush
has a clear blue plastic housing. Model number "EB005 / 52008"
is written on a silver-colored label on the bottom of the units.
"L&N Sales and Marketing" and "Made in China" also are written
on the label.
QVC television sold these items nationwide from December 28,
2003 through February 16, 2004 for between $36 and $40.
Consumers should stop using the sweeper immediately. A
replacement sweeper will be offered free of charge by L&N
through QVC. Consumers will receive direct notification from QVC
about the recall. For more information, contact QVC's customer
service department by Phone: (800) 367-9444 between 8 a.m. and
12 a.m. ET any day of the week.
METRIS COMPANIES: Discovery Proceeds in MN Shareholder Lawsuit
--------------------------------------------------------------
Discovery is proceeding in the shareholder class action filed
against Metris Companies, Inc. in the United States District
Court for the District of Minnesota. The suit also names Ronald
N. Zebeck and David D. Wesselink as defendants.
The plaintiffs seek to represent a class of purchasers of MCI
common stock between November 5, 2001 and July 17, 2002. The
lawsuit seeks damages in an unspecified amount. The complaint
alleges, among other things, that defendants violated the
federal securities laws when the Company failed to timely
disclose the existence of an impact of an OCC Report of
Examination.
METRIS COMPANIES: MA State Court Dismisses Consumer Fraud Suit
--------------------------------------------------------------
Metris Companies, Inc. and its principal subsidiary Direct
Merchants Credit Card Bank, National Association has settled a
class action filed by a Direct Merchants Bank cardholder in
Middlesex County Superior Court in Cambridge, Massachusetts.
The suit alleges certain unfair business practices and purports
to be a class action lawsuit; however, it was never certified as
a class action. The complaint will be dismissed with prejudice.
RICHMARK CAPITAL: SEC Suspends Broker-Dealer Registration, Exec
---------------------------------------------------------------
The Securities and Exchange Commission suspended the broker-
dealer registration of RichMark Capital Corporation of Irving,
Texas for 90 days, suspended Doyle Mark White, RichMark's vice
president and secretary, from association with any broker or
dealer for 90 days, assessed civil money penalties of $275,00
against RichMark and $55,000 against White, issued a cease-and-
desist order, and ordered joint and several disgorgement of
$25,617.86 plus prejudgment interest.
The sanctions were based on findings that respondents violated
antifraud provisions in that they recklessly failed to disclose
to customers to whom they recommended and sold stock of PCC
Group, Inc. (PCCG) that, at the very same time, respondents were
taking action contrary to their recommendation by selling their
own shares of PCCG. The Commission also found that respondents
were negligent in failing to disclose to PCCG customers that
respondents had a strong financial incentive to promote the sale
of PCCG because of the PCCG stock and options they received
under an investment banking agreement between PCCG and RichMark.
The sanctions imposed on RichMark and White were stayed pending
their appeal of the Commission's decision to the United States
Court of Appeals for the Fifth Circuit. The Court recently
affirmed the Commission's decision. Accordingly, the Commission
has issued an order making respondents' suspensions effective 14
days from the date of its order, and making the cease-and-desist
order and the orders assessing money penalties and disgorgement
effective immediately, with payment required within 10 business
days.
SPX CORPORATION: Shareholders File Securities, ERISA Suits in NC
----------------------------------------------------------------
SPX Corporation and certain of its current and former executive
officers face several securities class actions filed by certain
law firms representing or seeking to represent purchasers of its
common stock during a specified period in the United States
District Court for the Western District of North Carolina.
The suits allege violations of Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934. The plaintiffs allege that the
Company made false and misleading statements regarding the
Company's 2003 fiscal year business and operating results in
order to artificially inflate the price of its stock.
Additionally, on April 23, 2004, an additional class action
complaint was filed, alleging breaches of the Employee
Retirement Income Security Act of 1974 by the Company, its
general counsel and the Administration Committee regarding one
of the Company's 401(k) defined contribution benefit plans
arising from the plan's holding of its stock.
TELUS CORPORATION: Alberta Court Junks Motion Striking Lawsuits
---------------------------------------------------------------
The Alberta Court of Queen's Bench dropped the motion dismissing
the lawsuits against TELUS Corporation as representative or
class actions.
In January 2002, the Company became aware of two statements of
claim filed by plaintiffs alleging to be either members or
business agents of the Telecommunications Workers' Union (TWU).
In one action, the three plaintiffs alleged to be suing on
behalf of all current or future beneficiaries of the TELUS
Corporation Pension Plan (TCPP), and in the other action, the
two plaintiffs allege to be suing on behalf of all current or
future beneficiaries of the TELUS Edmonton Pension Plan
(TEPP).
The statement of claim in the TCPP-related action named TELUS,
certain of its affiliates and certain present and former
trustees of the TCPP as defendants, and claims damages in the
sum of $445 million. The statement of claim in the TEPP-related
action named TELUS, certain of its affiliates and certain
individuals who are alleged to be trustees of the TEPP and
claims damages in the sum of $15.5 million.
On February 19, 2002, TELUS filed statements of defense to both
actions and also filed notices of motion for certain relief,
including an order striking out the actions as representative or
class actions. On May 17, 2002, the statements of claim were
amended by the plaintiffs and include allegations, inter alia,
that benefits provided under the TCPP and TEPP are less
advantageous than the benefits provided under the respective
former pension plans, contrary to applicable legislation, that
insufficient contributions were made to the plans and
contribution holidays were taken and that the defendants
wrongfully used the diverted funds, and that administration fees
and expenses were improperly deducted.
TELUS filed statements of defense to the amended statements of
claim on June 3, 2002. An application for an order striking out
the actions as representative or class actions was dismissed on
December 17, 2003. The Company believes it has good defenses to
the actions. However, at this stage of the litigation, it is
too early to determine if there is a material likelihood of the
actions being determined adversely against the Company.
WASHINGTON DC: Businessman Sentenced for Illegal Fireworks Sale
---------------------------------------------------------------
A Kansas businessman was sentenced today to 15 months in federal
prison for conspiring to sell illegal fireworks and for making
false statements. He was also permanently banned from
manufacturing, importing, or distributing fireworks. Through
the investigative work of the U.S. Consumer Product Safety
Commission, the conspiracy was dismantled before any consumers
were seriously injured or killed.
U.S. District Court in Washington, D.C. Judge J. Thomas Marten
sentenced Gerald Lee Dunnegan, 59, of Witchita, for conspiring
to sell highly explosive display fireworks to an out-of-state
buyer who had falsified Alcohol, Tobacco, Firearms and
Explosives (ATF) documents and intended to sell the fireworks to
consumers. Under federal law, both dealers and out-of-state
purchasers must possess a license issued by ATF.
Mr. Dunnegan, who pled guilty in October 2003, also was fined
$25,000, sentenced to two years of supervised release, ordered
to forfeit over $400,000 in profits, and is permanently banned
from operating a fireworks-related business in the future.
"CPSC's investigative work helped connect the pieces to this
puzzle and exposed a dangerous conspiracy to divert to consumers
highly explosive, professional fireworks," said CPSC Chairman
Hal Stratton in a statement. "Our coordination with federal law
enforcement to stop this illegal activity may well have
prevented deaths and injuries to consumers throughout the
Midwest."
Mr. Dunnegan, owner of Advanced Imports Inc., admitted to
planning the sale of over 1,000 lbs. of display fireworks to
Rodney Harris, of Appleton, Wisconsin, in June 1997 and May
1998. In each case, Mr. Harris traveled to Wichita, purchased
the explosives from Mr. Dunnegan with cash, and transported them
back to Wisconsin. Mr. Dunnegan made the sale with full
knowledge that Mr. Harris did not have an ATF license and had
used a third party in Kansas to falsify ATF documents stating
that the fireworks would be used for display purposes in Kansas.
Mr. Harris pled guilty in December 1999 to conspiracy to import,
deal, and make false statements involving illegal fireworks and
was sentenced to 16 months in federal prison and fined $7,500.
Through undercover buys, online purchases, inspections and
investigations, CPSC is tracking down and closing illegal
roadside stands, warehouses and retail stores that sell
professional grade explosives to consumers, and homes that serve
as havens for the manufacture of dangerous fireworks devices.
Under the authority granted to it by the Federal Hazardous
Substances Act, the CPSC prohibits the sale of the most
dangerous types of fireworks, and the components intended to
make them. The banned fireworks include various large aerial
devices, M-80s, quarter-sticks, half-sticks, and other large
firecrackers. Any firecracker with more than 50 milligrams of
explosive powder is banned under federal law, as are mail order
kits and components designed to build these fireworks.
The CPSC worked closely and cooperatively on the prosecution
with the Bureau of Alcohol, Tobacco, Firearms, and Explosives in
Wichita; the Department of Justice's Office of Consumer
Litigation; and the United States Attorney's Office in Kansas.
WYETH-AYERST: Freedland Farmer Launches Phen-fen Injury Lawsuit
---------------------------------------------------------------
Coming on the heels of a Texas jury's $1 billion award to the
family of a woman who died after taking one of the now banned
phen-fen diet drugs, Freedland, Farmer, Russo & Sheller PL await
a trial date for a strikingly similar case against Wyeth-Ayerst
Laboratories.
"A $1 billion verdict sends a strong message about the severity
and ramifications phen-fen has riddled on the lives of innocent
people," said Michael Freedland, a partner at the law firm of
Freedland, Farmer, Russo & Sheller who is most noted as one of
the first lawyers involved in the highly publicized phen-fen
diet drug litigation and has since devoted significant efforts
into successfully protecting victims' rights on this issue.
In a suit filed in Miami-Dade County Circuit Court, case # 03-
30259CA21, lawyers claim the drug took the life of Andrea
Papeika in October 2002. Her death came almost five years after
Papeika stopped taking the drug; The FDA in 1997 ordered the
drug removed from the market.
The suit, filed on behalf of Papeika's husband and two children,
claims drug-maker Wyeth knew phen-fen caused primary pulmonary
hypertension (PPH), a lethal condition.
"This drug continues to haunt people who once used it," said
Freedland.
The suit claims that Wyeth knew for years that its product
caused fatal health problems but that executives there put
profits before patient health. Since 1999, American Home
Products has paid more than $16 billion to settle claims brought
by phen-fen users and their families. Like other phen-fen users
who developed PPH, Papeika claims are excluded from the original
class action settlement, Freedland said.
The suit also names the University of Miami, Prescription Pad
Pharmacy, and Leopoldo Ramon Arosemena, Papieka's Miami
physician who treated her before her death. The family is
seeking compensatory damages for medical care, lost wages and
the family's pain and suffering. Moreover, Plaintiffs will be
seeking Punitive Damages to punish Wyeth for their wrongdoing.
The Texas jury awarded punitive damages in the amount of $900
million.
"Wyeth has known this was a bad drug for many years," Freedland
said. "Company executives put their profits over the people and
despite knowing that this drug could kill, they decided to keep
it on the market. Everything about this drug is horrible, and to
this day, it continues to plague us. Even though phen-fen has
been off the market for years, there are still people dying from
it."
For more details, contact Michael Freedland by Phone:
954-467-6400 or by E-Mail: Michael@westonlawyers.com
New Securities Fraud Cases
ABATIX CORPORATION: Schiffrin & Barroway Lodges Stock Suit in TX
----------------------------------------------------------------
Schiffrin & Barroway, LLP initiated a securities class action in
the United States District Court for the Northern District of
Texas, Dallas Division on behalf of all persons who purchased or
acquired securities of Abatix Corporation (Nasdaq: ABIX) between
5:05 p.m. Eastern Daylight Time (EDT) on April 14, 2004 and 8:24
a.m. EDT on April 21, 2004, inclusive.
The complaint charges that Abatix and Terry W. Shaver violated
sections 10(b) and 20(a) of the Exchange Act, and Rule 10b-5
promulgated thereunder, by issuing a series of material
misrepresentations to the market during the Class Period. More
specifically, the complaint alleges that defendants' statements
during the Class Period failed to disclose and misrepresented
the following material adverse facts, which were then known to
defendants or recklessly disregarded by them:
(1) the Company had not verified the proprietary nature of
RapidCool or that the Company had in fact, obtained the
"exclusive worldwide rights to distribute RapidCool;"
(2) that Abatix had not verified that Goodwin Group LLC was
the assignee of patents relating to RapidCool products,
nor had defendants verified the ownership of any patent
applications filed with respect to the product line;
(3) defendants knew but failed to disclose that they had
only been permitted to perform limited due diligence on
the proprietary nature of RapidCool products before
signing the distributorship agreement.
On April 16, 2004, NASDAQ issued a press release announcing that
it was halting trading in Abatix common stock for "additional
information requested." Then, on April 21, 2004, Abatix issued a
press release entitled "Press Release Clarification." The press
release stated in pertinent part as follows: "The April 14, 2004
press release made claims as to the proprietary nature,
uniqueness, and efficacy of the products in the RapidCool(TM)
line, and that the Company would be undertaking third party
testing to substantiate efficacy. Following the issuance of the
April 14, 2004 press release there was a significant increase in
the price and volume of shares traded of Abatix stock which
Abatix believes was not warranted by Company developments."
Shortly after the issuance of the press release, NASDAQ released
the halt on trading of Abatix common stock and the price of
Abatix common stock dropped precipitously, falling from $16.70
per share to $9.77 per share on extremely heavy volume.
For more details, contact Schiffrin & Barroway, LLP (Marc A.
Topaz, Esq. & Stuart L. Berman, Esq.) 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 at
info@sbclasslaw.com
ACTERNA CORPORATION: Marc Henzel Launches Securities Suit in MD
---------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class
action in the United Stated District Court for the District of
Maryland on behalf of purchasers of the securities of Acterna
Corporation (formerly Nasdaq: ACTR) from August 1, 2001 through
October 31, 2002, inclusive seeking to pursue remedies under the
Securities Exchange Act of 1934. The action is currently
pending against the Company and:
(1) Ned C. Lautenbach (Acterna's Chairman and Chief
Executive Officer),
(2) John D. Ratliff (Acterna's Corporate Vice-President and
Chief Financial Officer),
(3) John R. Peeler (President of Acterna),
(4) Allan M. Kline (Vice-President, Chief Financial Officer
and Treasurer), and
(5) Robert D. Woodbury, Jr. (Corporate Vice- President,
Controller and Principal Accounting Officer.)
According to the complaint, defendants violated sections 10(b)
and 20(a) of the Exchange Act, and Rule 10b-5 promulgated
thereunder, by issuing a series of material misrepresentations
to the market between August 1, 2001 and October 31, 2002. The
complaint alleges that during the Class Period, Acterna, in an
effort to grow its communications testing business, began to
acquire market competitors and as a result, assumed a tremendous
amount of goodwill. The Company repeatedly characterized its
goodwill as unimpaired and continuously portrayed itself as
having a future in the communications test sector, despite
experiencing a record decrease in its business.
According to the complaint, in 2000, Acterna Corporation,
formerly known as Dynatech Corporation, went on a buying spree
in an effort to grow its communications testing business - a
sector that accounted for approximately 91% of the Company's
total revenues. Specifically, the Company merged its existing
subsidiary, TTC, with Wavetek Wandel Golermann ("WWG"),
representing a merger of the number-two and number-three
companies in the communications testing market. Later in 2000,
the Company again beefed up its communications testing
capabilities by purchasing Superior Electronics Group, Inc., a
Florida corporation doing business as Cheetah Technologies
("Cheetah") for a purchase price of $171.5 million. The market
response to these events was tremendous. In a span of seven
months, the stock price soared from a price of $10.37 on
February 14, 2000 (the date of the announcement of the merger
with WWG) to a peek of $41.38 on August 29, 2000.
In conjunction with these acquisitions, the Company assumed a
tremendous amount of goodwill - quantified as the excess of
purchase price over fair market value of net assets acquired
under the purchase method of accounting. Between the WWG and
Cheetah acquisitions alone, the Company acquired over $600
million in goodwill. Over the next year, the telecom industry
entered a free- fall, which included many of Acterna's
customers. Not surprisingly, new orders for Acterna's products
also began to slip. While the Company was able to ward off
massive losses due to its backlog of orders, its stock price
fell within the intervening year from $41.38 to $6.03.
Also during Class Period, the Fair Accounting Standards Board
issued FAS 142, which required companies to perform an annual
test of their goodwill to see if it is impaired. If so, the
Company is required to write-down the goodwill and take a charge
against earnings. Impressively, the Company adopted the new
accounting standard retroactively to the beginning of Fiscal
2002, before it was actually required to do so. Rather than
reclassifying its substantial goodwill as impaired, however, the
Company gave repeated assurances that goodwill was not, in fact,
impaired.
Finally, the complaint alleges that all of defendants'
statements during the Class Period failed to disclose and
misrepresented the following material adverse facts were then
known to defendants or recklessly disregarded by them:
(1) that in light of the significant adverse change in the
Company's business climate, the Company's goodwill was
seriously impaired;
(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 value of the Company's net income
and financial results were materially overstated at all
relevant times.
On October 31, 2002, the Company issued a press release
announcing the financial results for the second quarter of 2003.
In addition to reporting yet another disappointing quarter of
sales and orders, the Company finally took a charge of $388
million for impaired goodwill stemming from its acquisitions in
the communication test sector. Moreover, instead of experiencing
a gain of $155-165 million as predicted, the Company took a loss
of $284 million.
By the time the Company finally made this concession, the stock
price had already fallen to $.30 per share. Despite quarters of
decreased sales, orders and profits, the Company still portrayed
itself as having a future in the communications test sector.
However, the recognition of the goodwill impairment finally
dispelled this notion conclusively.
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 PHARMACEUTICAL: Marc Henzel Files Securities 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 defendants Patrick
Soon-Shiong, Derek J. Brown, Jeffrey M. Yordon, Nicole S.
Williams, American Bioscience, Inc., and American Pharmaceutical
Partners, 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:
(1) Abraxane could be administered without Cremophor, a
toxic substance with severe side-effects that limited
the tolerable dose and effectiveness of Taxol;
(2) 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;
(3) 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
CANADIAN SUPERIOR: Scott + Scott Launches Securities Suit in NY
---------------------------------------------------------------
Scott + Scott, LLC, initiated a securities class action in the
United States District Court for the Southern District of New
York, against Canadian Superior Energy Inc. (Amex: SNG); TSX:
SNG.TO) on behalf of all investors who purchased the shares of
the Company during the period between October 22, 2003 and 11,
2004.
The complaint alleges that Defendants Canadian Superior, Greg
Noval, and Michael Coolen violated the United States securities
laws (specifically, Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934, and Rule 10b- 5) by issuing a number of
materially false and misleading statements. The statements that
were made that are alleged to be false and misleading include
that some of the Company's oil/gas well operations located in
Nova Scotia, Canada (the "Mariner \ I-85 well") were performing
better than they actually were and that sound financing for
oil/gas exploration was accurately reflected in public
statements. The complaint alleges that these positive
statements, when made, failed to disclose that Defendants knew
that the Mariner \ I-85 well was not going to be able to produce
commercial amounts of oil/gas.
Further, these positive, public statements, coupled with the
under-funded budget for testing and drilling at the Mariner\ I-
85-funding that was proclaimed sufficient in public statements-
resulted in artificially inflated prices of the common stock.
These statements were materially false and misleading when made
and designed to inflate the value of the Company's stock.
On March 11, 2004, the Company announced that it had halted
operations at the Mariner \ I-85 well and that it would not
continue these operations. The market reacted strongly to this
news and Canadian Superior shares plunged 44.44%, or $1.44 per
share, to close at $1.80 per share on March 11, 2004. The stock
has traded as low as $1.00 per share in recent days.
For more details, contact attorney Neil Rothstein by Mail: Scott
+ Scott, LLC @ 108 Norwich Avenue, Colchester, CT 06415 by
Phone: 1-800-332-2259 or 860/537-3818 or 800/404-7770 or
800/332-2259 or 619/233-4565 by Fax: 860/537-4432 or by E-Mail:
nrothstein@scott-scott.com
EXXON MOBIL: Wolf Haldenstein Lodges Securities Fraud Suit in NJ
----------------------------------------------------------------
Wolf Haldenstein Adler Freeman & Herz LLP filed a class action
lawsuit in the United States District Court for the District of
New Jersey, on behalf of all persons who purchased, owned, or
otherwise acquired Mobil shares and whose Mobil shares were
exchanged for Exxon Mobil common stock (NYSE: XOM) as a result
of the merger transaction approved by shareholders on May 27,
1999, against defendants Exxon and Lee Raymond, Chairman and
Chief Executive Officer of Exxon. The case name and index
number are Rock v. Exxon Mobil Corporation, et al., 04-cv-1921.
The complaint alleges that defendants violated Sections 14(a)
and 14 (e) of the Securities Exchange Act of 1934 by issuing
materially false and misleading financial statements contained
in a proxy filed with the Securities and Exchange Commission
(the "SEC") that, inter alia, overstated the Company's financial
condition by inflating revenue and failing to account for
impaired assets in violation of General Accepted Accounting
Principles (GAAP).
Specifically, the complaint alleges that these representations
were materially false and misleading because they failed to
disclose a material impairment of Exxon's oil and gas reserves
for 1998 and earlier, and consequently, its future cash flows
related to proved oil and gas reserves, a key indicator of
future operating performance. This material omission thus
enabled Mobil to be acquired for an artificially low number of
shares by the new Exxon Mobil Corporation as it inflated Exxon
Corporation's true asset base and future cash flows thereby
inflating Exxon Corporation's contribution to the merged
company.
For more details, contact contact Wolf Haldenstein Adler Freeman
& Herz LLP (Fred Taylor Isquith, Esq., Christopher S. Hinton,
Esq., George Peters, or Derek Behnke) by Mail: 270 Madison
Avenue, New York, New York 10016, by Phone: (800) 575-0735) by
E-Mail: classmember@whafh.com or visit their Web Site:
www.whafh.com/cases/exxonmobil.htm
GLOBAL CROSSING: Abbey Gardy Lodges Securities Fraud Suit in NJ
---------------------------------------------------------------
Abbey Gardy, LLP initiated a securities class action suit on
behalf of persons or entities who purchased or otherwise
acquired the securities of Global Crossing, Ltd.,(Nasdaq:GLBC)
between January 22, 2004 and Aoril 26, 2004, both dates
inclusive. The class action lawsuit is pending in the United
States District Court for the District of New Jersey. In
addition to Global Crossing, Ltd., the Complaint also names the
following as Defendants:
(1) Lodewijk Christiaan Van Wachen,
(2) Peter Seah Lim Huat and
(3) John Leger
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. More specifically the Complaint alleges
that on December 9, 2003 Singapore Technologies Telemedia (ST
Telemedia) and Global Crossing announced that they have
consummated their purchase agreement, allowing a newly
restructured Global Crossing to emerge from Chapter 11
proceedings.
The December 9, 2003 press release stated that Global Crossing's
plan of reorganization included the cancellation of existing
preferred and common stock. The holders of these previously
publicly traded securities received no consideration under the
company's plan of reorganization. Global Crossing also reported
that it, together with its independent auditor, Grant Thornton
LLP, had finalized its audit of financial results for the years
ended December 31, 2001 and December 31, 2002.
The Complaint also alleges that throughout the Class Period,
Global Crossing and the Individual Defendants made material
misrepresentations with respect to the Company's financial
results. More specifically, the defendants failed to disclose
that:
(1) the Company understated between $50 million to $80
million of accrued cost of access liability;
(2) the Company had inadequate internal controls; and
(3) the Company's financial results were materially
inflated at all relevant times Plaintiff seeks to
recover damages on behalf of all those who purchased or
otherwise acquired Global Crossing securities during
the Class Period.
On the 22nd of June 2004, Global Crossing announced that its new
common stock would begin trading on the NASDAQ National Market,
under the trading symbol GLBC. On March 10, 2004, Global
Crossing reported its preliminary financial results for the
fourth quarter and year ended December 31, 2003. In addition,
the company announced several key milestones in 2003 and offered
an outlook for 2004 "Today Global Crossing is a company with a
clean balance sheet, minimal debt, strong corporate governance
and a seasoned management team that will steer the company into
a leadership position within the telecommunications industry,"
said John Legere, Global Crossing's chief executive officer. On
March 26, 2004, Global Crossing filed its 2003 annual report on
Form 10-K with the Securities and Exchange Commission.
Then on 27th of April 2004, Global Crossing shocked the
investing public by announcing that it plans to restate results
for 2003 because it understated costs by at least $50 million to
$80 million. Global Crossing said in the statement its
previously reported results for 2002 and 2003, and its 2004
forecasts should be disregarded pending the outcome of its
review. The company also said that it is assessing the internal
control issues believing that these issues constitute a material
weakness in its internal controls. Finally the Company said that
pending the ongoing review and the restatement, Global Crossing
is postponing its June 2004 shareholders meeting, the filing and
mailing to shareholders of its proxy statement, and its earnings
release and Quarterly Report on Form 10-Q for the first quarter
of 2004.
Following these disclosures, shares tumbled $5 to $13.20.
Volume, at 4.19 million shares, was more than six times the
three-month daily average
For more details, contact Abbey Gardy, LLP (Susan Lee) by Mail:
212 East 39th Street, New York, New York 10016 by Phone:
(212)889-3700 or (800) 889-3701 or by E-Mail:
slee@abbeygardy.com
GLOBAL CROSSING: Geller Rudman Lodges Securities Suit in S.D. NY
----------------------------------------------------------------
The Law Firm of Geller Rudman, PLLC launched a securities class
action in the United States District Court for the Southern
District of New York on behalf of purchasers of Global Crossing
Ltd. (Nasdaq: GLBCE) publicly traded securities during the
period between December 9, 2003 and April 26, 2004, inclusive.
The complaint charges that Global Crossing, John Legere (Chief
Executive Officer) and Daniel P. O'Brien (Chief Financial
Officer and Executive Vice President) violated sections 10(b)
and 20(a) of the Exchange Act, and Rule 10b-5 promulgated
thereunder, by issuing a series of material misrepresentations
to the market during the Class Period. More specifically,
the complaint alleges that defendants' statements during the
Class Period failed to disclose and misrepresented the following
material adverse facts which were then known to defendants or
recklessly disregarded by them:
(1) that the Company had materially understated its accrued
cost-of-access liability by $50- $80 million;
(2) that the Company had insufficient internal controls;
and
(3) that as a result, the Company's financial results were
materially inflated at all relevant times.
On April 27, 2004, Global Crossing announced that it had begun a
review of its previously reported financial statements for the
years ended December 31, 2003 and 2002, including respective
interim periods, and that "the company will amend periodic
reports previously filed with the Securities and Exchange
Commission to reflect the expected restatement and to revise
disclosures related to the internal control issues presented and
the company's methodologies for estimating cost of access
expenses and reconciling these expenses to vendor invoices."
News of this shocked the market. Shares of Global Crossing
stock dropped $5.00 per share, or 27.7 percent on April 27, 2004
on unusually large tradingvolumes to close at $13.20 per share.
For more details contact Geller Rudman, PLLC by Mail: 200
Broadhollow Suite 406, Melville, NY 11747-4806 by Phone:
(631) 367-7100 or (877) 992-2555 by Fax: (631) 367-1173 or
visit their Web Site: http://www.geller-rudman.com
GOODYEAR TIRE: Marc Henzel Lodges Securities Suit in N.D. Ohio
--------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class
action in the United States District Court for the Northern
District of Ohio on behalf of all purchasers of the common stock
of Goodyear Tire & Rubber Co. (NYSE:GT) from October 22, 1998
through October 22, 2003, inclusive (the "Class Period").
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 22, 1998 and
October 22, 2003, thereby artificially inflating the price of
Goodyear's publicly traded securities.
The Complaint alleges the statements were materially false and
misleading because they failed to disclose and/or misrepresented
the following adverse facts, among others:
(1) that the Company's implantation of an enterprise
resource planning accounting system in 1999 caused
Goodyear to materially overstate its net income and
earnings by up to $100 million;
(2) that the Company's financial statements were not
prepared in accordance with Generally Accepted
Accounting Principles (GAAP);
(3) that the Company lacked adequate internal controls and
was therefore unable to ascertain the true financial
condition of the Company; and
(4) that as a result, the value of the Company's net income
and financial results were materially overstated at all
relevant times.
On October 22, 2003, after the market had closed, Goodyear
announced that it would restate its financial results for the
years 1998-2002 and for the first and second quarters of 2003,
and that the restatement would result in a decrease in net
income over the restatement period by up to $100 million.
Market reaction to this news was swift and fast. Shares of
Goodyear fell more than 10 percent during inter-day trading and
traded as low as $5.55 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
NORTEL NETWORKS: Wolf Haldenstein Launches Amended Stock Suit
-------------------------------------------------------------
Wolf Haldenstein Adler Freeman & Herz LLP filed a securities
class action against Nortel Networks Corporation on behalf of
all investors who purchased Nortel Networks Corporation (NYSE:
NT) publicly traded securities during the period between October
23, 2003 and April 27, 2004 against defendants Nortel and
certain officers and directors of the Company. The case name is
Cornfield v. Nortel Networks Corporation, et al.
On October 23, 2003, the first day of the Class Period, Nortel
announced that it intended to restate its financial results for
2000, 2001, and 2002, and the first and second quarters of 2003,
and that it anticipated that the principal impacts of the
restatement was a reduction in previously reported net losses
for 2000, 2001 and 2002; and an increase in shareholders' equity
and net assets previously reported on Nortel Networks balance
sheet as at June 30, 2003.
The Complaint alleges that defendants thus represented that this
restatement was good news for the Company, and proceeded to
restate its financial results in several Class Period financial
statements. Furthermore, on March 15, 2004, the Company shocked
the market when it announced that it was placing Defendants
Douglas Beatty, the Company's incumbent Chief Financial Officer,
and Michael Gollogly, the incumbent Controller, on paid leave of
absence pending completion of the independent review concerning
the restatements being undertaken by the Nortel Networks Audit
Committee, causing the Company's stock to plunge 19%.
Then on April 28, 2004, the Company fired its CEO, CFO and
Controller and disclosed that its previously announced
restatement would be worse than earlier planned. In addition,
the Company disclosed that its financial results for Q1 2004
would be indefinitely delayed. On this news, Nortel shares
plunged to below $4.00 per share.
The Complaint also alleges that the Company's anticipated need
to restate its financial results a few months after it had
supposedly completed restating them, and after it had repeatedly
represented that it had completed its comprehensive review and
analysis of the Company's assets and liabilities, demonstrates
that Nortel's Class Period statements lacked a reasonable basis
in fact.
For more details, contact Wolf Haldenstein Adler Freeman & Herz
LLP (Fred Taylor Isquith, Esq., Lawrence P. Kolker, Esq., Scott
J. Farrell, Esq., George Peters, or Derek Behnke) by Mail: 270
Madison Avenue, New York, New York 10016, by Phone:
(800) 575-0735 by E-Mail: classmember@whafh.com or visit their
Web Site: http://www.whafh.com
NORTEL NETWORKS: Cauley Bowman Files Securities Fraud Suit in NY
----------------------------------------------------------------
The Law Firm of Cauley Bowman Carney & Williams, PLLC filed a
securities class action against Nortel Networks Corporation on
behalf of all investors who purchased Nortel Networks
Corporation (NYSE: NT; Toronto: NT.TO) publicly traded
securities during the period between December 23, 2003 and April
27, 2004, inclusive in the United States District Court for the
Southern District of New York.
The amended complaint charges Nortel and certain of its officers
and directors with violations of the Securities Exchange Act of
1934. Nortel supplies products and services that support the
Internet and other public and private data, voice and multimedia
communications networks using wireline and wireless
technologies.
The amended complaint alleges that during the Class Period,
defendants caused Nortel's shares to trade at artificially
inflated levels through the issuance of false and misleading
financial statements. Defendants had formulated a plan to have
the Company's credit rating on its $4.1 billion debt raised from
"B3" to "investment grade." Defendants were advised by Moody's
that if the Company could improve its financials, the Company's
rating would be raised. Not only would this rating change have a
positive impact on the Company's stock price but this would in
turn further inflate the Company's net income (beyond the
already falsified accounting).
By raising the Company rating, the Company could refinance its
debt at a preferable rate, and increase the Company's margins.
Defendants had hoped that the Company's positive (albeit false)
Q4 2003 report would put pressure on Moody's to raise its
rating. Regardless, by posting the false (but positive) Q4
results, defendants and the Company's top executives were
rewarded with $30 million in bonuses. Then as defendants' scheme
began to unwind, Nortel put its chief financial officer and
controller on leave of absence pending completion of an
investigation into the circumstances leading to the restatement.
On March 15, 2004, Nortel delayed filing its annual report and
admitted it may have to restate results for a second time in six
months while the timing of certain accruals and provisions in
2003 and earlier periods were re- examined. In response to this
delay in filing, the price of the Company's shares fell.
Defendants knew that as a result of their actions, Nortel's
lenders could demand early repayment of $3.6 billion of notes
and convertibles bonds. As this leaked out into the market the
Company's shares continued to decline.
Then on April 28, 2004, the Company fired its CEO, CFO and
Controller and disclosed that its previously announced
restatement would be worse than earlier planned. In addition,
the Company disclosed that its financial results for Q1 2004
would be indefinitely delayed. On this news, Nortel shares
plunged to below $4.00 per share. The amended complaint also
demands the executives return their ill-gotten bonuses for 2003.
For more details, contact CAULEY BOWMAN CARNEY & WILLIAMS, PLLC
(Jackie Addison) by Mail: Client Relations Department P.O. Box
25438, Little Rock, AR 72221-5438 by Phone: 1-888-551-9944
by Fax: 1-501-312-8505 or by E-Mail: info@cauleybowman.com
NORTEL NETWORKS: Berger & Montague Launches NY Securities Suit
--------------------------------------------------------------
Berger & Montague, P.C. initiated an amended securities class
action in the United States District Court for the Southern
District of New York (Civ. Action No. 04-CV-2249) against Nortel
Networks Corporation, on behalf of purchasers of publicly traded
securities of Nortel (NYSE: NT; Toronto: NT) between April 24,
2003 and April 27, 2004 inclusive.
On April 28, 2004, before the market opened, the Company
announced that it was firing its CEO, CFO and Controller "for
cause," and that it would be restating its financial results for
all of 2003. The restated financials would cut previously
announced net earnings for 2003 by 50 percent and would show a
reported net loss for the first half of 2003 compared to the
previously announced net earnings for that period. The Company
also announced that it would have to delay issuing preliminary
financial results for first quarter of 2004. In a conference
call, the Company's chairman said that the firings were "about
accountability for financial reporting."
The April 28th announcement caused the stock to immediately fall
by 29%. The latest announcement further confirms the
seriousness of Nortel's accounting problems which had led the
Company to announce last month that it intends to restate its
results for 2003 and one or more earlier periods as a result of
an ongoing examination of "certain accruals and provisions" in
connection with Nortel's first restatement last fall of its
financials for the first half of 2003 and prior years, and to
put its CFO and Controller on paid leave.
On April 5, 2004, Nortel had announced that it was the target of
a "formal" investigation by the United States Securities and
Exchange Commission (SEC). A "formal" investigation is serious
because it gives the SEC the power to issue subpoenas for
documents and information.
The amended Complaint charges defendants Nortel, Frank A. Dunn,
Douglas C. Beatty, and Michael J. Gollogly, with violations of
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934
and Rule 10b-5 promulgated thereunder. The Complaint alleges
that defendants' financial reports and statements, which they
publicly announced and/or filed with the SEC throughout the
Class Period were false and misleading. The truth began to
emerge when, on March 10, 2004, Nortel suddenly announced that
it would need to delay filing its 2003 annual financial
statements with the SEC and that, as a result of its ongoing
review of previously-issued financial results, the Company would
need to revise its just-announced results for the full-year and
certain quarters of 2003, and would likely restate its
previously-filed financial results for one or more earlier
periods as well because it was re-examining the bookkeeping
surrounding "certain accruals and provisions in prior periods."
The Company admitted that the delay in filing its 2003 annual
financial statements would violate the Company's debt covenants
and could, therefore, have a serious adverse impact on the
Company.
For more details, contact Berger & Montague, P.C. (Sherrie R.
Savett, Esquire; Phyllis M. Parker, Esquire; Diane R. Werwinski,
Investor Relations Manager) by Mail: 1622 Locust Street,
Philadelphia, PA 19103 by Phone: 888-891-2289 or 215-875-3000 by
Fax: 215-875-5715 by E-Mail: InvestorProtect@bm.net or visit
their Web Site: http://www.bergermontague.com
NOVASTAR FINANCIAL: Squitieri & Fearon Files Stock Lawsuit in MO
----------------------------------------------------------------
Squitieri & Fearon, LLP initiated a securities class action in
the United States District Court for the Western District of
Missouri on behalf of purchasers of NovaStar Financial Inc.
(NYSE:NFI) common stock during the period November 3, 2003
through April 12, 2004.
The Complaint charges NovaStar and certain of its officers and
directors with violating the federal securities laws by
misrepresenting and omitting facts about the Company, its
operations and its business practices.
For more details, contact Stephen J. Fearon, Jr. by Phone:
(212) 575-2092 by E-mail: Stephen@sfclasslaw.com.
ODYSSEY HEALTHCARE: Cauley Geller Lodges Securities Suit in TX
--------------------------------------------------------------
Cauley Geller Bowman & Rudman, LLP initiated a securities class
action in the United States District Court for the Northern
District of Texas on behalf of purchasers of Odyssey Healthcare,
Inc. (Nasdaq: ODSY) publicly traded securities during the period
between May 5, 2003 and February 23, 2004, inclusive.
The complaint charges that Odyssey, Richard R. Burnham, David C.
Gasmire, and Douglas B. Cannon violated sections 10(b) and 20(a)
of the Exchange Act, and Rule 10b-5 promulgated thereunder, by
issuing a series of material misrepresentations to the market
between May 5, 2003 and February 23, 2004. More specifically,
the complaint alleges that defendants' statements during the
Class Period failed to disclose and misrepresented the following
material adverse facts which were then known to defendants or
recklessly disregarded by them:
(1) that the Company's financial results were materially
inflated because at least six of its Hospice programs
exceeded the amounts they were entitled to receive in
Medicare reimbursements;
(2) that the Company admitted patients to its Hospice
programs who were not eligible for Medicare yet claimed
that such patients were;
(3) the Company's financial results were a result of
providing a level of care and services below the
standards set forth under government guidelines because
the Company's caseloads were heavier than industry
norms;
(4) that the Company could not keep up with its heady
growth due to higher labor costs -- especially in
California, which represented 13 percent to 15 percent
of Odyssey's revenues;
(5) that higher drug costs were hurting the Company's
margins; and
(6) that Odyssey was suffering from negative cash-flows.
On February 23, 2004, Odyssey announced that its first-quarter
profits would be below analysts' estimates. According to the
Company, it expected its 2004 earnings per share results to
reflect a 23 to 25 percent increase over 2003, or $1.03 to $1.05
for the year. For the first quarter of 2004, Odyssey expected
earnings per share of $0.20 to $0.22, (analysts' expected the
Company to earn earnings per share of $0.25) compared to $0.19
for the first quarter of 2003. News of this shocked the market
with shares of Odyssey falling $7.11 per share, or 26 percent,
to close at $20.32 per share on February 24, 2004.
In its April 12, 2004 edition, Barron's published an article
highlighting the Company's operational issues. Therein, Barron's
articulated that there are signs that the Company can't keep up
with its heady growth. "Higher labor costs -- especially in
California, which represents 13%-15% of its revenues -- as well
as higher drug costs hurt Odyssey's margins in last year's
fourth quarter. In reporting those results on Feb. 23, the
company forecast lower- than-expected earnings for this year.
Another red flag: Odyssey disclosed that, in its most recent
quarter, six of its programs exceeded the amounts they were
entitled to receive in Medicare reimbursements, raising
questions about whether patients admitted to its programs are
truly eligible."
Additionally, the article pointed out: "There are also
suggestions that some of Odyssey's strong growth is the result
of providing a level of care and services below the standards
set forth under government guidelines, including providing
adequate bereavement services for patients' families."
For more details, contact CAULEY GELLER BOWMAN & RUDMAN, LLP
(Samuel H. Rudman, Esq. or David A. Rosenfeld, Esq.) by Mail:
P.O. Box 25438 Little Rock, AR 72221-5438 by Phone Toll Free:
1-888-551-9944 by Fax: 1-501-312-8505 or by E-Mail:
info@cauleygeller.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.
*********
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 * * *