/raid1/www/Hosts/bankrupt/CAR_Public/040513.mbx
C L A S S A C T I O N R E P O R T E R
Thursday, May 13, 2004, Vol. 6, No. 94
Headlines
ARCH CHEMICAL: Faces Suits On CCA-Treated Wood in Various Courts
CAREER EDUCATION: IL Court Consolidates Securities Fraud Suits
CAULEY GELLER: Prominent Law Firm Splits into Two New Practices
CERUS CORPORATION: Faces Stock Fraud, Derivative Lawsuits in CA
CONSOL ENERGY: Investors Lodge Securities Fraud Suits in W.D. PA
CORN SYRUP LITIGATION: Settlement Fairness Hearing Set May 2004
COVENTRY HEALTH: Continues To Face HMO Litigation in FL Court
ENERGIZER HOLDINGS: Plaintiff Dismisses Consumer Lawsuit in IL
FACTUAL DATA: CO Court Refuses To Dismiss Shareholder Fraud Suit
FEDERATED INVESTORS: Shareholders Launch Mutual Fund Fraud Suits
GEORGIA-PACIFIC CORPORATION: Settlement Hearing Set May 21,2004
HOMESTORE INC.: Court Approves Partial Class Settlement in Suit
MIDWAY GAMES: Asks IL Court To Dismiss Securities Fraud Lawsuit
MUTUAL BENEFITS: SEC Launches Suit To Halt Fraudulent Offering
NATIONWIDE FINANCIAL: Seeks Summary Judgment For CT ERISA Suit
NATIONWIDE LIFE: Plaintiffs Appeal Dismissal of LA Consumer Suit
NATIONWIDE LIFE: Plaintiffs File Amended Consumer Lawsuit in AZ
NATIONWIDE LIFE: Mutual Fund Unitholders Commence Lawsuit in IL
NATIONWIDE LIFE: Asks FL Court To Dismiss RICO Violations Suit
NEW YORK: Fairness Hearing For Suit Settlement Set July 30,2004
NUANCE COMMUNICATIONS: CA Court Approves Stock Suit Settlement
ODYSSEY HEALTHCARE: Faces Securities Fraud Lawsuits in N.D Texas
PARADYNE NETWORKS: Fairness Hearing For Settlement Set June 2004
PMA CAPITAL: Shareholders Commence Securities Suits in E.D. PA
RETEK INC.: MN Court Dismisses Securities Suit Without Prejudice
TOBACCO LITIGATION: VA High Court Upholds Favorable Jury Verdict
WELLS REAL: Limited Partners Lodge Securities Fraud Suit in GA
New Securities Fraud Cases
ABATIX CORPORATION: Federman & Sherwood Files TX Securities Suit
ABATIX CORPORATION: Emerson Poynter Lodges Securities Suit in TX
ASCONI CORPORATION: Milberg Weiss Lodges Stock Suit in M.D. FL
ASCONI CORPORATION: Murray Frank Files Securities Lawsuit in FL
ASCONI CORPORATION: Federman & Sherwood Lodges Stock Suit in FL
CHINA LIFE: Weiss & Yourman Commences Securities Suit in S.D. NY
GENTA INC.: Schiffrin & Barroway Lodges Securities Suit in NJ
GENTA INC.: Charles Piven Lodges Securities Fraud Lawsuit in NJ
GENTA INC.: Vianale & Vianale Lodges Securities Fraud Suit in NJ
GENTA INC.: Berger & Montague Expands Class Period in NJ Lawsuit
GENTA INC.: Wolf Haldenstein Lodges Securities Fraud Suit in NJ
GENTA INC.: Geller Rudman Lodges Securities Fraud Lawsuit in NJ
GENTA INC.: Lerach Coughlin Lodges Securities Fraud Suit in NJ
GLOBAL CROSSING: Lasky & Rifkind Lodges Securities Lawsuit in NY
GLOBAL CROSSING: Abraham Fruchter Lodges Securities Suit in NJ
MASTEC INC.: Berman DeValerio Lodges Securities Suit in S.D. FL
NORTEL NETWORKS: Stull Stull Files Amended Securities Suit in NY
NOVASTAR FINANCIAL: Berger & Montague Lodges Stock Lawsuit in MO
ODYSSEY HEALTHCARE: Federman & Sherwood Files TX Securities Suit
ODYSSEY HEALTCARE: Lerach Coughlin Lodges Securities Suit in TX
QUOVADX INC.: Berger & Montague Lodges Securities Lawsuit in CO
QUOVADX INC.: Bernstein Liebhard Lodges Securities Lawsuit in CO
UNIVERSAL HEALTH: Berger & Montague Announces PA Suit Deadline
*********
ARCH CHEMICAL: Faces Suits On CCA-Treated Wood in Various Courts
----------------------------------------------------------------
Arch Chemical, Inc and/or its chromated copper arsenate (CCA) -
formulating subsidiary Arch Wood Protection, Inc. faces five
class actions filed in various state and federal courts
regarding the marketing and use of CCA-treated wood. The suits
also name as defendants several other CCA manufacturers, several
CCA customers and various retailers.
Three of these cases have been dismissed without prejudice. In
the fourth case (Jacobs v. Osmose, Inc. et. al.), the federal
district court has ruled that the requirements for a class
action have not been met and has denied class action status in
this case. Subsequently, the court entered an order granting
plaintiffs' motion for voluntary dismissal of their claims
against the Company, its subsidiaries and several other
defendants.
In March 2004, in the fifth putative class action lawsuit
(Ardoin v. Stine Lumber Company et. al.), the federal district
court has ruled that the requirements for a class action have
not been met and has denied class action status to this case.
CAREER EDUCATION: IL Court Consolidates Securities Fraud Suits
--------------------------------------------------------------
The United States District Court for the Northern District of
Illinois ordered consolidated the six securities class actions
filed against Career Education Corporation and certain of its
executive officers, John M. Larson and Patrick K. Pesch.
The cases purportedly are brought on behalf of all persons who
acquired shares of the Company's common stock during a specified
class period in 2003. The complaints allege that in violation
of Section 10(b) of the Securities Exchange Act of 1934 and Rule
10b-5 promulgated thereunder by the SEC, the defendants made
certain material misrepresentations and failed to disclose
certain material facts about the condition of the Company's
business and prospects during the putative class period, causing
the respective plaintiffs to purchase the Company's common stock
at artificially inflated prices. The plaintiffs further claim
that John M. Larson and Patrick K. Pesch are liable under
Section 20(a) of the Act. The plaintiffs ask for unspecified
amounts in damages, interest, and costs, as well as ancillary
relief.
Five of these lawsuits were found to be related to the first
filed lawsuit, captioned "Taubenfeld v. Career Education
Corporation et al. (No.03 CV 8884)," and have been reassigned to
the same judge. On March 19, 2004, the court ordered these six
cases to be consolidated and appointed Thomas Schroeder as lead
plaintiff. On April 6, 2004, the court appointed the firm of
Goodkind Labaton Rudoff & Sucharow LLP, which represents Mr.
Schroder, as lead counsel.
CAULEY GELLER: Prominent Law Firm Splits into Two New Practices
---------------------------------------------------------------
Cauley Geller Bowman & Rudman, LLP announced that it has split
into two separate law firms: Cauley Bowman Carney & Williams,
PLLC and Geller Rudman, PLLC. The Cauley Bowman firm will be
based in Little Rock, Arkansas, with additional offices planned
for New York. The Geller Rudman firm will maintain its offices
in New York and Boca Raton, Florida.
"We decided that our clients, attorneys and staff would all be
better served if we divided our firm into separate entities,"
said Paul J. Geller, managing partner of Geller Rudman's Boca
Raton, office. The split has been amicable. According to S. Gene
Cauley, "we expect to continue working together in many existing
and future cases, in particular in the representation of public
and private institutional investors."
Both firms will continue representing investors and consumers in
class action and corporate governance litigation, with a
particular focus on the representation of public and private
institutional investors. In addition, the Cauley Bowman firm
announced that partner Steve Owings will head the firm's new
personal injury and nursing home abuse practice group, while
partner Hank Bates will oversee the firm's new environmental
practice.
Additional information about each firm is available on their
websites: http://www.cauleybowman.comand
http://www.geller-rudman.com
CERUS CORPORATION: Faces Stock Fraud, Derivative Lawsuits in CA
---------------------------------------------------------------
Cerus Corporation and certain of its present and former
directors and officers face several securities class actions
filed in the United States District Court for the Northern
District of California. The suits are filed on behalf of a
purported class of persons who purchased the Company's publicly
traded securities between October 25, 2000 and September 3,
2003.
The complaints alleged that the defendants violated the federal
securities laws by making certain allegedly false and misleading
statements regarding clinical trials of the Company's red blood
cell system.
In addition, certain of the Company's present and former
directors and officers have been named as defendants in two
virtually identical derivative lawsuits in the Superior Court
for the County of Contra Costa, which name the Company as a
nominal defendant. The plaintiffs in these actions are Company
stockholders who seek to bring derivative claims on behalf of
the Company against the defendants. The complaints allege
breach of fiduciary duty and related claims.
CONSOL ENERGY: Investors Lodge Securities Fraud Suits in W.D. PA
----------------------------------------------------------------
Consol Energy, Inc. faces several class actions filed in the
United States District Court for the Western District of
Pennsylvania for violations of federal securities laws. The
suit also names as defendants J. Brett Harvey and William J.
Lyons.
The complaints allege, among other things, that the defendants
violated Sections 10(b) and 20(a) of the Exchange Act and Rule
10b-5 promulgated under the Exchange Act and that during the
period between January 24, 2002, and July 18, 2002, the
defendants issued false and misleading statements to the public
that failed to disclose or misrepresented the following, among
other things that:
(1) CONSOL utilized an aggressive approach regarding its
spot market sales by reserving 20% of its production to
that market, and that by increasing its exposure to the
spot market, CONSOL Energy was subjecting itself to
increased risk and uncertainty as the price and demand
for coal could be volatile;
(2) CONSOL Energy was experiencing difficulty selling the
production that it had allocated to the spot market,
and, nonetheless, CONSOL Energy maintained its
production levels which caused its coal inventory to
increase;
(3) CONSOL Energy's increasing coal inventory was causing
its expenses to rise dramatically, thereby weakening
the company's financial condition; and
(4) based on the foregoing, defendants' positive statements
regarding CONSOL Energy's earnings and prospects were
lacking in a reasonable basis at all times and
therefore were materially false and misleading.
The complaints asks the court to award unspecified damages to
plaintiff and award plaintiff reasonable costs and expenses
incurred in connection with this action, including counsel fees
and expert fees.
CORN SYRUP LITIGATION: Settlement Fairness Hearing Set May 2004
---------------------------------------------------------------
The U.S. District Court for the Central District of Illinois,
Peoria Division will hold a fairness hearing on the Partial
Settlement of the suit filed on behalf of all direct purchasers
of High Fructose Corn Syrup in the United States during the
period July 21, 1991 through June 30, 1995.
Defendants Maize and Cargill have agreed to $24,000,000.00 in
exchange for the release of certain claims by all class members.
A hearing will be held on May 19, 2004 at 3:00pm in the United
States Courthouse, Courtroom A, 100 N.E. Monroe Street, Peoria,
Illinois, for the Court to determine whether the proposed
settlement with Maize And Cargill is fair reasonable and
adequate.
For more details, contact Robert N. Kaplan, Esq. of Kaplan Fox &
Kilsheimer LLP by Mail: 805 Third Ave. New York, New York 10022
or by Phone: (212) 687-1980
For more details, contact Michael J. Freed, Esq. of Much Shelist
Freed Denenberg Ament & Rubenstein, P.C. by Mail: 191 N. Wacker
Drive, Suite 1900, Chicago, IL 60606 or by Phone: (312) 521-2000
For more details, contact H. Laddie Montague, Jr., Esq. of
Berger & Montague by Mail: 1622 Locus Street, Philadelphia, PA
19103 or by Phone: (215) 875-3000
COVENTRY HEALTH: Continues To Face HMO Litigation in FL Court
-------------------------------------------------------------
Coventry Health Care, Inc. continues to face litigation in the
provider track in the Managed Care Litigation filed in the
United States District Court for the Southern District of
Florida, Miami Division, Multi-District Litigation (MDL) No.
1334, styled "in re: Humana, Inc., Charles B. Shane, MD, et al.
vs. Humana, Inc., et al."
This action was filed by a group of physicians as a class action
against the Company and twelve other companies in the managed
care industry. In its fourth amended complaint, the plaintiffs
have alleged violations of the federal racketeering act,
Racketeer Influenced and Corrupt Organizations (RICO),
conspiracy to violate RICO and aiding and abetting a scheme to
violate RICO. In addition to these RICO claims, the complaint
includes counts for breach of contract, violations of various
state prompt payment laws and equitable claims for unjust
enrichment and quantum meruit.
The Company has filed a motion to dismiss each of these claims
because they fail to state a cause of action or, in the
alternative, to compel arbitration pursuant to the arbitration
provisions which exist in the Company's physician contracts. In
response to the motion to dismiss, the trial court dismissed
several of the claims and ordered that all physicians who have
an arbitration provision in their provider contracts must submit
all of their claims to arbitration. As a consequence of this
ruling, all the plaintiffs who have arbitration provisions
voluntarily dismissed all of their arbitratable claims.
The trial court excluded from the scope of claims subject to
arbitration, the plaintiffs' claims of conspiracy, conspiracy to
violate RICO and aiding and abetting violations of RICO. The
defendants, including Coventry, have appealed the trial court's
decision to the 11th Circuit Court of Appeals. The appeal has
been fully briefed and the parties are awaiting a date for oral
argument. The trial court has certified various subclasses of
physicians; however, Coventry is not subject to the class
certification order because the motion to certify was filed
before Coventry was joined as a defendant. The plaintiffs have
now filed a motion to certify a class as to Coventry, and
Coventry has filed their opposition to that motion. The trial
court has not yet issued a ruling on the motion.
The defendants who were subject to the certification order filed
an appeal to the 11th Circuit which has been argued. The
appeals court has not yet issued its decision. Subsequent to
this appeal, two defendants have entered into settlement
agreements with the plaintiffs. Both settlement agreements have
been filed with the Court and have received final approval. The
Shane lawsuit has triggered the filing of copycat class action
complaints by other health care providers such as chiropractors,
podiatrists, acupuncturists and other licensed health care
professionals. Each of these actions have been transferred to
the MDL and have been designated as "tag-along" actions to
Shane. The court has entered an order which stays all
proceedings in the tag-along actions until all pre-trial
proceedings in Shane have been concluded.
ENERGIZER HOLDINGS: Plaintiff Dismisses Consumer Lawsuit in IL
--------------------------------------------------------------
Plaintiff in a proposed class action against Energizer Holdings,
Inc. and its subsidiary Eveready Battery Company, Inc.
voluntarily dismissed her suit, filed in May 2003 in the Circuit
Court for the 20th Judicial Circuit in St. Clair County,
Illinois.
The suit was filed on behalf of all present and past customers
of the defendants that acquired Eveready's "Heavy Duty" or
"Super Heavy Duty" carbon zinc batteries. The lawsuit alleges
that the labeling of carbon zinc batteries in such manner was
false and misleading and in violation of various state consumer
protection statutes, and seeks compensatory and punitive
damages, costs and attorneys' fees in an amount less than
$75,000 per plaintiff or class member, an earlier Class Action
Reporter story (September 1,2003) reports.
FACTUAL DATA: CO Court Refuses To Dismiss Shareholder Fraud Suit
----------------------------------------------------------------
The District Court for the County of Larimer, Colorado denied
Factual Data Corporation's motion to dismiss the class action
filed against it and its directors, styled "Troxler v. Factual
Data Corporation, Jerald H. Donnan, Todd A. Neiberger, Robert J.
Terry, J. Barton Goodwin, Daniel G. Helle, Abdul H. Rajput and
James N. Donnan."
The plaintiff alleges, among other things, that the individual
defendants engaged in self-dealing in connection with the
negotiation and approval of the merger agreement and the merger.
The plaintiff also claims the individual defendants obtained
benefits not shared by the plaintiff, and that they breached
their fiduciary duties of care, loyalty, candor and independence
owed under Colorado law to the Company's public shareholders.
The plaintiff seeks certification of the case as a class action.
The plaintiff requests damages, certain equitable relief,
attorneys' fees and costs and an order rescinding the merger.
On August 12, 2003, the Company moved to dismiss the plaintiff's
amended complaint. On September 15, 2003, the plaintiff filed a
response to the Company's motion to dismiss. On September 26,
2003, the Company filed an amended reply in support of its
motion to dismiss the first amended complaint. The parties have
not engaged in any discovery to date.
FEDERATED INVESTORS: Shareholders Launch Mutual Fund Fraud Suits
----------------------------------------------------------------
Federated Investors, Inc. faces 18 class action or derivative
lawsuits filed on behalf of certain alleged shareholders in
various Federated-sponsored mutual funds. Ten of these actions
have been transferred to a multi-district litigation (MDL) panel
of judges sitting in the U.S. District Court for the District of
Maryland for consolidated pre-trial proceedings. The Company
expects four other cases to be transferred to the MDL panel.
The cases generally involve claims arising from allegations that
the Company permitted improper trading practices including
market timing and late trading in concert with certain
institutional traders, which allegedly caused injury to the
mutual fund shareholders.
Three additional cases, alleging excessive advisory and rule
12b-1 fees on behalf of certain Federated mutual funds, have
been filed or are being transferred to the U.S. District Court
for the District of Western Pennsylvania. One case alleging
breach of contract has been filed in an Illinois State Circuit
Court.
GEORGIA-PACIFIC CORPORATION: Settlement Hearing Set May 21,2004
---------------------------------------------------------------
The United States District Court for the Northern District of
Georgia - Atlanta Division will hold a fairness hearing for the
proposed settlement for the class action filed against Georgia-
Pacific Corporation on behalf of all persons who received lump
sum distributions from the cash balance feature of the Georgia -
Pacific Corp. salaried employees retirement plan on or after
January 1, 1989 and prior to February 3, 2004.
The Court has scheduled a fairness hearing to approve the
proposed settlement, which will occur on May 21, 2004, at 1:30
pm in the United States District Court for the District of
Georgia, 75 Spring St., S.W., Atlanta, Georgia 30303-3361,
Courtroom 1905, before the Honorable J. Owen Forrester.
For more details, contact Hertz, Schram, Saretsky, P.C. by Mail:
1760 South Telegraph Road, Suite 300, Bloomfield Hills, MI 48302
or by Phone: (248) 335-5000.
HOMESTORE INC.: Court Approves Partial Class Settlement in Suit
---------------------------------------------------------------
The United States District Court in the Central District of
California granted approval to the partial class settlement in
the consolidated securities class action filed against
Homestore, Inc. and certain of its current and former officers
and directors.
The suit alleges violations of certain provisions of the
Securities Exchange Act of 1934. The complaint alleges that the
Company made materially false and misleading statements with
respect to the Company's 2000 and 2001 financial results
included in the Company's filings with the SEC, analysts
reports, press releases and media reports.
In March 2002, the California State Teachers Retirement
System was named lead plaintiff, and the suit was amended to
include Company, certain of its former officers, directors and
employees, along with PricewaterhouseCoopers LLP as defendants.
In November 2002, the Plaintiff filed a first amended
consolidated class action, alleging that the Company violated
federal securities laws, and seeks an unspecified amount of
damages.
On March 7, 2003, the court dismissed, with prejudice, the
Plaintiff's claims against a number of corporate and individual
defendants whom the Plaintiff alleged either assisted in the
planning and execution of the purportedly fraudulent
transactions at issue, or who were parties to those
transactions. The court also dismissed without prejudice the
Plaintiff's claims against a number of the Company's current and
former officers and employees. At the same time, the court
denied the motions to dismiss of PricewaterhouseCoopers LLP and
the Company's former chief executive officer. The Company did
not file a motion to dismiss the Plaintiff's claims against the
Company, but answered the complaint. Accordingly, the March 7,
2003 decision did not make any ruling with respect to the claims
asserted against the Company.
On August 12, 2003, the Company entered into a settlement
agreement with the Plaintiff to resolve all outstanding claims
related to the Securities Class Action. On October 8, 2003, the
Court preliminarily approved the settlement. A final hearing on
the settlement was held on January 16, 2004, after delivery of
notice to class members. On February 5, 2004, the Court
issued an interim order generally approving the terms of the
settlement as fair, adequate and reasonable, but directing
additional briefing on two issues - whether certain objectors'
proposal to "carve out" certain claims from the settlement is
feasible; and whether notice to class members was potentially
inadequate because of the short time period given to file their
claims. The Court suggested that the parties consider allowing
additional time for class members to file claims, which would
not affect the total settlement fund. On March 16, 2004, the
Court issued its "Order Granting Motion for Final Approval of
Partial Class Settlement and Directing Renotice of the Class."
The Order directed that an abbreviated class notice be published
and extended the deadline for class members to opt out or submit
claims until May 31, 2004.
As a part of the settlement, the Company agreed to pay $13.0
million in cash and issue 20.0 million new shares of the
Company's common stock valued at $50.6 million as of August 12,
2003. In October 2003, the Company placed $10.0 million in
escrow upon preliminary approval by the U.S. District Court,
with the additional $3.0 million paid in April 2004. Following
final judicial approval of the settlement, the $13.0 million and
the 20 million shares of newly issued common stock will be
distributed to the class. The issuance of the shares will be
exempt from registration under Section 3(a)(10) of the
Securities Act of 1933.
In addition, the Company agreed to adopt, within thirty days of
final approval of the settlement, certain corporate governance
principles that have been approved by the Board of Directors,
including requirements for independent directors and special
committees, a non-classified Board of Directors with two-year
terms, appointment of a new shareholder-nominated director,
prohibition on the future use of stock options for director
compensation and minimum stock retention by officers after
exercise of future stock option grants. The Company will also
divide equally with the class any future net proceeds from
insurance with respect to the litigation after provision for
legal expenses incurred against the Company. The Plaintiff has
agreed that any members of the class who participate in the
settlement will release and discharge all claims against the
Company and will request that the court issue a bar order
providing for the maximum protection to which the Company is
entitled under the law with respect to discharge and bar of all
future claims for contribution or indemnity by other persons,
arising out of or in any way related to the action, whether
under federal, state or common law, or any other principle of
law or equity. The Company is aware that thus far several
persons, who purportedly acquired the Company's shares during
the class period during January 1, 2000 through December 21,
2002, representing less than 1% of the Company's outstanding
shares, have notified the Plaintiff that they wish to be
excluded from the settlement.
MIDWAY GAMES: Asks IL Court To Dismiss Securities Fraud Lawsuit
---------------------------------------------------------------
Midway Games, Inc. asked the United States District Court for
the Northern District of Illinois to dismiss the consolidated
securities class action filed against Midway Games, Inc. and
certain of its officers, alleging violations of federal
securities law.
Three putative securities class actions were initially filed,
namely:
(1) Allen Ehrlich, Individually and On Behalf of All Others
Similarly Situated, Plaintiff, v. Midway Games, Inc.,
Neil D. Nicastro, Thomas E. Powell, and Kenneth J.
Fedesna, Defendants, Case No. 03 C 6821, filed
September 29, 2003;
(2) Denise R. McVey, Individually and On Behalf of All
Others Similarly Situated, Plaintiff, v. Midway Games,
Inc., Neil D. Nicastro, Thomas E. Powell, and Kenneth
J. Fedesna, Defendants, Case No. 03 C 7008, filed
October 6, 2003; and
(3) Ezra Birnbaum, Individually and On Behalf of All Others
Similarly Situated, Plaintiff, v. Midway Games, Inc.,
Neil D. Nicastro, Thomas E. Powell, Kenneth J. Fedesna,
UBS Warburg LLC, Gerard Klauer Mattison & Co., Inc.,
and Jefferies & Company, Inc., Defendants, Case No. 03
C 7095, filed October 7, 2003.
Plaintiffs filed their Consolidated Complaint, under the caption
In re Midway Games, Inc. Litigation, No. 03 C 6821 on March 8,
2004. The Consolidated Complaint seeks damages for a class
consisting of persons who purchased the Company's securities
between December 11, 2001 and July 30, 2003, inclusive.
Plaintiffs allege that during this time, the defendants
concealed facts concerning expected release dates for the
Company's major new game titles, its ability to develop new game
titles in a timely manner, and a decrease in consumer demand for
its released products.
Plaintiffs claim that, as a result, defendants lacked a
reasonable basis for the Company's earnings projections, which
plaintiffs allege were materially false and misleading.
Plaintiffs further claim that the Company's financial statements
during the class period violated General Accepted Accounting
Principles because they did not include timely write-offs of
capitalized product development costs, and because they did not
include adequate reserves for price protection, returns, and
discounts. Plaintiffs allege violations of Sections 10(b) and
20(a) of the Securities Exchange Act of 1934.
The Company filed a motion to dismiss and accompanying
memorandum in support on April 22, 2004 asserting that none of
plaintiffs' allegations state a legally viable claim against any
of the defendants. The court has set a July 31, 2004 date for a
ruling on the motion. Discovery has not yet commenced, and no
trial date has been set.
MUTUAL BENEFITS: SEC Launches Suit To Halt Fraudulent Offering
--------------------------------------------------------------
The Securities and Exchange Commission filed an emergency
federal civil action seeking to halt an alleged billion dollar
fraudulent securities offering affecting 29,000 investors
worldwide. This action was filed against defendants Mutual
Benefits Corporation (MBC), Joel Steinger, his brother, Leslie
Steinger, and Peter Lombardi.
MBC is headquartered in Ft. Lauderdale, Fla. The SEC's action
includes a civil complaint and also a contempt motion against
the Steingers. In 1998, the Steingers were enjoined from
violating the federal securities laws in connection with their
activities at MBC.
On May 4, the Honorable Federico A. Moreno, United States
District Judge for the Southern District of Florida, entered,
among other things, a temporary restraining order, a freeze of
the defendants' assets and an order appointing a receiver over
MBC.
The SEC's complaint alleges that the defendants raised over $1
billion from more than 29,000 investors through a fraudulent,
unregistered offering of securities in the form fractionalized
interests in viatical and life settlements. A viatical or life
settlement is the sale of a life insurance policy by a
terminally ill person or senior citizen (the viator) at a price
discounted from the face value of the policy. Investors pay the
premiums and receive the face value of the life insurance policy
when the insured, or viator, dies. In turn, the viator receives
a portion of the proceeds of his life insurance policy as a lump
sum.
According to the SEC's complaint, MBC promised investors fixed
returns ranging from 12% to 72%, depending upon the term of
investment chosen by the investor. The life expectancy figure
determined for each viator was a key factor in determining the
maturity date of the investment, the rates of return to
investors and the amount of funds needed to be escrowed for
payment of future premiums on the policies.
In its complaint, the SEC alleges that in raising money for its
enterprise, MBC falsely represented to numerous investors that
its life expectancy figures were the product of a review by an
independent physician. The SEC further alleges that MBC failed
to disclose that about 65% of its outstanding life insurance
policies were sold to investors using fraudulent life expectancy
figures generated by MBC. Moreover, the SEC alleges that MBC
omitted to tell investors that more than 90% of its policies
have already surpassed their assigned life expectancy.
According to the SEC's complaint, as a result of the failure of
these older policies to mature, shortfalls in escrowed premium
funds have forced MBC to effectuate a premium payment scheme
similar to traditional "Ponzi" schemes, whereby the company is
paying premium obligations of specific investors with monies
escrowed for future obligations of other investors.
The SEC's complaint also contends that the defendants failed to
disclose to investors that Joel Steinger and Leslie Steinger
both played key roles in the management of MBC's operations and
its securities offering. Furthermore, the complaint alleges
that investors were not being told that at least $26 million in
funds collected in MBC's offering was paid to the Steingers and
their relatives in the form of "consulting fees."
The SEC's complaint charges the defendants with violating the
anti-fraud and registration provisions of the federal securities
laws. Specifically, the Commission alleges that defendants MBC,
Joel Steinger, Leslie Steinger and Peter Lombardi 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, thereunder. The Commission also alleges that defendants
Joel Steinger and Leslie Steinger, as control persons of MBC,
violated Section 10(b) of the Exchange Act and Rule 10b-5,
thereunder. In addition to the emergency relief described
above, the complaint seeks permanent injunctions prohibiting
future violations of the securities laws, disgorgement, and
civil penalties.
Also named in the SEC's action as relief defendants are Viatical
Benefactors, LLC, Viatical Services, Inc., Kensington
Management, Inc., Rainy Consulting Corp., Twin Groves
Investments, Inc., P.J.L. Consulting, Inc, SKS Consulting, Inc.
and Camden Consulting, Inc.
In addition to its civil complaint, the SEC filed an emergency
contempt action against defendants Joel Steinger and Leslie
Steinger for disobeying a prior final judgment of permanent
injunction entered against them on May 6, 1998, in SEC v. Joel
Steinger and Leslie Steinger, Civil Action 98-6442-CIV-
MIDDLEBROOKS (S.D.Fla. 1998). In that previous action, the SEC
charged defendants Joel Steinger and Leslie Steinger with fraud
and securities violations arising out of their roles in MBC's
offering as it stood at that time. In that case, the Steingers
were permanently enjoined from violating the registration and
anti-fraud provisions of the federal securities laws and paid
$850,000 in disgorgement, plus prejudgment interest, and $50,000
each in civil money penalties.
In simultaneous filings, the State of Florida's Department of
Financial Services-Office of Insurance Regulation filed an
emergency cease-and-desist order against MBC suspending MBC's
license to operate as a viatical settlement provider in and from
the state of Florida, and the State of Florida's Office of
Statewide Prosecution issued a 16 count criminal information
against MBC.
The suit is styled "SEC v. Mutual Benefits Corporation, et al.,
Case No. 04-60573-CIV-MORENO."
NATIONWIDE FINANCIAL: Seeks Summary Judgment For CT ERISA Suit
--------------------------------------------------------------
Nationwide Financial Services, Inc. and the Nationwide Life
Insurance Company (NLIC) filed a motion for summary judgment in
the class action filed in the United States District Court in
Connecticut. The suit is styled "Lou Haddock, as trustee of the
Flyte Tool & Die, Incorporated Deferred Compensation Plan, et al
v. Nationwide Financial Services, Inc. and Nationwide Life
Insurance Company."
The amended complaint was filed on behalf of a class of Employee
Retirement Income Security Act (ERISA) qualified retirement
plans that purchased variable annuities from NLIC. Plaintiffs
allege that they invested ERISA plan assets in their variable
annuity contracts, and that the Company acquired and breached
ERISA fiduciary duties by accepting service payments from
certain mutual funds that allegedly consisted of or diminished
those ERISA plan assets. The complaint seeks disgorgement of
some or all of the fees allegedly received by the Company and
other unspecified relief for restitution, along with declaratory
and injunctive relief and attorneys' fees.
On December 3, 2001, the plaintiffs filed a motion for class
certification. Plaintiffs filed a supplement to that motion on
September 19, 2003. The Company opposed that motion on December
24, 2003. On January 30, 2004, the Company filed a Revised
Memorandum in Support of Summary Judgment, and a Motion
Requesting that the Court Decide Summary Judgment before Class
Certification. Plaintiffs have opposed that motion.
NATIONWIDE LIFE: Plaintiffs Appeal Dismissal of LA Consumer Suit
----------------------------------------------------------------
Plaintiffs appealed the United States District Court for the
Eastern District of Louisiana's dismissal of the class action
filed against Nationwide Life Insurance Company, styled "Edward
Miller, Individually, and on behalf of all others similarly
situated, v. Nationwide Life Insurance Company."
The complaint alleges that in 2001, plaintiff Edward Miller
purchased three group modified single premium variable annuities
issued by Nationwide Life Insurance Company (NLIC). Plaintiff
alleges that NLIC represented in its prospectus and promised in
its annuity contracts that contract holders could transfer
assets without charge among the various funds available through
the contracts, that the transfer rights of contract holders
could not be modified and that NLIC's expense charges under the
contracts were fixed.
Plaintiff claims that NLIC has breached the contracts and
violated federal securities laws by imposing trading fees on
transfers that were supposed to have been without charge.
Plaintiff seeks compensatory damages and rescission on behalf of
himself and a class of persons who purchased this type of
annuity or similar contracts issued by NLIC between May 1, 2001
and April 30, 2002 inclusive and were allegedly damaged by
paying transfer fees.
NLIC's motion to dismiss the complaint was granted by the Court
on October 28, 2003. Plaintiff has appealed that dismissal to
the United Stated Court of Appeals for the Fifth Circuit.
NATIONWIDE LIFE: Plaintiffs File Amended Consumer Lawsuit in AZ
---------------------------------------------------------------
Plaintiffs filed an amended class action against Nationwide Life
Insurance Company in the United States District Court in
Arizona, styled "Robert Helman et al v. Nationwide Life
Insurance Company et al."
The suit challenges the sale of deferred annuity products for
use as investments in tax-deferred contributory retirement
plans. The suit was filed on behalf of all persons who
purchased an individual variable deferred annuity contract or a
certificate to a group variable annuity contract issued by NLIC
or Nationwide Life and Annuity Insurance Company (NLAIC) which
were allegedly used to fund certain tax-deferred retirement
plans. The amended class action complaint seeks unspecified
compensatory damages. This lawsuit is in a very preliminary
stage, and the Company is evaluating its merits.
NATIONWIDE LIFE: Mutual Fund Unitholders Commence Lawsuit in IL
---------------------------------------------------------------
Nationwide Life Insurance Company faces a class action filed in
Circuit Court, Third Judicial Circuit, Madison County, Illinois,
entitled "Woodbury v. Nationwide Life Insurance Company."
The plaintiff purports to represent a class of persons in the
United States who, through their ownership of a Nationwide
annuity or insurance product, held units of any Nationwide sub-
account invested in mutual funds which included foreign
securities in their portfolios and which experienced market
timing trading activity. The complaint contains allegations of
negligence, reckless indifference and breach of fiduciary duty.
Plaintiff seeks to recover compensatory and punitive damages in
an amount not to exceed $75,000 per plaintiff or class member.
NATIONWIDE LIFE: Asks FL Court To Dismiss RICO Violations Suit
--------------------------------------------------------------
Nationwide Life Insurance Company of America (NLICA) asked the
United States District Court for the Middle District of Florida
to dismiss the lawsuit filed against it and twenty-five other
defendants, styled "Steven L. Flood, Luzerne County Controller
and the Luzerne County Retirement Board on behalf of the Luzerne
County Employee Retirement System v. Thomas A. Makowski, Esq.,
et al."
NLICA is a defendant as successor in interest to Provident
Financial Corporation, which is alleged to have entered into
four agreements to manage assets and investments of the Luzerne
County Employee Retirement System (the Plan). In their
complaint, the plaintiffs allege that NLICA aided and abetted
certain other defendants in breaching their fiduciary duties to
the Plan. Plaintiffs also allege that NLICA violated the
Federal Racketeer Influenced and Corrupt Organizations Act
(RICO) by engaging in and conspiring to engage in an improper
scheme to mismanage funds in order to collect excessive fees and
commissions and that NLICA was unjustly enriched by the
allegedly excessive fees and commissions. The complaint seeks
treble compensatory damages, punitive damages, a full
accounting, imposition of a constructive trust on all funds paid
by the Plan to all defendants, pre- and post-judgment interest,
and costs and disbursements, including attorneys' fees.
The plaintiffs seek to have each defendant judged jointly and
severally liable for all damages. NLICA, along with virtually
every other defendant, has filed a motion to dismiss the
complaint for failure to state a claim. The plaintiffs have
filed their response to the motions to dismiss.
NEW YORK: Fairness Hearing For Suit Settlement Set July 30,2004
---------------------------------------------------------------
The United States District Court for the Central District of
California will hold a fairness hearing for the settlement
proposed by New York Life Insurance to settle the insurance suit
filed against it.
The fairness hearing will be held on July 30, 2004 at 9:30 A.M.
PDT, before the Honorable Christina A. Synder in United States
District Court for the Central District of California.
For more details, visit the settlement Web Site:
www.ArmenianInsuranceSettlement.com
NUANCE COMMUNICATIONS: CA Court Approves Stock Suit Settlement
--------------------------------------------------------------
The United States District Court for the Northern District of
California approved the settlement proposed by Nuance
Communications for the securities class action filed against it
and certain of its officers and directors.
The suit was filed on behalf of a purported class of people who
purchased the Company's stock during the period January 31,
2001, through March 15, 2001, alleging false and misleading
statements and insider trading in violation of the federal
securities laws. The plaintiffs were seeking unspecified
damages.
In November 2003, the Court approved a settlement and dismissal
of the action. The settlement was funded entirely by the
Company's insurers in August and September 2003.
ODYSSEY HEALTHCARE: Faces Securities Fraud Lawsuits in N.D Texas
----------------------------------------------------------------
Odyssey Healthcare, Inc., its current and former Chief Executive
Officers and its Chief Financial Officer face several class
actions filed in the United States District Court for the
Northern District of Texas, Dallas Division, purportedly on
behalf of all persons who purchased or otherwise acquired the
Company's publicly traded securities between May 5, 2003 and
February 23, 2004.
The complaints allege violations of Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder. The plaintiff seeks an order determining that the
action may proceed as a class action, awarding compensatory
damages in favor of the plaintiff and the other class members in
an unspecified amount, and reasonable costs and expenses
incurred in the action, including counsel fees and expert fees.
PARADYNE NETWORKS: Fairness Hearing For Settlement Set June 2004
----------------------------------------------------------------
The United States District Court for the Middle District of
Florida - Tampa Division will hold a fairness hearing for the
settlement of the class action filed against Paradyne Networks,
Inc. on June 11, 2004
The Company proposed a settlement that will provide $3 million
to pay claims from Paradyne investors who brought or otherwise
acquired the company's common stock during the Class Period.
The Court will hold a hearing to determine whether to approve
the settlement and a request by the Plaintiff's lawyers for
attorneys' fees and costs.
For more details, contact Heffler, Radetich & Saitta LLP, by
Mail: P.O. Box 58490, Philadelphia, PA 19102-8490 by Phone:
1-800-335-2852 or visit their Web Site: www.heffler.com
PMA CAPITAL: Shareholders Commence Securities Suits in E.D. PA
--------------------------------------------------------------
PMA Capital Corporation faces several securities class actions
filed in the United States District Court for the Eastern
District of Pennsylvania, alleging violations of federal
securities laws.
On November 6, 2003, several purported class action lawsuits
were filed against the Company and certain other defendants. A
purported class action lawsuit captioned "Pitt v. PMA Capital
Corporation, John W. Smithson and William E. Hitselberger
(initiated November 6, 2003) was filed by alleged shareholders
of the Company who seek to represent a class of purchasers of
PMA Capital securities from May 7, 2003 to November 3, 2003.
The complaints allege, among other things, that the defendants
violated Rule 10b-5 of the Securities Exchange Act of 1934, as
amended, by making materially false and misleading public
statements and material omissions during the class period
regarding the Company's loss reserves.
Several other purported class action lawsuits, captioned
Augenbaum v. PMA Capital Corporation, et. al. (initiated
November 6, 2003); Klinghoffer v. PMA Capital Corporation, et.
al. (initiated November 10, 2003); and Pollin v. PMA Capital
Corporation, John W. Smithson and Frederick W. Anton III
(initiated November 11, 2003); were filed by alleged purchasers
of the Company's 4.25% Convertible Debentures and 8.50% Monthly
Income Senior Notes. The Klinghoffer and Pollin complaints name
as defendants the Company, PMA Capital Trust I, PMA Capital
Trust II, certain of the Company's officers and directors and
investment banking firms as defendants.
The complaints allege, among other things, that the defendants
violated Sections 11, 12(a)(2) and 15 of the Securities Act of
1933, as amended, by making materially false and misleading
statements about its reserves in the registration statement,
prospectuses and prospectus supplements in connection with the
debt.
Several purported class action lawsuits captioned Newman v. PMA
Capital Corporation, John W. Smithson, William E. Hitselberger
and Francis W. McDonnell (initiated November 7, 2003); Appel v.
PMA Capital Corporation, John W. Smithson, William E.
Hitselberger and Francis W. McDonnell (initiated November 10,
2003); Boyd v. PMA Capital Corporation, John W. Smithson,
William E. Hitselberger and Francis W. McDonnell (initiated
November 20, 2003); Waller v. PMA Capital Corporation, John W.
Smithson, Francis W. McDonnell and William E. Hitselberger
(initiated November 12, 2003); Bauer v. PMA Capital Corporation,
John W. Smithson, William E. Hitselberger and Francis W.
McDonnell (initiated November 21, 2003), and Frey v. PMA Capital
Corporation, John W. Smithson, William E. Hitselberger and
Francis W. McDonnell (initiated December 11, 2003) were filed by
alleged shareholders of PMA Capital who seek to represent a
class of purchasers of PMA Capital securities from November 13,
1998 to November 3, 2003.
The complaints allege, among other things, that the defendants
violated Rule 10b-5 of the Securities Exchange Act of 1934, as
amended, by making materially false and misleading public
statements and material omissions during the class period
regarding the Company's loss reserves.
RETEK INC.: MN Court Dismisses Securities Suit Without Prejudice
----------------------------------------------------------------
The United States District Court in Minnesota dismissed without
prejudice the consolidated securities class action filed against
Retek, Inc. and certain of its current and former officers and
directors.
The consolidated complaint alleges, among other things,
violations of Sections 10(b) and 20(a) of the Exchange Act.
Specifically, the complaint alleges that, among other things,
between July 19, 2001 and July 8, 2002, defendants made false
and misleading statements and/or concealed material adverse
facts from the market in press releases, presentations and SEC
disclosures. The Complaint alleges that the Company and the
individual defendants misled the market with respect to, among
other things, its alliance with IBM, its ability to develop
certain software, and the Company's expectations regarding
certain customer sales.
Plaintiffs further allege that defendants manipulated financial
statements and failed to disclose problems with existing and
potential customer deals, which led to the Company's stock price
being artificially inflated during the Class Period. The
plaintiffs seek compensatory damages and other unspecified
relief.
On May 30, 2003, the Company and the individual defendants
served a motion to dismiss the complaint. On January 27, 2004,
the Court heard arguments on the motion to dismiss. On March
30, 2004, the Court dismissed the Consolidated Complaint, with
leave to amend.
TOBACCO LITIGATION: VA High Court Upholds Favorable Jury Verdict
----------------------------------------------------------------
Tobacco manufacturers won an important appeal in the West
Virginia Supreme Court, as the court affirmed a jury's 2001
verdict that U.S. cigarette companies should not have to pay for
medical monitoring for healthy current and former smokers in the
state.
The class action case, called Blankenship, was filed on behalf
of an estimated 250,000 West Virginia smokers who did not claim
that they were ill or that they were unable to quit smoking.
Rather, they alleged that smoking cigarettes placed them at an
increased risk of contracting serious diseases. This was the
first case of its type to go to trial.
In affirming the jury's decision, the court found that there was
not a "serious challenge to the jury's conclusion ... that
exposure to (cigarette smoke) does not 'make it reasonably
necessary for all class members to undergo periodic medical
examinations different from what would be prescribed in the
absence of exposure."
Jeff Furr, the attorney for R.J. Reynolds Tobacco Company who
served as the lead trial counsel for the tobacco industry, said,
"The jury sent a clear message with its verdict: Tobacco
companies are not liable for the inherent risks associated with
smoking, and if smokers are concerned about those risks, they
should quit -- not sue and continue to smoke. The West Virginia
Supreme Court simply refused to upset the jury's verdict,
rejecting the notion that healthy smokers and former smokers
need, or would benefit from, the medical monitoring program that
was proposed by the plaintiffs' lawyers."
R.J. Reynolds Tobacco Company (RJRT) is a wholly owned
subsidiary of R.J. Reynolds Tobacco Holdings, Inc. (NYSE: RJR).
R.J. Reynolds Tobacco Company is the second-largest tobacco
company in the United States, manufacturing about one of every
four cigarettes sold in the United States. Reynolds Tobacco's
product line includes four of the nation's 10 best-selling
cigarette brands: Camel, Winston, Salem and Doral. For more
information about RJRT, visit the company's web site at
www.RJRT.com
WELLS REAL: Limited Partners Lodge Securities Fraud Suit in GA
--------------------------------------------------------------
Wells Capital, Inc. faces a class action relating to Wells Real
Estate Fund I, a public limited partnership that offered units
from September 6, 1984 through September 5, 1986, filed in the
Gwinnett County Superior Court in Georgia, by four individuals.
The suit also names as defendants:
(1) Leo F. Wells, III,
(2) Wells Investment Services, Inc. (WIS),
(3) Wells Management Company, Inc., and
(4) Wells Fund I
The suit, styled "Hendry et al. v. Leo F. Wells, III et al.,
Superior Court of Gwinnett County, Georgia, Civil Action No. 04-
A-2791 2," was filed on behalf of all limited partners holding B
Units of Wells Fund I as of January 15, 2003. The complaint
alleges, among other things, that:
(i) during the offering period (September 6, 1984 through
September 5, 1986), Mr. Wells, Wells Capital, Wells
Investment Securities and Wells Fund I negligently or
fraudulently made false statements and made material
omissions in connection with the initial sale of the B
Units to investors of Wells Fund I by making false
statements and omissions in the Wells Fund I sales
literature relating to the distribution of net sale
proceeds to holders of B Units;
(ii) Mr. Wells, Wells Capital and Wells Fund I negligently
or fraudulently misrepresented and concealed disclosure
of, among other things, alleged discrepancies between
such statements and the provisions in the partnership
agreement for a period of time in order to delay such
investors from taking any legal, equitable or other
action to protect their investments in Wells Fund I,
among other reasons; and
(iii) Mr. Wells, Wells Capital and Wells Fund I breached
their fiduciary duties to the limited partners.
The Plaintiffs seek, among other remedies, rescission of all
purported class members' purchases of B Units and an order for a
full refund of all money paid for such units together with
interest; judgment against the Wells Defendants, jointly and
severally, in an amount to be proven at trial; punitive damages;
judicial dissolution of Wells Fund I and the appointment of a
receiver to wind up and terminate the partnership; and an award
to Plaintiffs of their attorneys' fees, costs and expenses.
New Securities Fraud Cases
ABATIX CORPORATION: Federman & Sherwood Files TX Securities Suit
----------------------------------------------------------------
Federman & Sherwood filed a securities class action lawsuit in
the Northern District of Texas against Abatix Corporation
(Nasdaq: ABIX).
The complaint alleges violations of federal securities laws,
including allegations of dramatically overstating revenues and
concealing Abatix Corporation's true prospects. The lawsuit
further alleges that defendants violated Sections 10(b) and
20(a) of the Securities Exchange Act of 1934 and Rule 10b-5,
thereby issuing a series of material misrepresentations to the
market. The class period is from April 14, 2004 through April
21, 2004.
For more details, contact William B. Federman by Mail: FEDERMAN
& SHERWOOD 120 N. Robinson, Suite 2720, Oklahoma City, OK 73102
by Phone: (405) 235-1560/ by Fax: (405) 239-2112 or E-Mail:
wfederman@aol.com
ABATIX CORPORATION: Emerson Poynter Lodges Securities Suit in TX
----------------------------------------------------------------
Emerson Poynter LLP, initiated a securities class action in the
United States District Court for the Northern District of Texas
on behalf of all persons or entities who purchased or otherwise
acquired Abatix Corporation securities (Nasdaq:ABIX) between
April 14, 2004 at 5:05 p.m. EST to April 16, 2004, at 9:27 a.m.
EST, both times inclusive. The Complaint names Terry Shaver,
Frank Cinatl IV, and the Company as defendants.
The Complaint alleges that defendants violated the Securities
Exchange Act of 1934 by making a series of materially false and
misleading statements concerning the Abatix's business agreement
with Goodwin Group LLC during the Class Period. Specifically,
the Complaint alleges that Abatix knew but failed to disclose
certain material facts, including that:
(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;
and
(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.
As a result, the prices of the Company's securities were
artificially inflated during the Class Period and caused
plaintiff and the other members of the Class to suffer damages.
For more details, contact EMERSON POYNTER LLP (John G. Emerson &
Scott E. Poynter) by Mail: 2228 Cottondale Lane, Suite 100,
Little Rock, AR 72202-2037 by Phone: (800) 663-9817 or
(501) 907-2555 by Fax: (501) 907-2556 or by E-Mail:
shareholder@emersonfirm.com
ASCONI CORPORATION: Milberg Weiss Lodges Stock Suit in M.D. FL
--------------------------------------------------------------
Milberg Weiss Bershad & Schulman LLP initiated a securities
class action on behalf of purchasers of the securities of Asconi
Corporation (AMEX:ACD) between June 11, 2001 and March 23, 2004,
inclusive (the "Class Period"), seeking to pursue remedies under
the Securities Exchange Act of 1934 (the "Exchange Act").
The complaint charges Asconi, Constantin Jitaru and Anatolie
Sirbu with violations of Section 10(b) and 20(a) of the
Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder. Throughout the Class Period, defendants issued false
and misleading statements concerning the company's business
performance and failed to disclose certain related party
transactions in violation of Sections 10(b) and 20(a) of the
Exchange Act. The Defendants violated Generally Accepted
Accounting Principles ("GAAP") by failing to properly account
for Company stock issued to the defendants, and as a result,
Asconi's financial statements were artificially inflated. Asconi
has delayed filing its annual Report on Form 10-K with the SEC
and has indicted it will restate certain prior periods.
Currently the target of an SEC investigation, Asconi's stock
price collapsed before trading ceased.
For more details contact, Steven G. Schulman or Maya Saxena
by Mail: One Pennsylvania Plaza, 49th fl., New York, NY,
10119-0165 or 5355 Town Center Road, Suite 900, Boca Raton, FL
33486 by Phone: (800) 320-5081 or (561) 361-5000 by E-Mail:
asconicorp@milbergweiss.com or msaxena@milbergweiss.com or visit
their Web Site: http://www.milbergweiss.com
ASCONI CORPORATION: Murray Frank Files Securities Lawsuit in FL
---------------------------------------------------------------
Murray, Frank & Sailer LLP initiated a securities class action
in the United States District Court for the Middle District of
Florida, on behalf of all persons or entities who purchased or
otherwise acquired Asconi Corporation securities (AMEX:ACD) from
June 11, 2001 through March 23, 2004, both dates inclusive. The
Complaint names Constantin Jitaru, Anatolie Sirbu, and the
Company as defendants.
The complaint alleges that the defendants made material
misrepresentations and omissions of material facts concerning
the company's business performance during the relevant time.
According to the complaint, throughout the relevant time period,
defendants misrepresented the financial condition of Asconi and
failed to disclose certain related party transactions, thereby
overstating the financial condition of Asconi. The company has
delayed the filing of its annual Report on Form 10-K with the
SEC, its stock price has collapsed and the stock has ceased
trading.
For more details, contact Eric J. Belfi or Gregory Linkh by
Mail: Murray, Frank & Sailer LLP, 275 Madison Avenue, Suite 801,
New York, NY 10016, by Phone: (800) 497-8076 or (212) 682-1818
by Fax: (212) 682 1892 or by E-Mail: info@murrayfrank.com
ASCONI CORPORATION: Federman & Sherwood Lodges Stock Suit in FL
---------------------------------------------------------------
Federman & Sherwood initiated a securities class action in the
Middle District of Florida against Asconi Corporation (Amex:
ACD).
The complaint alleges violations of federal securities laws,
including allegations of dramatically overstating revenues and
concealing Asconi's true prospects. The lawsuit further alleges
that defendants violated Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10b-5, thereby issuing
a series of material misrepresentations to the market. The class
period is from May 15, 2003 through March 23, 2004.
For more details, contact William B. Federman by Mail: FEDERMAN
& SHERWOOD 120 N. Robinson, Suite 2720, Oklahoma City, OK 73102
by Phone: (405) 235-1560/ by Fax: (405) 239-2112 or E-Mail:
wfederman@aol.com
CHINA LIFE: Weiss & Yourman Commences Securities Suit in S.D. NY
----------------------------------------------------------------
Weiss & Yourman initiated a securities class action filed
in the United States District Court for the Southern District of
New York on behalf of all persons who purchased the publicly
traded securities of China Life Insurance Company Limited
("China Life") (NYSE:LFC) and its senior executives from
December 22, 2003 through April 27, 2004 inclusive.
The complaint charges defendants with violations of the
antifraud provisions of the Securities Exchange Act of 1934,
alleging that defendants issued a series of materially false and
misleading statements which artificially inflated the price of
China Life securities during the Class Period.
For more details, contact Mark D. Smilow, James E. Tullman, or
David C. Katz, by Mail: Weiss & Yourman, The French Building,
551 Fifth Avenue, Suite 1600, New York, New York 10176 by Phone:
(888) 593-4771 or (212) 682-3025 by E-Mail: info@wynyc.com
GENTA INC.: Schiffrin & Barroway Lodges Securities Suit in NJ
-------------------------------------------------------------
Schiffrin & Barroway, LLP filed a securities class action in the
United States District Court for the District of New Jersey on
behalf of all purchasers of the publicly traded securities of
Genta Inc. (Nasdaq: GNTA) from March 26, 2001 through May 3,
2004, inclusive.
The complaint charges that Genta, Raymond P. Warrell, Jr.,
Loretta M. Itiri, and William P. Keane 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 26, 2001 and May
3, 2004. More specifically, the Complaint alleges that the
Company failed to disclose and misrepresented the following
material adverse facts which were known to defendants or
recklessly disregarded by them:
(1) that most patients enrolled in the Genasense Phase III
study were asymptomatic and that 56% were "ECOG
performance status 0" (fully active, able to carry on
all pre-disease performance without restriction) at
baseline;
(2) that attempts to stratify and balance prognostic
factors during the randomization of patients were
unsuccessful, resulting in imbalances, including fewer
patients with visceral disease-lactate dehydrogenase
elevations (59% versus 67% in the DTIC alone arm);
(3) that the majority of patients in both arms went off
study after 6 weeks (two cycles) because of progressive
disease;
(4) that the study failed to show a survival benefit from
the combination of Genasense plus DTIC using an
unadjusted log rank analysis of survival time for the
intention-to-treat population (p = 0.18, HR=0.89);
(5) that as a result of "missing data," defendants employed
a censoring procedure of "last observation carried
forward" for analysis of secondary endpoints, to show a
statistically significant benefit in progression-free
survival;
(6) that as a result of "missing data" and the questionable
manner in which defendants arrived at their analysis of
the secondary endpoints, defendants were required to
perform a different procedure of censoring at last
observation for missing data;
(7) that as a result of these analyses and further
simulations conducted by FDA reviewers, it was clear
that defendants' study was biased and fundamentally
flawed - flaws which make it impossible to rule out
that the statistically significant differences observed
by defendants were false positive;
(8) that of the 5 complete responses reported to the FDA by
defendants, none were verified by their blinded,
independent review organization;
(9) that for all 71 responders identified by defendants,
there was concordance with their blinded, independent
review organization for only 49% of the
interpretations;
(10) that since most patients were asymptomatic at study
entry and were performance status zero, it was
difficult to assess whether patients achieved any
symptom benefit from combination therapy over single-
agent therapy;
(11) that the addition of Genasense correlated with serious
and alarming toxicity to patients during the study,
including increased toxicity and discontinuations due
to adverse events, including 69 patients (18.6%) who
discontinued therapy for adverse events on the
Genasense arm versus 39 (10.8%) on the DTIC alone arm;
(12) that the rate of serious adverse events was 40% on the
Genasense arm versus 27% on DTIC alone;
(13) that since the dosing of DTIC was identical on the two
arms, toxicity increases were likely due to the
addition of Genasense;
(14) that at the May 3, 2004 meeting of the ODAC, FDA would
provide an accurate and transparent report of the
concealed facts;
(15) that the FDA and the ODAC had previously rejected an
application that sought approval based on facts similar
to those concealed by defendants, and specifically
small differences in progression- free survival, a
situation worsened in the case of Genasense as a result
of the unreliable nature of the clinical data and the
observation of serious toxicities cased by Genasense
when used in combination with DTIC; and
(16) that FDA regulations require "substantial evidence of
efficacy" for any NDA, including NDA 21-649, and that
no such finding could be made for Genasense since
survival was not improved and toxicity was increased
over the existing therapy.
On April 30, 2004, Genta announced that the FDA had posted on
its website briefing documents for the ODAC meeting on Monday,
May 3, 2004. The briefing documents suggested that Genasense
will fail to win FDA approval. News of this shocked the market.
Shares of Genta fell $5.83 per share or 40% on April 30, 2004 to
close at $8.60 per share. In fact, on May 3, 2004, Genta failed
to win FDA Panel support for Genasense. News of this sent shares
of Genta falling another $3.49 per share or 40.5% to close at
$5.11 on May 3, 2004.
For more details, contact Schiffrin & Barroway, LLP (Marc A.
Topaz, Esq. or Stuart L. Berman, Esq.) by Mail: Three Bala Plaza
East, Suite 400, Bala Cynwyd, PA 19004 by Phone: 1-888-299-7706
or 1-610-667-7706 or by E-Mail: info@sbclasslaw.com
GENTA INC.: Charles Piven Lodges Securities Fraud Lawsuit in NJ
---------------------------------------------------------------
The Law Offices Of Charles J. Piven, P.A., initiated a
securities class action lawsuit on behalf of shareholders who
acquired Genta, Inc. (Nasdaq:GNTA) securities between September
10, 2003 and May 3, 2004, inclusive. Though still pending in
the United States District Court for the District of New Jersey,
the suit has not yet certified a class.
The class action alleges that defendants issued materially false
and misleading statements to the market during the Class Period,
which had the effect of artificially inflating the market price
of Company securities. The statements, the action claims was a
blatant violation of federal securities laws.
For more details, contact Law Offices Of Charles J. Piven, P.A.,
by Mail: Baltimore, Maryland by Phone: 410/986-0036 or by E-
Mail: hoffman@pivenlaw.com
GENTA INC.: Vianale & Vianale Lodges Securities Fraud Suit in NJ
----------------------------------------------------------------
Vianale & Vianale LLP commenced a securities fraud class action
lawsuit on May 6, 2004, in New Jersey federal court on behalf of
purchasers of the securities of Genta, Inc. ("Genta") (NASDAQ:
GNTA) between September 10, 2003 and May 3, 2004, inclusive.
The complaint alleges that defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934.
During the Class Period, defendants falsely represented to
investors that Genasense, the Company's cancer drug, did not
appear to be associated with serious adverse reactions in the
Phase 3 clinical trial. Defendants knew, however, that the use
of Genasense was associated with increased toxicity and
discontinuations due to adverse events, and that FDA approval of
the Genasense New Drug Application was unlikely because the
drug's increased toxicity and adverse events associated with the
use of Genasense outweighed its marginal benefits.
On April 30, 2004, the staff of the Oncologic Drugs Advisory
Committee (ODAC) of the FDA stated in briefing materials in
advance of the May 3, 2004 ODAC meeting that the Phase 3
clinical trial of Genasense failed to demonstrate a survival
benefit, which was the primary trial endpoint. The stock price
fell significantly on this news.
On May 3, 2004, the ODAC ruled by a 13-3 vote that, without
increased survival, the evidence presented did not provide
substantial evidence of effectiveness to outweigh Genasense's
increased toxicity. On this news, Genta shares fell more than $3
per share, to close at $5.11 on May 3, 2004 at a high volume of
over 17 million shares traded.
For more details, contact Vianale & Vianale LLP, by Phone:
(561) 391-4900 or 888-657-9960 by E-Mail: info@vianalelaw.com or
visit their Web Site: www.vianalelaw.com
GENTA INC.: Berger & Montague Expands Class Period in NJ Lawsuit
----------------------------------------------------------------
The law firm of Berger & Montague, P.C. expanded the Class
Period in the class action suit against Genta (Nasdaq: GNTA) and
certain of its principal officers and directors in the United
States District Court for the District of New Jersey to include
all persons or entities who purchased Genta securities between
March 26, 2001 and May 3, 2004 (the "Class Period"), Maitland v.
Genta, Inc., et al., 2:04-CV-2123 (D.N.J).
Plaintiff alleges that defendants violated the federal
securities laws by issuing materially false and misleading
statements throughout the Class Period that had the effect of
artificially inflating the market price of the Company's
securities. Specifically, plaintiff alleges that throughout the
Class Period, defendants misrepresented the safety and efficacy
of the Company's drug, Genasense, for the treatment of advanced
melanoma, the most deadly form of skin cancer.
During the Class Period, defendants falsely represented to the
investing public that Genasense did not appear to be associated
with serious adverse reactions in the Phase 3 clinical trial. In
fact, defendants knew that the use of Genasense was associated
with increased toxicity and discontinuations due to adverse
events, and that U.S. Food and Drug Administration ("FDA")
approval of the Genasense New Drug Application was unlikely
because the increased toxicity and adverse events associated
with the use of Genasense outweighed its marginal benefits.
On April 30, 2004, the staff of the Oncologic Drugs Advisory
Committee (ODAC) of the FDA stated in briefing materials in
advance of the May 3, 2004 ODAC meeting that the Phase 3
clinical trial of Genasense failed to demonstrate a survival
benefit, which was the primary trial endpoint. However, small
but unreliable benefits were seen for progression-free survival
(PFS) and response rates (RR). The staff also stated:
"Uncertainty also exists regarding whether an improvement in PFS
and RP of this magnitude outweighs the increase in toxicity seen
with the combination [of Genasense and dacarbazine.]: . . .
Survival was not improved and toxicity was increased." As a
result of this announcement, the price of Genta shares dropped
$5.83 or 40.4% to close at $8.60 on the Nasdaq market on an
unusually high volume of over 30 million shares traded.
On May 3, 2004, the ODAC ruled by a 13-3 vote that, in the
absence of increased survival, the evidence presented did not
provide substantial evidence of effectiveness to outweigh the
increased toxicity of Genasense. As a result of this
announcement, the price of Genta shares fell more than $3 per
share, to close at $5.11 on May 3, 2004 at a high volume of over
17 million shares traded.
For more details, contact Sherrie R. Savett, Esq., Carole A.
Broderick, Esq., Barbara A. Podell, Esq., Diane R. Werwinski,
Investor Relations Manager by Mail: Berger & Montague, P.C.,
1622 Locust St., 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
GENTA INC.: 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 or otherwise
acquired the securities of Genta, Inc. ("Genta" or the
"Company") (Nasdaq: GNTA) between September 10, 2003 and May 3,
2004, inclusive, (the "Class Period") against defendants Genta
and certain officers of the Company. The case name is Yarbro v.
Genta, Inc., et al.
The complaint alleges that defendants violated the federal
securities laws by issuing materially false and misleading
statements throughout the Class Period that had the effect of
artificially inflating the market price of the Company's
securities.
The Complaint alleges that during the Class Period, defendants
falsely represented to the investing public that Genasense did
not appear to be associated with serious adverse reactions in
the Phase 3 clinical trial. In fact, defendants knew that the
use of Genasense was associated with increased toxicity and
discontinuations due to adverse events. Furthermore, the
defendants knew that U.S. Food and Drug Administration approval
of the Genasense New Drug Application was unlikely because the
increased toxicity and adverse events associated with the use of
Genasense outweighed its marginal benefits.
For more details, contact Wolf Haldenstein Adler Freeman & Herz
LLP (Fred Taylor Isquith, Esq., Gregory M. Nespole, 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/genta.htm
GENTA INC.: Geller Rudman Lodges Securities Fraud Lawsuit in NJ
---------------------------------------------------------------
The Law Firm of Geller Rudman, PLLC initiated a securities class
action in the United States District Court for the District of
New Jersey on behalf of purchasers of Genta Incorporated
(Nasdaq: GNTA) ("Genta" or the "Company") common stock during
the period between March 26, 2001 and May 3, 2004, inclusive
(the "Class Period").
The complaint charges Genta and certain of its officers and
directors with violations of the Securities Exchange Act of
1934. Genta is a biopharmaceutical company dedicated to the
identification, development and commercialization of novel drugs
for cancer and related diseases.
More specifically, the complaint alleges that during the Class
Period, defendants artificially inflated the price of Genta
stock by concealing critical material information regarding the
details of both the safety and efficacy of their lead product,
Genasense, an antisense oligonucleotide molecule designed to
block the production of a protein known as "Bcl-2." The Company
claimed that increased expression of Bcl-2 appears to function
as an important cause of the inherent resistance of cancer cells
to chemotherapy. The concealment by defendants, including the
failings of the study as documented in the Company's new drug
application ("NDA") and in related communications with the U.S.
Food and Drug Administration, adversely impacted the prospects
of approval for the drug. The true facts which were known by
each of the defendants, but concealed from the investing public
during the Class Period, were as follows:
(1) that the Genasense study failed to show a survival
benefit from the combination of Genasense plus
dacarbazine ("DTIC") using an unadjusted log rank
analysis of survival time for the intention-to- treat
population;
(2) that as a result of "missing data" and the questionable
manner in which defendants arrived at their analysis of
the secondary endpoints, defendants were required to
perform a different procedure of censoring at last
observation for missing data;
(3) that as a result of these analyses and further
simulations conducted by FDA reviewers, it was clear
that defendants' study was biased and fundamentally
flawed, flaws which make it impossible to rule out that
the statistically significant differences observed by
defendants were false positive;
(4) that since most patients were asymptomatic at study
entry and were EGOC performance status zero, it was
difficult to assess whether patients achieved any
symptom benefit from combination therapy over single-
agent therapy;
(5) that the addition of Genasense correlated with serious
and alarming toxicity to patients during the study, and
that toxicity increases were likely due to the addition
of Genasense;
(6) that at the May 3, 2004 meeting of the Oncologic Drugs
Advisory Committee ("ODAC"), FDA would provide an
accurate and transparent report of the concealed facts
described above in (a)-(e); and
(7) that FDA regulations require "substantial evidence of
efficacy" for any NDA and that no such finding could be
made for Genasense since survival was not improved and
toxicity was increased over the existing therapy.
The release of the FDA briefing materials on April 30, 2004,
detailing defendants' ill-advised concealment, followed by a
recommendation to reject Genasense for malignant melanoma by an
advisory panel caused Genta stock to drop as low as $5.11 from
its Class Period high of $18.25, on volume of 48 million shares
over two consecutive trading days, causing millions of dollars
in damages to members of the Class.
For more details, visit the following link: http://www.geller-
rudman.com/view_case.asp?cID=284&pcode=10&pp=4
GENTA INC.: Lerach Coughlin Lodges Securities Fraud Suit in NJ
--------------------------------------------------------------
Lerach Coughlin Stoia & Robbins LLP initiated a securities class
action in the United States District Court for the District of
New Jersey on behalf of purchasers of Genta Inc. (NASDAQ:GNTA)
common stock during the period between March 26, 2001 and May 3,
2004.
The complaint charges Genta and certain of its officers and
directors with violations of the Securities Exchange Act of
1934. Genta is a biopharmaceutical company dedicated to the
identification, development and commercialization of novel drugs
for cancer and related diseases.
The complaint alleges that during the Class Period, defendants
artificially inflated the price of Genta stock by concealing
critical material information regarding the details of both the
safety and efficacy of their lead product, Genasense, an
antisense oligonucleotide molecule designed to block the
production of a protein known as "Bcl-2." The Company claimed
that increased expression of Bcl-2 appears to function as an
important cause of the inherent resistance of cancer cells to
chemotherapy. The concealment by defendants, including the
failings of the study as documented in the Company's new drug
application ("NDA") and in related communications with the U.S.
Food and Drug Administration, adversely impacted the prospects
of approval for the drug. The true facts which were known by
each of the defendants, but concealed from the investing public
during the Class Period, were as follows:
(1) that the Genasense study failed to show a survival
benefit from the combination of Genasense plus
dacarbazine ("DTIC") using an unadjusted log rank
analysis of survival time for the intention-to-treat
population;
(2) that as a result of "missing data" and the questionable
manner in which defendants arrived at their analysis of
the secondary endpoints, defendants were required to
perform a different procedure of censoring at last
observation for missing data;
(3) that as a result of these analyses and further
simulations conducted by FDA reviewers, it was clear
that defendants' study was biased and fundamentally
flawed, flaws which make it impossible to rule out that
the statistically significant differences observed by
defendants were false positive;
(4) that since most patients were asymptomatic at study
entry and were EGOC performance status zero, it was
difficult to assess whether patients achieved any
symptom benefit from combination therapy over single-
agent therapy;
(5) that the addition of Genasense correlated with serious
and alarming toxicity to patients during the study, and
that toxicity increases were likely due to the addition
of Genasense;
(6) that at the May 3, 2004 meeting of the Oncologic Drugs
Advisory Committee ("ODAC"), FDA would provide an
accurate and transparent report of the concealed facts
described above in (a)-(e); and (g) that FDA
regulations require "substantial evidence of efficacy"
for any NDA and that no such finding could be made for
Genasense since survival was not improved and toxicity
was increased over the existing therapy.
The release of the FDA briefing materials on April 30, 2004,
detailing defendants' ill-advised concealment, followed by a
recommendation to reject Genasense for malignant melanoma by an
advisory panel caused Genta stock to drop as low as $5.11 from
its Class Period high of $18.25, on volume of 48 million shares
over two consecutive trading days, causing millions of dollars
in damages to members of the Class.
For more details, contact William Lerach or Darren Robbins of
Lerach Coughlin Stoia & Robbins LLP by Phone: 800-449-4900 by E-
Mail: wsl@lcsr.com or visit their Web Site:
http://www.lcsr.com/cases/genta/
GLOBAL CROSSING: Lasky & Rifkind Lodges Securities Lawsuit in NY
----------------------------------------------------------------
Lasky & Rifkind, Ltd. initiated a securities class action filed
in the United States District Court for the Southern District of
New York, on behalf of persons who purchased or otherwise
acquired publicly traded securities of Global Crossing Ltd.
(NASDAQ: GLBCE) between December 9, 2003 and April 26, 2004,
inclusive. The lawsuit was filed against Global Crossing and
John Legere and Daniel P. O'Brien.
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
during the Class Period Defendants failed to disclose or
misrepresented that the Company had materially understated its
accrued cost of access liability by $50 million to $80 million
and that the Company had insufficient internal controls to
detect the understatement of costs.
On April 27, 2004, Global Crossing announced that it had begun a
review of its previously reported financial statements for the
calendar years 2003 and 2002, and also indicated that it would
"amend" periodic reports filed with the Securities and Exchange
Commission ("SEC") to reflect the expected restatement and to
revise its disclosures with respect to the internal control
issues that are now apparent. Shares of Global Crossing reacted
negatively to the news, falling approximately $5 per share, or
27.7% in heavy volume to close at $13.20 per share.
For more details, contact Lasky & Rifkind, Ltd., by Mail: 100
Park Avenue, 12th Floor, New York, New York 10017 by Phone:
800-495-1868 or 212-907-0800 or by Fax: 212-684-6083 or by E-
Mail: investorrelations@laskyrifkind.com
GLOBAL CROSSING: Abraham Fruchter Lodges Securities Suit in NJ
--------------------------------------------------------------
Abraham, Fruchter & Twersky LLP initiated a securities class
action on behalf of purchasers of the securities of securities
of Global Crossing Limited (NASDAQ: GLBCE) between December 24,
2003 and April 26, 2004, inclusive, seeking to pursue remedies
under the Securities Exchange Act of 1934.
The action is pending in the United States District Court for
District of New Jersey against defendants Global Crossing, John
Legere (CEO) and Dan O'Brien (CFO). According to the complaint,
defendants violated sections 10(b) and 20(a) of the Exchange
Act, and Rule 10b-5 by issuing a series of material
misrepresentations to the market during the Class Period.
The complaint alleges that throughout the Class Period, Global
Crossing reported positive results in publicly disseminated
press releases and SEC filings. Defendants attributed these
purportedly positive results to the Company's emergence from
bankruptcy protection on December 9, 2003, and decreases in fees
the Company paid to other carriers for use of their lines. Such
fees are referred to in the industry as "cost of access." In
addition, the complaint charges that defendants represented that
they actively monitored the Company's system of estimating its
costs of access, and further, that these estimates were adjusted
as invoices were received from access providers.
The complaint alleges defendants knew or recklessly disregarded
that:
(1) Global Crossing lacked adequate internal controls,
(2) Global Crossing's costs of access were materially
understated in Global Crossing's financial statements,
and, as a result,
(3) Global Crossing's reported earnings were at all
relevant times, artificially inflated.
On April 27, 2004, minutes after the market opened, defendants
disclosed that Global Crossing would restate its previously
issued financial statements as far back as fiscal 2002 because
defendants had understated the accrued cost of access liability
by $50 million to $80 million. The Company stated that the
understatement of its cost of access liability was due to
"incorrect estimates of cost of access expenses and the failure
to reconcile these expenses to vendor invoices," that there were
material weaknesses in its internal controls, and that investors
should disregard the Company's financial statements for fiscal
2002 and 2003, including interim periods. The Company further
stated that investors should disregard defendants' previous
guidance with respect to Global Crossing's 2004 results. In
reaction to this news, the price of Global Crossing common stock
fell $5.00, or 27.4%, from its previous day's closing price of
$18.20 per share, to close on April 27, 2004 at $13.20.
For more details, contact Jack Fruchter by Mail: One
Pennsylvania Plaza, Suite 1910, New York, NY 10119 by Phone:
(212) 279-5050 or (800) 440-8986 or by Fax: (212) 279-3655 or by
E-Mail: JFruchter@FruchterTwersky.com
MASTEC INC.: Berman DeValerio Lodges Securities Suit in S.D. FL
---------------------------------------------------------------
Berman DeValerio Pease Tabacco Burt & Pucillo initiated a
securities class action in the U.S. District Court for the
Southern District of Florida. The lawsuit seeks damages for
violations of federal securities laws on behalf of all investors
who bought MasTec, Inc. (NYSE:MTZ), common stock from May 13,
2003 through and including April 12, 2004. The complaint, Keedi
v. MasTec, Inc., et. al., is filed as Civil Action No. 04-21066-
Civ-Gold.
The lawsuit claims that the defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934 and the rules
and regulations promulgated thereunder, including U.S.
Securities and Exchange Commission (SEC) Rule 10b-5.
The complaint names as defendants:
(1) MasTec, Inc.;
(2) Austin Shanfelter, who is MasTec's president and chief
executive officer; and
(3) Donald P. Weinstein, who is MasTec's chief financial
officer and executive vice president.
According to the complaint, MasTec issued materially false and
misleading information to the investing public during the Class
Period that artificially inflated the Company's stock price.
Specifically, the lawsuit says that the defendants knew but
concealed from the investing public that the Company:
(i) materially inflated its financial results;
(ii) prematurely recognized revenue on various contracts;
(iii) improperly recognized revenue in violation of Generally
Accepted Accounting Principles;
(iv) overstated its inventory; and
(v) failed to maintain adequate reserves for bad debts,
inventory, cost overruns, and projected losses on
certain projects.
On April 13, 2004, MasTec announced its 2003 operating results
and disclosed material problems that could result in a
restatement of its previously announced financials.
Additionally, MasTec disclosed that during the Company's review
and analysis of its annual results, management identified a
number of matters that affected current and prior-period
operating results. The defendants concluded that these matters
required a detailed analysis and evaluation to determine the
appropriate accounting remedy, which could require restatements
of previously reported financial statements.
On this news, MasTec's stock dropped $1.50 per share, or 15.5
percent, on April 13, 2004.
For more details contact, Berman DeValerio Pease Tabacco Burt &
Pucillo by Phone: (800) 349-4612 or (800) 516-9926 or visit
their Web Site: http://www.bermanesq.com/pdf/Mastec-Cplt.pdf
NORTEL NETWORKS: Stull Stull Files Amended Securities Suit in NY
----------------------------------------------------------------
Stull, Stull & Brody filed an amended securities class action in
the United States District Court for the Southern District of
New York, on behalf of defrauded investors who purchased
securities of Nortel Networks Corporation (NYSE:NT) between
October 23, 2003 and April 28, 2004, inclusive against Nortel
and its senior executives.
The complaint charges defendants with violations the antifraud
provisions of the Securities Exchange Act of 1934, alleging that
defendants issued a series of materially false and misleading
statements which artificially inflated the price of Nortel
securities during the Class Period.
For more details, contact Aaron Brody, Esq. by Mail: 6 East 45th
Street, New York, NY 10017 by Phone: 1-800-337-4983 by Fax:
212-490-2022, or by E-Mail: SSBNY@aol.com or visit their Web
Site: www.ssbny.com
NOVASTAR FINANCIAL: Berger & Montague Lodges Stock Lawsuit in MO
----------------------------------------------------------------
The law firm of Berger & Montague, P.C. filed a securities class
action against NovaStar Financial, Inc. (NYSE: NFI) and certain
of its officers, in the United States District Court for the
Western District of Missouri on behalf of all persons or
entities who purchased NovaStar common stock from October 29,
2003 through April 12, 2004.
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 the SEC by issuing materially false
and misleading statements throughout the Class Period that had
the effect of artificially inflating the market price of the
Company's securities.
The complaint alleges that NovaStar issued press releases, and
false financial reports with the SEC, reporting alleged record
growth, supposedly on the strength of its core business.
Unbeknownst to investors, however, the Company's growth had
outpaced NovaStar's ability to maintain compliance with
applicable regulations governing its business, thereby
subjecting the Company to fines, regulatory action(s) and the
serious, but undisclosed, risk that such non-compliance could
materially and negatively impact the Company's ability to
conduct business.
The Company's compliance problems were exposed by an article in
the Wall Street Journal on April 12, 2004. In response to the
announcement, the price of NovaStar common stock plummeted
precipitously, closing at $37.50 per share on April 12, 2004,
down from $54.18 per share on April 8, 2004 (the last trading
day before the disclosure) -- a one day drop of 30.7% on
unusually high trading volume.
For more details, contact Sherrie R. Savett, Esq., Douglas M.
Risen, Esq., Diane Werwinski, Investor Relations Manager, by
Mail: Berger & Montague, P.C., 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
ODYSSEY HEALTHCARE: Federman & Sherwood Files TX Securities Suit
----------------------------------------------------------------
Federman & Sherwood initiated a securities class action in the
Northern District of Texas against Odyssey Healthcare, Inc.
(Nasdaq: ODSY).
The complaint alleges violations of federal securities laws,
including allegations of dramatically overstating revenues and
concealing Odyssey Healthcare, Inc.'s true prospects. The
lawsuit further alleges that defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5,
thereby issuing a series of material misrepresentations to the
market. The class period is from May 5, 2003 through February
23, 2004.
For more details, contact William B. Federman by Mail: FEDERMAN
& SHERWOOD 120 N. Robinson, Suite 2720, Oklahoma City, OK 73102
by Phone: (405) 235-1560/ by Fax: (405) 239-2112 or E-Mail:
wfederman@aol.com
ODYSSEY HEALTCARE: Lerach Coughlin Lodges Securities Suit in TX
---------------------------------------------------------------
Lerach Coughlin Stoia & Robbins 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) common stock during the period between May 5,
2003 and February 23, 2004.
The complaint charges Odyssey and certain of its officers and
directors with violations of the Securities Exchange Act of
1934. Odyssey is a provider of hospice care in the United
States.
The complaint alleges defendants caused Odyssey stock to trade
at artificially inflated levels through the issuance of false
and misleading financial statements. On February 23, 2004, the
Company announced that its Q1 2004 profits would be below
analysts' estimates. On this news Odyssey's stock price dropped
to below $21 per share. Then on April 12, 2004, Barron's
published an article highlighting the Company's operational
issues. The true facts which were known by each of the
defendants, but concealed from the investing public during the
Class Period, were as follows:
(1) the Company's revenues attributable to several of the
Company's hospice programs was inflated by, among other
things, usurping Medicare benefits it was not entitled
to and admitting patients ineligible for Medicare;
(2) the Company's expenses were understated by failing to
spend the required monies to provide the level of care
required by applicable law;
(3) the Company's high labor costs in its western
operations were eroding the Company's margins,
rendering the Company's forecasts unattainable; and
(4) the Company's Q1 2004 quarter would not only fall short
of the defendants' rosy projections but also it would
be the first quarter where the Company experienced
negative cash flow in nearly three years.
As a result of the defendants' false statements, Odyssey's stock
price traded at inflated levels during the Class Period,
increasing to as high as $37.35 on December 2, 2003, whereby the
Company's top officers and directors sold more than $24 million
worth of their own shares.
For more details, contact William Lerach or Darren Robbins of
Lerach Coughlin Stoia & Robbins LLP by Phone: 800-449-4900 by E-
Mail: wsl@lcsr.com or visit their Web Site:
http://www.lcsr.com/cases/odyssey/
QUOVADX INC.: Berger & Montague Lodges Securities Lawsuit in CO
---------------------------------------------------------------
Berger & Montague, P.C. initiated a securities fraud class
action in the United States District Court for the District of
Colorado against Quovadx, Inc. (Nasdaq: QVDX) and certain of its
officers, on behalf of purchasers of Quovadx common stock
between October 22, 2003 and March 15, 2004 inclusive.
The Complaint charges defendants with violations of 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 issued
numerous false and misleading statements concerning the
Company's financial results. These statements failed to disclose
that the Company had materially overstated its net income and
earnings per share, that Defendants prematurely recognized
revenue from contracts with Infotech Network Group, and that the
Company lacked adequate internal controls to determine its true
financial condition.
On March 15, 2004, Quovadx announced that it would:
(1) delay the filing of its annual report on form 10-K for
the year ended December 31, 2003;
(2) restate its third quarter 2003 financial results; and
(3) revise its previously announced fourth quarter and full
year financial results.
In response to this announcement, Quovadx shares fell $1.45 per
share, losing approximately 28.8% of their value.
Since the complaint was filed, CEO Lorine Sweeney and CFO Gary
Scherping have resigned. In addition, Quovadx has announced that
the SEC has notified the company that its previously announced
informal inquiry concerning Infotech Network Group has become a
formal investigation. Quovadx also said its audit committee has
retained a law firm to conduct a special review of its
relationship with Infotech and related disclosures.
For more details, contact Sherrie R. Savett, Esq., Douglas M.
Risen, Esq., Diane R. Werwinski, Investor Relations Manager by
Mail: Berger & Montague, P.C., 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
QUOVADX INC.: Bernstein Liebhard Lodges Securities Lawsuit in CO
----------------------------------------------------------------
Bernstein Liebhard & Lifshitz, LLP initiated a securities class
action on behalf of all persons who acquired securities of
Quovadx Inc. (NASDAQ: QVDX) between October 22, 2003 and March
15, 2004, inclusive. The case is pending in the United States
District Court for the District of Colorado, against Defendants
Quovadx, Lorine R. Sweeney, and Gary T. Scherping.
The Complaint charges that Quovadx and certain officers and
directors violated Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by
issuing a series of material misrepresentations to the market
during the Class Period, thereby artificially inflating the
price of Quovadx's securities. Specifically, the Complaint
alleges that Defendants issued numerous false and misleading
statements concerning the Company's financial results. These
statements failed to disclose that the Company materially
overstated its net income and earnings per share, that
Defendants prematurely recognized revenue from contracts, and
that the Company lacked adequate internal controls to determine
its true financial condition.
The truth was revealed on March 15, 2004, when Quovadx announced
that it would:
(1) delay the filing of its annual report on form 10-K for
the year ended December 31, 2003;
(2) restate its third quarter 2003 financial results; and
(3) revise its previously announced fourth quarter and full
year financial results. As a result of this disclosure,
shares of Quovadx fell $1.45 per share, losing
approximately 28.8% of their value.
For more details contact, Bernstein Liebhard & Lifshitz, LLP by
Phone: (800) 217-1522 by E-Mail: QVDX@bernlieb.com or visit
their Web Site: http://www.bernlieb.com
UNIVERSAL HEALTH: Berger & Montague Announces PA Suit Deadline
--------------------------------------------------------------
Berger & Montague, P.C. initiated a securities class action
complaint in the United States District Court for the Eastern
District of Pennsylvania against Universal Health Services, Inc.
(NYSE: UHS) and certain of its senior officers, on behalf of
purchasers of Universal Health's securities between July 21,
2003 and February 27, 2004 inclusive.
The Complaint charges defendants Universal Health, Alan B.
Miller, and Steve G. Filton 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
materially misled the investing public, thereby inflating the
price of UHS stock, by publicly issuing false and misleading
statements and omitting to disclose material facts regarding the
Company, its financial performance, earnings momentum, and
future business prospects, including:
(1) Universal Health was unable to compete effectively in
key markets;
(2) Universal Health's hospitals were losing better-paying
patients to their competitors, and the proportion of
uninsured patients who constitute a greater credit risk
was increasing;
(3) certain Universal Health hospitals were unable to
effectively manage their caseloads, and, as a
consequence, had experienced an increase in the number
of patients who remained hospitalized at the Company's
facilities beyond the period reimbursable by Medicaid
and Medicare causing the hospitals to lose full
payments for the services provided;
(4) defendants failed to properly write-off uncollectible
receivables, and materially overstated Universal
Health's financial results by maintaining known
uncollectible accounts as assets during the Class
Period;
(5) the Company's allowance for doubtful accounts was
insufficient, and, as a result, the Company's reported
operating income was artificially inflated; and
(6) the Company's reported operating income was not a true
measure of the Company's operating performance because
defendants failed to properly deduct from operating
income the appropriate allowance for doubtful accounts.
On March 1, 2004, before the markets opened, defendants shocked
investors by withdrawing their guidance for 2004 and by
announcing that earnings per diluted share for the three-month
period ending March 31, 2004 could be as much as 25% lower than
the $0.84 per diluted share recorded in the same period in the
prior year. Defendants attributed the decline in substantial
part to the factors listed above. With regard to bad debt, the
Company, which had already increased its provision for doubtful
accounts in the fourth quarter of 2003 to $74.3 million, or 7.8%
of revenues, as compared to $58 million, or 6.9% of revenues,
during the prior year's fourth quarter, said that bad debt in
2004 was likely to exceed the Company's previously-reported
expectation of 9.5% of revenues. On this news, the price of
Universal Health's shares fell $9.05, or 17%, to $44.88.
For more details, contact Sherrie R. Savett, Esq., Carole A.
Broderick, Esq., Barbara A. Podell, Esq., Diane R. Werwinski,
Investor Relations Manager by Mail: Berger & Montague, P.C.,
1622 Locust St., 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
*********
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Wednesday's edition of the Class Action Reporter. Submissions
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asbestos defendants that, according to independent researches,
collectively face billions of dollars in asbestos-related
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*********
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Copyright 2004. All rights reserved. ISSN 1525-2272.
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