/raid1/www/Hosts/bankrupt/CAR_Public/050718.mbx
C L A S S A C T I O N R E P O R T E R
Monday, July 18, 2005, Vol. 7, No. 140
Headlines
ASPECT COMMUNICATIONS: Shareholder Sues to Stop Concerto Deal
AXCIOM CORPORATION: Investors Sue, Want Takeover Bid Considered
BROOKHAVEN NATIONAL: Judge Dismisses Resident's Pollution Suit
CALIFORNIA MEDICAL: Forges Settlement For FL HMO RICO Litigation
CANADA: Court Refuses to Include Province in Waiting Lists Suit
CATHOLIC MEMORIALS: PA AG Lodges Civil Suit For Consumer Fraud
COST PLUS: Consumer Fraud Suit Filed Over Unassembled Furniture
CRA INTERNATIONAL: Team Instrumental in Thane Securities Trial
CVS CORPORATION: Suit Settlement Hearing Set September 7, 2005
EAGLE SPRING: WI AG Files Suits For Environmental Law Violations
GUIDANT CORPORATION: FL Law Firm Lodges Suit Over Recalled ICDs
HYUNDAI MOTOR: Recalls Tucson SUVs Due To Parking Brake Defect
HYUNDAI MOTOR: Recalls Sonata Cars For Brake Defect, Crash Risk
ILLINOIS: Activist Vows to Appeal Dismissed Slavery Lawsuits
KB HOME: Inks $2M Pact For FTC Complaint V. Arbitration Clause
LOUISIANA: Judge Delays Start of Trial For Gold Antitrust Suit
MEDTRONIC INC.: Schiffrin & Barroway Investigates ICD Claims
MICHIGAN: Parents To Sue Over Sport Participation Restrictions
MIRAPEX LITIGATION: Mayo Study Links Drug To Compulsive Behavior
NESTLE SA: Mali Child Workers Launch Slave Labor Lawsuit in CA
OHIO: AG Petro Seeks More Time To Consider Marsh Antitrust Pact
OPTION ONE: Madison County Lawsuit Removed to IL Federal Court
PENNSYLVANIA: Judge Dismisses Suit to Halt Township's Sewer Plan
PENNSYLVANIA: PA AG Charges Chiropractor, 18 Persons For Fraud
RHODE ISLAND: Groups Push For Passing of Consumer Protection Law
SAMSUNG ELECTRONICS: Transfer Motion For Brooks Case Granted
SEITEL INC.: Securities Settlement Hearing Set July 29, 2005
SONY CORPORATION: Recalls 16KT LCD Televisions For Shock Hazard
SOUTH AFRICA: Labor Commission Processes 130T Claims in Lawsuit
STAR TRIBUNE: Updated Complaint Filed Over Circulation Rates
SUPREMA SPECIALTIES: SEC Files NJ Fraud Suit V. Former CEO, CFO
SYCAMORE KIDS: Recalls 2.2T Jogging Strollers For Injury Hazard
TOYOBO COMPANY: NH AG Reveals Details of Zylon Vest Settlement
TOYOBO COMPANY: WI AG Bares Bullet-Proof Vest Settlement Details
UNITED STATES: SEC Starts Proceeding V. 20 Firms Over Filings
VILLAGE LIFE: Shareholders To File Lawsuit For Securities Fraud
WASHINGTON: AG Warns V. Sexually-Explicit, Violent Game Content
WISCONSIN: High Court Refuses To Allow Church Sex Abuse Lawsuit
WORLDCOM INC.: NY Judge Hands Founder 25-Year Prison Sentence
WORLDCOM INC.: SEC Files NY Fraud Suit V. Ex-CEO Bernard Ebbers
New Securities Fraud Cases
CARRIER ACCESS: Marc S. Henzel Files Securities Fraud Suit in CO
CYBERONICS INC.: Marc S. Henzel Files Securities Suit in S.D. TX
GUIDANT CORPORATION: Goldman Scarlato Lodges IN Securities Suit
STARTEK INC.: Marc S. Henzel Lodges Securities Fraud Suit in CO
TREX COMPANY: Marc S. Henzel Lodges Securities Fraud Suit in VA
*********
ASPECT COMMUNICATIONS: Shareholder Sues to Stop Concerto Deal
-------------------------------------------------------------
A shareholder of Aspect Communications Corporation commenced a lawsuit to
stop the San Jose, California-based Company's impending $1 billion cash sale
to Westwood, Massachusetts-based Concerto Software Inc., The Boston Business
Journal reports. If the deal pushes through, experts say that the combined
company would be the world's largest supplier of software for use in call
centers.
Kevin Kane, who earlier purchased 2,000 shares of Aspect stock (NASDAQ:
ASPT), filed his suit against Aspect in Santa Clara County Superior Court in
California, and is seeking class action status. Defendants named in his suit
are Aspect, its directors, and one former director. The suit alleges
Aspect's directors breached their fiduciary duties, engaged in an unfair
process for the sale of the company to Concerto, and failed to take steps to
maximize Aspect's value.
Court documents revealed that the companies reached the acquisition price of
$11.60 per share by tacking a 15 percent premium onto the average price of
Aspect's shares over the preceding 30 trading days. Documents also revealed
that the companies plan to delist Aspect's ticker following the deal's
close. The issue closed Wednesday at $11.45 per share.
Aspect Chief Executive Gary Barnett and Concerto CEO James Foy previously
said that Aspect's stock was likely inflated recently by merger speculation
among investors. Mr. Kane though countered that because Aspect is trading
well below its 52-week high of $14.12, shareholders had reason to expect a
better return. Additionally, Mr. Kane also claimed in his suit that Vista
Equity Fund II L.P., a San Francisco fund that controls two of seven seats
on Aspect's board, drove the deal. According to the suit, Vista purchased
$50 million in preferred stock in 2003 a stake, which Mr. Kane said has
since ballooned $257 million in value.
AXCIOM CORPORATION: Investor Sue, Wants Takeover Bid Considered
---------------------------------------------------------------
All nine members of Acxiom Corporation's (Nasdaq: ACXM) board of directors
face a class action lawsuit filed by the Indiana State District Council of
Laborers and HOD Carriers Pension Fund, which holds stock in the Little Rock
information management services company, The Arkansas Business Online
reports.
The lawsuit alleges that Acxiom's board failed to act in shareholders' best
interest by not considering a potential takeover bid in June by San
Francisco investment firm ValueAct Capital Partners LP, Acxiom's largest
shareholder. On June 6, ValueAct said it wanted to make an offer to buy all
outstanding shares of Acxiom that it did not own for $23 per share.
Subsequently, the company made its offer official.
Additionally, the suit alleges conflicts of interest with all of Acxiom's
board members, including Company Leader Charles Morgan and Rodger Kline,
William Dillard, Harry Gambill, Mary Good, Ann Die Hasselmo, William
Henderson, Thomas "Mack" McLarty and Stephen Patterson. It also claims board
members do not serve the board independently of Mr. Morgan, who the lawsuit
claims "dominates and controls the rest of the Acxiom Board through a web of
financial and professional affiliations." According to the suit, "Through
his domination and control of the other members of the Acxiom Board, Mr.
Morgan has been permitted to run the Company like his own private fiefdom to
the detriment of its shareholders."
Scott Poynter of Emerson Poynter LLP in Little Rock is representing the
plaintiffs in the suit, which calls for Acxiom board members to consider
ValueAct's offer or any other offers.
Acxiom spokesman Dale Ingram told Arkansas Business Online, the board would
respond to the lawsuit on or before August 10, the deadline for responding
to the lawsuit, which was filed in Pulaski County Circuit Court on June 23.
Although the lawsuit was filed weeks earlier, ValueAct didn't make its offer
to acquire Acxiom official until recently. It also announced it had received
a high confidence letter from UBS Securities LLC of New York for debt
financing of at least $1.6 billion.
BROOKHAVEN NATIONAL: Judge Dismisses Resident's Pollution Suit
--------------------------------------------------------------
State Supreme Court Justice Mary M. Werner dismissed a lawsuit launched by a
group of North Shirley residents eight years ago against the Brookhaven
National Laboratory (BNL), which claimed that the air, water, and soil
pollution from the lab caused elevated cancer rates and stigmatized their
neighborhood, The Newsday.com reports.
In a ruling last May, the judge said that a plume of groundwater
contamination from BNL was too deep to affect residents' drinking water
wells and that radioactive contamination levels were within the limits
allowed under federal law. The judge also denied the plaintiffs' request
that the case be considered as a class action.
Angelo Drago, who is an unnamed plaintiff in the suit, was dismayed to
receive a letter from his attorney informing him of the decision. Mr. Drago,
58, of North Shirley told Newsday that the judge "had no right dismissing
this lawsuit." He adds, "They've destroyed this neighborhood."
Richard Lippes, one of the attorneys who brought the suit, told Newsday that
they have filed an appeal and a motion to re-argue the case. He pointed out
that among the problems with Judge Werner's decision, is she did not rule on
claims of chemical water contamination, instead focusing on the radioactive
pollution covered by a federal law.
On the other hand, Mike Goldman, an attorney for BNL, told Newsday that
Judge Werner's decision was right though the lab does not see it as cause to
celebrate. He also told Newsday, "We do feel sympathy for people who have
suffered losses or damages that they feel were attributable to the
laboratory. But the bottom line is that we don't feel we were responsible
for those losses or damages, and the court concurred with us."
Mr. Drago, who has seen some neighbors get cancer and many others move out
of a community he now calls "a ghost town," told Newsday that the whole
ordeal leaves him wondering what, if anything, happened. He further said, "I
feel like, wow, did something occur that was drastic enough for all the
lawyers to come down here? Or did nothing happen and they just upset this
whole place? Even if somebody was not injured, we lost something here that
we had. We lost peace of mind."
CALIFORNIA MEDICAL: Forges Settlement For FL HMO RICO Litigation
----------------------------------------------------------------
The California Medical Association and more than a dozen other state medical
associations representing more than 800,000 physicians reached a settlement
with Wellpoint Inc., the largest remaining health plan defendant in a class
action lawsuit in U.S. District Court in Miami, Florida, the Sacramento
Business Journal reports.
The plaintiffs assert that the Company and other defendants improperly paid
providers' claims and "downcoded" their claims by paying lesser amounts than
they submitted. The complaint alleges, among other things, multiple
violations under the Racketeer Influenced and Corrupt Organizations Act, or
RICO, as well as various breaches of contract and violations of regulations
governing the timeliness of claim payments. The complaint was subsequently
amended to add as plaintiffs several medical societies, including the Texas
Medical Association, the Medical Association of Georgia, the California
Medical Association, the Florida Medical Association, and the Louisiana
State Medical Society, each of which purports to bring its action against
specified defendants, an earlier Class Action Reporter story (June 1,2005)
states.
Under the settlement, physicians that are members of the class are due to
receive $135 million in direct payments to physicians resolving allegations
of unfair reimbursement for more than a decade by the Company, which merged
last year with Anthem Inc., making it the largest for-profit health insurer
in California. U.S. District Judge Federico Moreno must approve the
settlement.
The agreement also mandates dramatic changes in Wellpoint's business
practices, which the Sacramento-based CMA estimates will result in
prospective relief worth more than $250 million to physicians and their
patients. Among other points in the settlement, Wellpoint/Anthem has agreed
to a patient- friendly definition of medical necessity and to cease using
software programs that systematically lowball or deny payment for legitimate
patient claims, the Business Journal reports. Under the settlement,
Wellpoint agreed to provisions that will pay physicians fairly, provide
patients with prompt care and end coercive business practices. The changes
are expected to increase predictability and speed of payments on claims,
reducing time-consuming and costly administrative burdens for physicians and
giving them more time to focus on their central mission-providing health
care to patients.
CMA leadership and physicians lauded the settlement, noting that it ends
what the CMA called "bait-and-switch tactics" of Wellpoint, which provides
insurance to more than 6 million patients in California. Anthem purchased
Wellpoint and assumed its name in 2004.
"CMA began the battle against the then-Wellpoint, California's largest
for-profit health plan, five years ago, when it became obvious insurers
promised patients one thing in order to sell a policy and then were doing
the opposite when it came time to deliver health care," said CMA president
Michael Sexton, M.D. in a written statement, the Business Journal reports.
"This is a tremendous victory for physicians and patients."
CMA leadership called on the remaining defendants--United, Pacificare,
Coventry and Humana--to resolve the longstanding case and stop wasting
health-care dollars in court. Previous settlements that benefited patients
and physicians were reached with Aetna, Cigna, Prudential and Health Net.
The suit is styled "In Re Humana Inc. Managed Care Litigation, MDL 1334,"
filed in the United States District Court for the Southern District of
Florida, Miami Division, under Judge Federico Moreno. The suit names as
defendants Humana, Inc., Aetna, Inc., Aetna-USHC, Inc., Cigna, Health Net,
Inc., Human Health Plan, Inc., Pacificare Health Systems, Inc., Prudential
Insurance Company of America, United Health Group, United Health Care and
Wellpoint Health Networks, Inc. Cigna and Aetna have entered settlements
with the plaintiffs. Lead Plaintiffs' Attorneys are Barry Meadow of
Podhurst, Orseck, et al., Harley Tropin of Kozyak, Tropin & Throckmorton and
Archie Lamb.
CANADA: Court Refuses to Include Province in Waiting Lists Suit
---------------------------------------------------------------
In a decision released without comment, the Supreme Court of Canada quashed
a request to name the province as a co-defendant in a class action lawsuit
by women who say they waited too long for treatment of their breast cancer,
The Canadian Press reports. The ruling means that the women can go ahead
with a plan to sue 12 hospitals across the province, but can't target the
government as the ultimate overseer of medicare.
Michel Savanitto, the lawyer for the claimants told the Canadian Press, "I'm
disappointed and quite surprised. But we'll have to deal with it and go
forward."
Anahit Cilinger, a Montrealer of Turkish origin, who underwent surgery to
have a cancerous tumour removed from her breast in 1999, launched the suit.
Ms. Cilinger claims in her suit that she found herself on a lengthy waiting
list for follow-up radiological therapy and, after a delay of three months,
finally traveled to Turkey and paid for treatment there out of her own
pocket. Upon her return, she took legal action claiming psychological and
physical damages. She says the consensus of medical opinion is that the
waiting time for her therapy should have been no more than eight weeks.
About 700 people have expressed interest in joining the suit, but Mr.
Savanitto told The Canadian Press that the eventual judgment could affect up
to 10,000 Quebec women. Though no dollar figure has been officially
attached to the suit, there are estimates that damages could run up to $50
million if the women win their case.
Mr. Savanitto acknowledged that the absence of the Quebec government from
the list of defendants may reduce the pot of money up for grabs. However, he
insisted that financial gain wasn't the main reason for trying to include
the province among the legal targets. The primary purpose was to hold the
government accountable for the way it manages the health system, Mr.
Savanitto said.
The next step for the former cancer patients will be to file a detailed
statement of claim in Quebec Superior Court against the 12 hospitals. Given
current backlogs, the case probably won't be heard until next year. Mr.
Savanitto predicted, however, that if the suit is successful the government
will eventually face a difficult choice. He pointed out that the government
could either pour more money into the public health system to shorten
waiting lists, or it could allow private cancer treatment as an alternative
to the public system. He reiterates, "We don't ask for that (in the
lawsuit), we only ask for damages. But the government will have to make a
decision in the end."
CATHOLIC MEMORIALS: PA AG Lodges Civil Suit For Consumer Fraud
--------------------------------------------------------------
Pennsylvania Attorney General Tom Corbett filed a civil lawsuit against a
Philadelphia monument business and its owner after consumers complained that
the monuments, cemetery markers and gravestones that they ordered are months
behind the promised delivery and installation dates. The defendant is also
accused of illegally contacting consumers who are officially registered on
the state's "Do Not Call" list.
The legal action, filed in Philadelphia Court of Common Pleas, seeks full
consumer restitution, civil penalties and a request that the defendants be
ordered to forfeit their right to do business in the state.
Mr. Corbett identified the defendant as William Jankiewicz, 505 Ridge Run
Lane, Philadelphia, the owner of Catholic Memorials, LLC., operating at 6632
Frankford Ave., Philadelphia. The company is currently doing business under
the name Christian Memorials. The defendant is accused of violating
Pennsylvania's Consumer Protection Law, Telemarketer Registration Act,
Business Corporation Law and Fictitious Names Act.
According to investigators with Corbett's Bureau of Consumer Protection,
Jankiewicz used the obituary listings in various newspapers to identify and
then call the family members of deceased individuals to sell them his
products. Complaints were received from consumers located in Philadelphia,
Bucks, Chester, Delaware and Montgomery counties. In some cases, the
consumers contacted were officially registered on the state's "Do Not Call"
list. The defendant is accused of failing to purchase Pennsylvania's "no
call" registry prior to engaging in telemarketing activities.
"We have instances where the defendant contacted grieving family members at
their homes, literally 24 hours after they lost a loved one," Mr. Corbett
said during a news conference in Philadelphia. "These surviving relatives
were no doubt overcome with grief and extremely vulnerable when it came to
the defendant's sales pitch."
According to the lawsuit, after contacting consumers the defendant typically
went to their homes to select and arrange for the purchase, delivery and
installation of the various monuments, cemetery markers or gravestones.
Consumers were required to sign a contract and pay a down payment or the
full amount up front. Mr. Jankiewicz through 2004 received deposits or full
payments that ranged from $350-$4,600. In his contracts with consumers, Mr.
Jankiewicz lists an "approximate" delivery date that is typically six to
eight months from the date the contract is signed. In some cases, consumers
were given non-specific delivery dates such as the "summer" or "when payment
is made in full." In complaints filed with Mr. Corbett's office, consumers
said Mr. Jankiewicz has failed to deliver the products on time or honor
their repeated requests for refunds. On some occasions, the defendant
provided consumers with refunds only after various consumer protection
agencies and Corbett's office intervened.
"Several consumers said that it's been many months past their promised
delivery dates and they still do not have the cemetery markers or
gravestones that they purchased from Jankiewicz," Mr. Corbett said. "They
claim that the defendant either failed to respond when they contacted him
about the delays or that he gave them a variety of excuses as to why the
products could not be delivered."
One Chester County consumer filed a complaint with Mr. Corbett's Office
after she paid Mr. Jankievicz a total of $3,350 for her mother's gravestone.
To date the gravestone has not been delivered. The consumer said Mr.
Jankievicz promised that the stone would be ready in December 2004, two
months after her mother passed away. By January 2005, an employee at
Catholic Memorials told the consumer that it takes six months to finish a
stone. After the six month deadline passed, the consumer said that no one
from the company would return her calls. Seven months after the original
deadline, Mr. Jankiewicz claimed that the cemetery was the cause of the
delay because it had not laid the foundation. The consumer contacted the
cemetery and was told that the site is ready for the stone at any time.
Mr. Jankiewicz is also accused of falsely claiming to at least one consumer,
that he was a certified dealer of Catholic stones through the Archdiocese of
Philadelphia. The lawsuit states that the defendant has never been
affiliated, associated or connected to the Archdiocese of Philadelphia. The
business has recently been using the name Christian Memorials.
In separate counts of the complaint, Mr. Jankiewicz is accused of failing to
provide consumers with the required three day right to cancel a contract and
proper "Notice of Cancellation," despite prior warnings by the Attorney
General's Office. In addition, Mr. Jankiewicz is accused of failing to
register Christian Memorials with the PA Department of State.
Mr. Corbett said the complaint asks the court to require Mr. Jankiewicz to:
(1) Pay full restitution to consumers who filed complaints
with the Bureau of Consumer Protection and to others
who come forward with proof that they were similarly
harmed.
(2) Pay civil penalties of $1,000 per violation and $3,000
for each violation involving a consumer age 60 or
older.
(3) Permanently forfeit his right to conduct business in
the Commonwealth.
(4) Pay the Commonwealth's investigation and litigation
costs.
The case is being litigated by Senior Deputy Attorney General Thomas J.
Blessington of Corbett's Bureau of Consumer Protection Office in
Philadelphia. For more details, contact the Pennsylvania Office of Attorney
General by Mail: Strawberry Square, Harrisburg, PA 17120 by Phone:
717-787-3391 or visit the Website: http://www.attorneygeneral.gov/
COST PLUS: Consumer Fraud Suit Filed Over Unassembled Furniture
---------------------------------------------------------------
A lawsuit which seeks class action status on behalf of California consumers
was filed against Cost Plus World Market for selling unassembled furniture
while failing to disclose in its advertising that the furniture is
unassembled (Los Angeles County Superior Court, #BC-333-614). Failure to
disclose this fact is a violation of California's Consumer Legal Remedies
Act (the "CLRA").
Consumers have used the CLRA for over 30 years to prevent false and
misleading advertising. Peter L.Weinberger & Associates, the firm that filed
the lawsuit, seeks a court order forcing Cost Plus to comply with the law
and seeks compensation for Cost Plus' customers who purchased unassembled
furniture. The lawsuit alleges that Cost Plus knows that it is required to
disclose in its advertising that its furniture is unassembled, but
intentionally ignores the law to boost sales. The suit seeks punitive
damages, additional damages for senior citizens and disabled persons who
were misled by Cost Plus' advertisements, and requests that Cost Plus make
charitable contributions to make amends for allegedly misleading its
customers.
The length of time in which Cost Plus has been deceiving the public is yet
to be determined. "We do not yet know if Cost Plus has been falsely
advertising its products for the more than thirty years that the Consumer
Legal Remedies Act has been in place," admits Doug Mastroianni, an attorney
at Peter Weinberger's office. "We do know that Cost Plus has more than 60
retail locations in California so we think its advertising has probably
reached nearly every community in the state."
For more details, contact Doug Mastroianni of Peter L. Weinberger &
Associates, Phone: 310-231-6452, Fax: 310-231-6453.
CRA INTERNATIONAL: Team Instrumental in Thane Securities Trial
--------------------------------------------------------------
CRA International, Inc. (Nasdaq: CRAI) revealed that Senior Consultant
Bradford Cornell and members of CRA's Finance practice, led by CRA Principal
John Haut, were instrumental in helping obtain a favorable verdict for Thane
International, Inc., in a rare securities class action trial. Orrick
Herrington & Sutcliffe LLP retained Prof. Cornell and CRA on behalf of
defendant Thane, which was accused of making material misstatements in its
prospectus related to its May 24, 2002 merger with Reliant Interactive Media
Corporation.
According to the shareholder plaintiff class, Thane's stock price decline
following the merger was the market's reaction to the stock being traded on
the Over the Counter Bulletin Board instead of the NASDAQ National Market
System, as allegedly was promised in the prospectus. Plaintiffs sought to
recover Thane's entire stock price decline from its imputed merger price of
$6.89 per share on May 24, 2002, to its last trading price of $0.35 per
share before the company was taken private on February 20, 2004.
Central to Prof. Cornell's analysis was a study comparing Thane's stock
price movements against those of a peer group and the NASDAQ Composite Index
over a four-month period following the first day Thane's stock traded on the
Bulletin Board following the merger. Prof. Cornell testified that, because
Thane's stock traded above its imputed merger price for 19 trading days
after the merger, investors were aware of the market on which the stock
traded and had ample time to factor this information into Thane's stock
price. United States District Court Judge James Selna used Prof. Cornell's
testimony as a basis for concluding that the market did not regard Thane's
stock trading on the Bulletin Board instead of the National Market System as
material and for finding that no material misstatements were made in Thane's
prospectus. According to Thane's lead trial counsel, Daniel Tyukody and
Michael Tu, only six known securities class actions prior to Thane have
reached the trial stage since the Private Securities Litigation Reform Act
was passed in 1995. The vast majority of these cases are resolved through
settlement.
James C. Burrows, CRA's President and CEO, said, "Securities actions are a
growing component of the larger financial litigation market, and CRA's
involvement in this rare case demonstrates the broad applicability of our
in-depth and objective financial and economic analysis. We are pleased to
have contributed to a successful judgment for our client."
CVS CORPORATION: Suit Settlement Hearing Set September 7, 2005
--------------------------------------------------------------
The United States District Court for the District of Massachusetts will hold
a fairness hearing in the proposed $110 million settlement in the matter: In
re CVS Corporation Securities Litigation, C.A. No. 01-11464 JLT, on behalf
of all persons or entities who purchased the common stock of CVS Corporation
between February 6, 2001 and October 30, 2001.
The hearing will be held before the Honorable Joseph L. Tauro in the John
Joseph Moakley United States Courthouse, 1 Courthouse Way, Boston, MA 02210,
at 11:30 a.m., on September 7, 2005.
For more details, contact Deborah Clark-Weintraub, Esq. of Milberg Weiss
Bershad & Schulman, LLP, One Pennsylvania Plaza, New York, NY, 10119-0165,
Phone: (212) 594-5300 OR Michael K. Yarnoff, Esq. of Schiffrin & Barroway,
LLP, 280 King of Prussia Road, Radnor, PA, 19087, Phone: (610) 667-7706 OR
In re CVS Corporation Securities Litigation, c/o The Garden City Group,
Inc., Claims Administrator, P.O. Box 9000 #6172, Merrick, NY, 11566-9000,
Phone: (866) 808-3529, Web site: http://http://www.gardencitygroup.com.
EAGLE SPRING: WI AG Files Suits For Environmental Law Violations
----------------------------------------------------------------
Wisconsin Attorney General Peg Lautenschlager's office filed four civil
complaints against Eagle Spring Environmental, Ltd., a Waukesha County
excavating company, and its owner and operator, Lee L. Cresca, for allegedly
violating state environmental laws at four different sites in Racine,
Sheboygan, Washington and Waukesha Counties between 2000 and 2004.
"Wisconsin requires that excavators adhere to our environmental laws when
digging ponds for the protection and integrity of our natural environment
and our clean water, and to promote the health and safety of our citizens,"
Ms. Lautenschlager said. "We simply cannot allow the unnecessary
destruction of valuable wetlands so often associated with illegal pond
construction."
In the Waukesha County case, the defendants are alleged to have unlawfully
dredged parts of a natural pond on property owned by Richard and Nada
Moeller near Eagle, Wisconsin, in the spring of 2002 in an effort to expand
and deepen it, but the dredging allegedly damaged the pond's ecological
values. The defendants are also alleged to have unlawfully graded a large
area on the banks of that pond which in turn caused eroding soil to enter
the Scuppernong River, a trout stream. Ms. Lautenschlager noted that the
Moellers have fully cooperated with the investigation of the case and in
planning for the restoration of the pond, which has not yet occurred.
In the Racine County case, Mr. Cresca and his company are charged with
unlawfully excavating wetlands in late 2002 and early 2003 on property owned
by Mark Huckstorf in the Town of Norway to construct an eighteen-foot deep
pond where none had existed before. The complaint also alleges that other
wetlands were damaged when Mr. Cresca disposed of excavated soils in other
wetlands near the new artificial pond. The site has been fully restored,
Ms. Lautenschlager said, with the cooperation of the property owner.
In the Washington County case, Mr. Cresca and Eagle Spring are alleged to
have unlawfully dredged hundreds of cubic yards of material from the bed of
Wall Lake, offshore from properties owned by David and Joyce Gonring and
Clarence and Margie Schmidt, in the fall of 2003. Although complete
restoration of the lake bed was not feasible, Ms. Lautenschlager said the
neighbors have cooperated in the proper handling of all the dredged
materials.
Finally, in the Sheboygan County case, Mr. Cresca, Eagle Spring and Zoryan
Abramovich are alleged to have excavated wetlands on land owned or
controlled by Mr. Cresca and Mr. Abramovich in the Town of Scott in order to
expand an artificial pond on the site. The complaint alleges that this
dredging occurred intermittently over a period of years, beginning in 2000
and continuing until August 2004, despite express requests from the
Department of Natural Resources (DNR) to refrain from such activity. No
restoration has been conducted at this site, Ms. Lautenschlager says, but
the state will seek a court order requiring it if the parties do not reach
an agreement on that subject.
In addition to seeking the restoration of the Waukesha County and Sheboygan
County sites, the state will ask the courts to impose penalties for any
violations of state water and wetland protection laws.
The Department of Justice brought the case at the request of the DNR.
Assistant Attorney General Thomas Dosch is handling the matter for the
state. For More Information, contact Kelly Kennedy by Phone: 608/266-7876
or visit the Website: http://www.doj.state.wi.us/.
GUIDANT CORPORATION: FL Law Firm Lodges Suit Over Recalled ICDs
---------------------------------------------------------------
The law firm of Spohrer, Wilner, Maxwell & Matthews initiated a class action
suit against Guidant Corporation, the maker of various models of implantable
cardioverter defibrillators (ICDs). Several ICD models are now under recall
by the FDA.
In this suit, the Jacksonville, Florida based law firm represents victims
and families where death or injury has been the result of a malfunctioning
heart device manufactured by Guidant, a $3.8 billion medical equipment maker
now in a pending sale to Johnson and Johnson for $25.4 billion.
This type of heart device is prescribed to patients with abnormally fast and
life-threatening heart rhythms and who are at risk for sudden cardiac death.
Developed to restart the heart of such patients, ICDs deliver a strong shock
to that critical organ. FDA-provided information indicates that the models
under recall have a history of developing an electronic short, which can
cause circuit damage and diverts shock therapy energy away from the heart.
Currently there are an estimated 24,000 people in the U.S. who have this
type of device implanted under the skin in their left breast area who are
now facing the need to have their device replaced through an out-patient
surgical procedure. According to a May 24, 2005 New York Times article,
Guidant knew for three years that this design flaw existed in their Ventak
Prizm 2 Model 1861 without disclosing this information to doctors or
patients. "It is inexcusable for anyone to withhold life-saving information
for the protection of profits," said attorney Robert Spohrer. "The victims
in these cases are blameless; they and their doctors trusted the company."
Bobby Smith, a Jacksonville area native and lifelong resident died on May
17, 2005 when his Guidant Ventak Prizm 2 Model 1861 failed to deliver the
heart-starting therapy it was designed to provide. Mr. Smith, a U.S. Army
veteran was 76 when he died, leaving behind six children and grandchildren.
His oldest son, Robert Smith, misses his father and describes him as "a
great guy who would give you the shoes off his feet if you needed them."
"Dad acted as the 'neighborhood taxi' for people who needed rides. He liked
fishing a lot, but he liked helping people more," he said.
Robert Spohrer and his partner Norwood S. "Woody" Wilner represent other
victims who have a recalled heart device and either has undergone
replacement surgery or is facing a replacement procedure. "For a company to
go three years knowing that they had a dangerous product reminds me of the
arrogance of the tobacco companies," said Woody Wilner, whose landmark
tobacco case resulted in the loss of $14 billion to tobacco stocks in one
single day.
For more details, contact Doug Perkins, Phone: +1-904-838-7801, E-mail:
doug@legalpr.net.
HYUNDAI MOTOR: Recalls Tucson SUVs Due To Parking Brake Defect
--------------------------------------------------------------
Hyundai Motor Company is cooperating with the National Highway Traffic
Safety Administration (NHTSA) by voluntarily recalling 8,400 Hyundai Tucson
sport utility vehicles, model 2005.
On these sport utility vehicles, the parking brake lever ratchet pawl was
not properly manufactured and may damage the teeth of the parking brake
lever ratchet. Damaged parking brake lever ratchet teeth may prevent the
parking brake from engaging or may allow the parking brake to release after
it has been engaged. The inability to engage or the inadvertent release of
the parking brake lever may allow your vehicle to roll while it is parked
and may result in a crash.
Dealers will replace the vehicle's parking brake lever assembly. The recall
is expected to begin on July 2005. For more details, contact the Company by
Phone: 1-800-633-5151, contact the NHTSA's auto safety hotline:
1-888-327-4236 (TTY 1-800-424-9153) or visit the Website:
http://www.safercar.gov.
HYUNDAI MOTOR: Recalls Sonata Cars For Brake Defect, Crash Risk
---------------------------------------------------------------
Hyundai Motor Company is cooperating with the National Highway Traffic
Safety Administration (NHTSA) by voluntarily recalling 2,017 Hyundai Sonata
cars, model 2006.
These cars are equipped with 3.3 liter engines and electronic stability
control (ESC), the ESC may have been programmed to be oversensitive to the
onset of oversteering while driving on banked curves, causing inadvertent
application of the front outside brake when ESC activation may not be
needed. This may cause the vehicle to slow and may affect the path that the
vehicle is traveling. Brake application caused by inadvertent ESC
activation may result in a crash.
Dealers will reprogram the ESC hydraulic electronic control unit. The
recall is expected to begin on July 2005. For more details, contact the
Company by Phone: 1-800-633-5151, contact the NHTSA's auto safety hotline:
1-888-327-4236 (TTY 1-800-424-9153) or visit the Website:
http://www.safercar.gov.
ILLINOIS: Activist Vows to Appeal Dismissed Slavery Lawsuits
------------------------------------------------------------
"We will keep up the court battle for slavery restitution from corporations
complicit in slavery until justice is served", vows Deadria
Farmer-Paellmann, pioneer in the effort for restitution from tainted
corporations, and lead plaintiff in a slavery lawsuit that was recently
dismissed.
On July 6, 2005 nine slavery reparations class action lawsuits against
corporations being heard in the Northern District Federal Court of Illinois
were dismissed by Judge Charles R. Norgle -- In Re: African American Slave
Descendants, CV-02-7764 (CRN). The lawsuits, filed between March 2002 and
January 2003, targeted 18 corporations for causing injuries plaintiffs
suffer from as a result of the enslavement of their ancestors, and for
consumer fraud injuries they recently incurred as a result of defendants
making false statements about their roles in slavery. The Court stated, as
a key basis for the dismissals, that none of the plaintiffs had any links to
the defendants in the actions.
Deadria Farmer-Paellmann, the lead plaintiff in the cases and pioneer of the
corporate restitution effort said: "The Court misstates the truth. I have
direct links to every defendant in the class action I filed." The defendants
in her case are Aetna, FleetBoston (Bank of America), and the railroad
company CSX. Mrs. Farmer-Paellmann claims that Aetna wrote a life
insurance policy on her ancestor Abel who was enslaved in South Carolina.
She obtained evidence of the policy from the California Slavery Era
Insurance Registry published in 2002 based on a law introduced by California
Senator Tom Hayden. She also claims that she was a consumer of FleetBoston
and CSX and lost money as a result of being mislead about their roles in
slavery -- recent consumer fraud.
Prior to filing the complaint, the Court allowed Mrs. Farmer-Paellmann's
counselors to withdraw from representing her; the Court refused to allow her
to represent herself; and it refused to allow her to withdraw from the
litigation. She was forced to remain in the litigation without any control
over her case -- a violation of her Constitutional "due process" right.
Consequently, details about her links to defendants were excluded from a
complaint filed by counsel who do not represent her. These facts were
included in other court documents, but the Court chose not to recognize them
in its decision.
"I cannot let this injustice prevail," said Mrs. Farmer-Paellmann. She adds,
"This corporate restitution effort will only intensify because African
Americans want justice for slavery, and we are consumers of these
companies." A 2002 CNN/USA Today/Gallup poll indicated that 75% of African
Americans want restitution from corporations complicit in slavery (24
million of the 40 million African Americans).
Mrs. Farmer-Paellmann believes that she can still win this case. She is
interviewing lawyers to appeal the court decision. She is also pursuing a
fundraising effort to finance the appeal in Circuit Court and U.S. Supreme
Court if necessary. "I am asking everyone who believes in justice to make a
contribution to the litigation fund," she said.
Contributions can be made online or via mail. For information or where to
send contributions, please visit the Restitution Study Group's website:
http://www.rsgincorp.com.
KB HOME: Inks $2M Pact For FTC Complaint V. Arbitration Clause
--------------------------------------------------------------
KB Home reached a $2 million settlement for the Federal Trade Commission's
(FTC) charges, alleging the Company violated guidelines for resolving
disputes with customers over construction complaints, the Associated Press
reports.
KB Home has agreed to pay $2 million to settle Federal Trade Commission
charges that the homebuilder violated guidelines for resolving disputes with
customers over construction complaints.
The FTC complaint opposed the homebuilder's inclusion of binding arbitration
clauses in its home warranties, requiring customers to settle disputes
through arbitration, instead of filing a lawsuit. Binding arbitration
clauses are common in the homebuilding industry but the Company, as part of
1979 consent decree, agreed not to require its customers to use arbitration
as a means of handling contract disputes, the Associated Press reports.
The settlement is pending approval from the Department of Justice, KB Home
spokeswoman Kate Mulhearn confirmed Wednesday, AP reports. "The FTC's
position is that because the document on which the consent decree is based
did not specifically allow us to use binding arbitration, we could not use
it, and so we violated the consent decree," Ms. Mulhearn said.
The company ceased including the restriction in its warranty contracts in
2003, Ms. Mulhearn said. "Under the current policy, if it gets to
arbitration, now KB Home buyers are not bound by that decision, they can
pursue legal action if they choose," she told AP.
In 1991, KB Home faced a complaint from the Justice Department over alleged
violations of the consent decree. The matter, which KB Home settled for
$595,000, was not related to binding arbitration, Ms. Mulhearn told AP. A
lawsuit challenging the company's past use of binding arbitration is pending
in Texas state court. The plaintiff in the case has filed for class-action
status. A hearing on the suit is scheduled for next month.
LOUISIANA: Judge Delays Start of Trial For Gold Antitrust Suit
--------------------------------------------------------------
Accusing Barrick Gold of manipulating the price of gold until January 17,
2006, Federal Magistrate Daniel Knowles III of the Eastern District of
Louisiana delayed the start of the trial of Blanchard v. Barrick until early
next year to give the parties more time to negotiate a settlement in the
case, The Mineweb.com reports.
Earlier this year, Chief U.S. District Court Judge Helene Berrigan ordered
defendants Barrick and J.P. MorganChase and plaintiff bullion and coin
dealer Blanchard & Co. to settle the case to avoid a 10-day trail, which was
suppose to start this month.
Court documents revealed that New Orleans-based Blanchard originally filed
antitrust litigation in December 2002, claiming that Barrick and bullion
banks, specifically J.P. Morgan, violated U.S. antitrust law by allegedly
conspiring to manipulate the gold price and monopolize the gold market. The
class action lawsuit was filed on behalf of investors, who bought and/or
sold spot-deferred sales contracts from January 1998 to September 21, 2001.
Last month, Blanchard dropped its case against J.P. MorganChase, but
nevertheless, Blanchard still contends that Barrick made $2.2 billion on its
spot-deferred contracts. Additionally, Blanchard claims that Barrick used
the money to acquire Homestake Mining, build four new mines, pay almost $500
million in dividends, and construct a state-of-the-art refinery. In the
meantime, Judge Knowles has asked Barrick and Blanchard to try to reach a
settlement prior to a July 26th meeting.
MEDTRONIC INC.: Schiffrin & Barroway Investigates ICD Claims
------------------------------------------------------------
The law firm of Schiffrin & Barroway, LLP, which filed a national class
action lawsuit on behalf of all persons implanted with recalled Guidant
Corporation (NYSE: GDT) heart defibrillators otherwise known as implantable
cardioverter defibrillators (ICDs), is now investigating similar claims
against Medtronic, Inc., and Medtronic USA, Inc., (NYSE: MDT).
Schiffrin & Barroway, LLP is investigating Medtronic for their role in
manufacturing and distributing faulty implantable cardioverter
defibrillators ("ICDs"). On February 11, 2005 Medtronic, Inc., voluntarily
advised physicians about a potential battery shorting mechanism that may
occur in a subset of ICDs and cardiac resynchronization therapy
defibrillator (CRT-D) models. In a letter to physicians, Medtronic reported
that several batteries have experienced rapid depletion due to this shorting
action. If shorting occurs, battery depletion can take place within a few
hours to a few days, after which there is loss of device function.
The class action lawsuit filed by Schiffrin & Barroway, LLP against Guidant
seeks to
(1) inform the public that users and consumers of Guidant
ICDs are at an increased risk of harm and/or death,
(2) establish a medical monitoring fund so that every
consumer may be tested and treated for the adverse
effects of Guidant ICDs
(3) reimburse monies paid for the product, and
(4) provide compensation to all victims for personal
injuries and death. A potential class-action lawsuit
against Medtronic would seek similar remedies.
On June 16, 2005, Guidant announced that it was recalling 50,000 faulty
defibrillators due to potentially life threatening malfunctions in 6
different devices. At least two patients with Guidant defibrillators have
died, and Guidant has acknowledged its devices have failed at least 45
times. On June 24, 2005, Guidant advised that it was recalling an additional
5 devices. In sum, approximately 100,000 people may be affected by the
defective Guidant heart devices. The following devices are affected under
FDA recall classification:
(i) VENTAK PRIZM 2 DR, Model 1861, manufactured on or
before April 16, 2002
(ii) CONTAK RENEWAL, Model H135, manufactured on or before
August 26, 2004
(iii) CONTAK RENEWAL 2, Model H155, manufactured on or before
August 26, 2004
(iv) VENTAK PRIZM AVT
(v) VITALITY AVT
(vi) RENEWAL AVT
(vii) CONTAK RENEWAL 3
(viii) CONTAK RENEWAL 4
(ix) RENEWAL 3 AVT
(x) RENEWAL 4 AVT
(xi) RENEWAL RF
An automatic implantable defibrillator is a device used to control
tachyarrhythmia (irregular heartbeat and rapid rate). The implantable
defibrillator is similar to a pacemaker in that it is designed to correct
arrhythmias. But while a pacemaker is used primarily to correct slow heart
rates, an implantable defibrillator detects and corrects both fast and slow
heart rates. The device can deliver a strong electrical shock to the heart
in order to restore a normal heartbeat.
MICHIGAN: Parents To Sue Over Sport Participation Restrictions
--------------------------------------------------------------
Michigan parents intend to file a class action against 18 school districts
over restrictions the districts intend to impose on how many sports a
student-athlete can participate in at the same time, The Macomb Daily
reports.
Chippewa Valley Schools is the latest district to join 17 other Macomb Area
Conference school districts in imposing the restriction. "We've done our
homework," Superintendent Mark Deldin said at Monday night's meeting of the
Board of Education, the Macomb Daily reports. "As superintendent I am
recommending we stick by an earlier decision by our athletic director and
coaches. We have 18 of 35 schools in the MAC electing to implement MHSAA
(Michigan High School Athletic Association) rules one year earlier."
All schools in Michigan must adhere to the same MHSAA rules by the 2006-07
school year requiring athletes to end sideline cheering competitions under
the auspices of the Michigan Cheerleading Coaches Association in favor of
competitive cheering only during the winter sports season. Sideline cheering
will change to a school spirit club, the Macomb Daily reports.
"This is not a gender equality issue," Mr. Deldin told the Macomb Daily.
"Anyone who participates in an outside sport when playing a school sport
will be ineligible to compete for their school for one full year. The MHSAA
says this has gotten out of control -- that it's time to put an end to it."
John Johnson, a spokesman for the MHSAA, could not be reached for comment
late Monday; however a group of parents who attended the board meeting said
they plan to file a class action lawsuit against the school district.
Parent Helen Pugh told the Macomb Daily the district's implementing of a new
policy will prevent their daughters, who also compete for Elite Cheer in
Chesterfield Township, from cheerleading on the football sidelines for the
2005-06 school year. "This is not right," Ms. Pugh said. "John Johnson of
the MHSAA informed me sideline cheer for football is not governed by the
MHSAA. And that an athlete is allowed to choose to just participate in high
school sideline cheer if she chooses to."
According to Mr. Deldin, the Dakota High School varsity cheerleading team
last year did not cheer for the school in a playoff game against Utica
Eisenhower because of a commitment the girls had in competing with Elite
Cheer. "This was a state semifinal game and they weren't there," Mr. Deldin
told the Macomb Daily. "We can't have it both ways, and 18 of 35 schools
agree that implementing the new regulations early will benefit the kids by
making the transition to the mandatory change-over year that much easier."
MIRAPEX LITIGATION: Mayo Study Links Drug To Compulsive Behavior
----------------------------------------------------------------
A Mayo Clinic study published Monday this week linked popular Parkinson's
drug Mirapex to compulsive gambling, the Associated Press reports.
The study describes 11 Parkinson's patients who developed an unusual problem
while taking Mirapex or similar drugs between 2002 and 2004. Doctors have
since identified 14 additional Mayo patients with the problem, said lead
author Dr. M. Leann Dodd, a Mayo psychiatrist, according to AP. It's
certainly enough for us to be cautious as we are using it," Dr. Dodd told
AP. "We wouldn't want them to have some kind of financial ruin or
difficulties that could be prevented."
Dr. Leo Verhagen, a Parkinson's specialist at Chicago's Rush University
Medical Center who was not involved in the study, says he and some
colleagues all have a few patients who developed compulsive gambling while
taking Mirapex, a drug that relieves tremors and stiffness. The behavior
usually disappears when the drug dose is lowered, Dr. Verhagen told AP. He
praised the Mayo article for raising awareness for doctors and patients.
California attorney Daniel Kodam has filed a lawsuit against
Boehringer-Ingelheim Pharmaceuticals, Inc. last year on behalf of several
Mirapex patients, alleging that the drug caused them to develop compulsive
behaviors, including excessive gambling, sex and shopping. He seeks to
have the suit classified as a nationwide class action and claims to have
talked to 200 patients with similar symptoms.
One of these patients is retired government intelligence worker Joe Neglia.
Mr. Neglia was down with Parkinson's when he developed a gambling habit,
losing thousands of dollars playing slot machines near his California home
several times a day for nearly two years. He stumbled upon the report and
said "I thought, 'Oh my God, this must be it . Three days after stopping the
drug, Mirapex, "all desire to gamble just went away completely. I felt like
I had my brain back," AP reports.
Mr. Neglia, 54, now living in Millersville, Md., was not treated at Mayo or
involved in the study. He told AP the problem is underreported "because of
the embarrassment factor." He added that he has contacted the Food and Drug
Administration but that the agency has failed to act on numerous adverse
reaction reports about Mirapex. An FDA spokeswoman, however, told AP the
agency is examining the reports to determine if there's any connection to
the drug but declined to say how many it has received.
Katherine King O'Connor, a spokeswoman for the Ridgefield, Conn.-based
Boehringer-Ingelheim Pharmaceuticals, said there's no scientific evidence
that Mirapex causes the problem. Still, the company revised Mirapex's
package insert earlier this year to include compulsive behavior among
potential side effects after receiving "rare" reports _ all after the drug
was approved for U.S. use in 1997, Ms. O'Connor told AP.
Mirapex was among top-selling Parkinson's drugs last year, with more than
$200 million in U.S. sales, according to IMS Health, a pharmaceutical
information and consulting firm. Mirapex, or pramipexole, reduces tremors
and the slow, stiff movements that are a hallmark of Parkinson's disease. It
belongs to a class of drugs that mimic the effects of dopamine, a brain
chemical that controls movement and is deficient in Parkinson's disease, AP
reports.
NESTLE SA: Mali Child Workers Launch Slave Labor Lawsuit in CA
--------------------------------------------------------------
Nestle SA, Archer Daniels Midland Co. and Cargill, Inc. face a class action
filed in the United States District Court in Los Angeles, California,
alleging they benefited from child slave labor at cocoa bean plantations in
the Ivory Coast, the Associated Press reports.
San Francisco-based Global Exchange, a nonprofit international human rights
organization, and International Labor Rights Fund, a Washington D.C.-based
human rights group, filed the lawsuit on behalf of three citizens of the
West African nation of Mali, identified only as "John Doe" and who are
allegedly former child slaves. The suit alleges violations of U.S. federal
laws against slavery, trafficking, forced labor and torture, among others,
and seeks unspecified compensatory and punitive damages.
The suit alleges that the plaintiffs were each forced from their homes in
Mali in 1996 while still in their teens to toil without pay at cocoa bean
plantations in the neighboring nation of Ivory Coast. The plaintiffs, who
worked in separate plantations, claim they worked 12 hours a day or more,
were barely fed and were subject to beatings if they didn't work properly or
attempted to escape, the Associated Press reports.
The lawsuit claims the three corporations, who are among the largest food
producers in the world, benefited from the forced labor at the plantations
because they were able to import cocoa beans at a lower price. The
companies, the lawsuit contends, are directly liable for knowingly providing
"financial support, supplies, training" that could have been use to support
the cocoa bean cooperatives' alleged use of child slave labor, AP reports.
"It is unconscionable that Nestle, ADM and Cargill have ignored repeated and
well-documented warnings over the past several years that the farms they
were using to grow cocoa employed child slave laborers," ILRF attorney
Natacha Thys told AP. "They could have put a stop to it years ago, but
chose to look the other way. We had to go to court as a last resort."
A spokeswoman for Nestle SA subsidiary Nestle USA Inc. in Glendale said
Thursday the company had no immediate comment because it had yet to see the
complaint, AP reports. No one was available for comment after business
hours Thursday at the offices of Decatur, Illinois-based Archer Daniels
Midland Co. and Wayzata, Minnesota-based Cargill Inc.
OHIO: AG Petro Seeks More Time To Consider Marsh Antitrust Pact
---------------------------------------------------------------
Ohio Attorney General Jim Petro told New York-based insurance broker Marsh &
McLennan Companies, Inc. that policyholders in Ohio harmed by the company's
alleged anticompetitive activities deserve more time - until the end of the
year - to consider an out-of-court settlement offer recently worked out with
New York state officials.
The Ohio Attorney General's office is conducting a related antitrust
investigation that might help some affected public entities in Ohio make a
decision, but results have been hampered by Marsh's delays in releasing
critical information, Mr. Petro said.
New York's state attorney general and insurance officials, along with Marsh
& McLennan, recently gave certain insurance purchasers until September 20 to
accept specified settlement payments in exchange for agreements not to sue
over their past insurance purchases using Marsh brokerage. Sixty-three Ohio
cities, counties, universities, and other public entities were offered
settlement payments totaling just over $1.1 million. Petro said he's
concerned affected customers in Ohio don't yet have enough information to
evaluate whether the settlement offers are fair.
"Commitment to transparency and candor in Marsh's dealings with its
customers in Ohio requires Marsh and the Attorney General of New York to .
extend to December 31, 2005 the time for those customers to elect into, or
out of, this settlement," Mr. Petro wrote in a July 8 letter to Marsh
President and CEO Michael Cherkasky. "This extension will permit such
customers, including the numerous taxpayer-funded entities among them, to
make careful, individual inquiry into the adequacy of this proposal."
Marsh & McLennan, citing legal problems, has delayed providing documents and
witnesses to investigators in Petro's antitrust section examining whether
abuses in the insurance and insurance brokerage industries have restrained
competition and harmed Ohio customers of insurance and broker services,
Petro said. He said the affected Ohio public entities should be allowed to
make a decision on the settlement offer - including evaluating the legal
claims they would give up - based on more informed legal advice.
The settlement, reached January 30, 2005, resolved claims brought in State
of New York v. Marsh & McLennan Companies, Inc., et al., filed October 14,
2004 in the Supreme Court of New York, New York County. Mr. Petro provides
legal counsel to all state agencies and represents Ohio public entities in
antitrust cases.
For more details, contact Mark Anthony, Attorney General's Office, by Phone:
(614) 466-3840 or visit the Website:
http://www.ag.state.oh.us/press_releases/attachments/050712_cherkasky_spitzer_ltr.pdf.
OPTION ONE: Madison County Lawsuit Removed to IL Federal Court
--------------------------------------------------------------
Option One Mortgage, a defendant in a Madison County class action lawsuit
removed a case to federal court under the new Class Action Fairness Act that
was enacted in February, The Madison County Record reports.
Option One served a notice on July 7 that it removed a lawsuit of Madison
County residents Larry and Pamela Smith to U. S. District Court. The Smiths
are claiming that the firm improperly collected an extra day of interest on
a home loan. According to defense attorney Ann Hatch, of Herzog Crebs in
St. Louis, federal law applies, because the Smiths sued after February 18,
the date of its enactment.
The lawsuit was started last year, but with different plaintiffs namely:
Madison County residents Larry and Brandi Freitag, which accepted a cash
settlement in March. In May, the Smiths were substituted for the Freitags
and filed an amended complaint. Subsequently, Madison County Circuit Judge
Nicholas Byron granted the motion June 10.
In Option One Mortgage's notice of removal, Ms. Hatch, wrote that the new
complaint represents a new case that was filed June 10. Relying on Knudsen
vs. Liberty Mutual Insurance, a June 7 decision of the U. S. Court of
Appeals, Seventh Circuit, she further writes, "The Freitags' counsel's
effort to interject the Smiths into the Freitags' already defunct case,
rather than filing a new case, constituted an obvious attempt to circumvent
application of the newly enacted Class Action Fairness Act."
In the Knudsen vs. Liberty Mutual Insurance case, Knudsen sued Liberty
Mutual in 2000. This year, after February 18, he changed the definition of
the class he represented. Liberty Mutual served notice of removal to federal
court in the Northern District of Illinois, arguing that Knudsen had started
a new action. A federal judge rejected the argument and remanded the case to
circuit court. Liberty Mutual appealed, but the Seventh Circuit denied the
appeal, holding that a change in class definition did not start a new
action. Leaving a door open for defendants, the Seventh Circuit held that a
new claim for relief, the addition of a defendant, or another distinct step
could start new litigation, "even if it bears an old docket number for state
purposes."
PENNSYLVANIA: Judge Dismisses Suit to Halt Township's Sewer Plan
----------------------------------------------------------------
After lecturing an attorney on what he considered errors of procedure,
Lebanon County Judge Samuel Kline threw out a class action lawsuit filed by
a citizens group trying to stop a proposed sewer project in South Annville
Twp, The Patriot-News reports.
Concerned Citizens of South Annville sought an injunction for the township's
plan to borrow more than $5.5 million to pay for its sewer project.
According to the group's lawsuit that amount exceeds 250 percent of the
township's borrowing base, which is prohibited by state law.
However, Judge Kline spent little time on the group's allegations because of
the alleged mistakes made by the group's attorney, Jaromir Kovarik. The
judge said that Mr. Kovarik failed to properly serve court papers to the
township. What was more outrageous, according to the judge, was mistakenly
suing the wrong governmental entity and filing the lawsuit in the wrong
court. The judge pointed out that Mr. Kovarik named in the lawsuit the
township when he should have named the South Annville Twp. Sewer Authority,
a separate agency established for the sole purpose of building the sewer
system. Mr. Kovarik also should have filed his complaint in Commonwealth
Court, he adds.
During the hearing Judge Kline asked Mr. Kovarik, "Why didn't you talk with
the authority's solicitor? To give you an opportunity to grandstand in front
of your clients, which I frankly think is happening here. ... This falls far
below the standard as to not even name the right parties. ... Shame."
Aside from the thorough lecture, Judge Kline stated at the hearing that he
would award legal fees and expenses to the township if it has to answer
another mishandled complaint and petitions the court to be reimbursed.
Additionally, the group also argued for the injunction, saying that the
township denied access to information, but Judge Kline also dismissed that
argument for lack of evidence and failure to follow proper procedure.
Attorney Josele Cleary, who represents the township, told The Patriot-News
supervisors have yet to sign any loan agreement and must take steps under
public scrutiny before that happens. The project is planned to serve about
300 residents and 500 to 600 more homes that developers hope to build, he
added.
PENNSYLVANIA: PA AG Charges Chiropractor, 18 Persons For Fraud
--------------------------------------------------------------
Agents of Pennsylvania Attorney General Tom Corbett's Insurance Fraud
Section charged a Philadelphia chiropractor and 18 other suspects for
allegedly participating in a massive insurance fraud scam that netted more
than $1 million. This is the second phase of an insurance fraud
investigation which resulted in the arrest of 23 suspects in August 2004.
Mr. Corbett said agents have filed new charges against the alleged
mastermind of the scam, Dr. Richard Walinsky of 20 Saratoga Court, Holland,
Bucks County, who operated the All-Care Chiropractic office at 6047 Castor
Ave., in Philadelphia, from 1998 through 2003. Mr. Walinsky is currently
awaiting trial on the 2004 charges filed by the Office of Attorney General.
He said new charges were also filed today against Mr. Walinsky's mother,
Eileen Nelson Means, of 204 Quay Court, Palmyra, New Jersey, who allegedly
helped her son orchestrate a sophisticated scam to defraud insurance
companies out of injury and disability claims. Ms. Means is also awaiting
court action on earlier charges following her August 2004 arrest.
Mr. Corbett said, "Insurance fraud scams like this one takes money out of
the pockets of every Pennsylvania resident, boosting insurance premiums for
employers and employees alike."
Mr. Corbett said that in addition to Mr. Walinsky and Ms. Means, 17 other
individuals were arrested today as part of the second phase of the
investigation into this corrupt organization. The new defendants being
arrested today all allegedly served as "runners," bringing individuals or
"patients" to All-Care for treatment of fictitious injuries allegedly
sustained in staged automobile accidents or slip-and-fall accidents. Mr.
Corbett said that runners were paid a referral fee of up to $500 for each
patient they brought to All-Care for treatment. In one example, James
Statham, of Tackawanna St., Philadelphia, was allegedly paid $81,097 for his
work referring fictitious patients to Mr. Walinsky. "These runners profited
substantially from their role in this criminal enterprise," Mr. Corbett
said, "pocketing thousands, and in many cases tens-of-thousands of dollars,
to generate the bogus insurance claims that are the center of this scam."
Mr. Corbett said the investigation initially centered on allegations of Mr.
Walinsky's fraudulent billing practices, but quickly expanded when agents
discovered that Mr. Walinsky had enlisted dozens of accomplices to assist
him with his alleged fraud. His mother, Eileen Means, served as the
practice administrator at All-Care and assisted Mr. Walinsky in the
insurance fraud scam by preparing fraudulent patient progress and false
insurance claims.
As the investigation expanded, agents determined that there were four tiers
or levels to the insurance fraud scam. The top tier included Mr. Walinsky
and his mother, who allegedly orchestrated the insurance fraud scam
together. The next level involved therapists who submitted insurance bills
for services they never provided. The third level involved runners who were
paid referral fees up to $500 for bringing in individuals or "patients" for
treatment at All-Care for alleged injuries that they sustained in staged
accidents. The last level involved the individuals or patients who were paid
to come in for treatment as the result of the staged accidents.
Mr. Corbett said that during the initial investigation agents executed a
search warrant for Mr. Walinsky's billing and treatment records, seizing
copies of checks Mr. Walinsky received from insurance companies totaling
more than $1 million. Agents also seized approximately 5,000 patient files
along with thousands of sign-in sheets and other documents, including
hundreds of tax forms sent to runners who were referring patients to Mr.
Walinsky.
The charges filed come as the result of information developed by
investigators following the first phase of arrests, along with information
from insurance companies about additional fictitious claims filed by the
defendants. Mr. Corbett explained that the charges are being filed in
Montgomery County because of the attempt by Mr. Walinsky to defraud
Progressive Insurance Company, of Plymouth Meeting, along with other
insurance carriers located within Pennsylvania and in other states.
Mr. Corbett said the defendants are being arraigned before Lafayette Hill
Magisterial District Judge Deborah Lukens and will be prosecuted by Deputy
Attorney General Gregg Shore of his Insurance Fraud Section. The suit
names as defendants:
(1) Richard J. Walinsky, 34, 20 Saratoga Ct., Holland, PA,
is charged with four counts of insurance fraud, three
counts of corrupt organizations, two counts of theft by
deception and two counts of conspiracy.
(2) Eileen Nelson Means, 57, 204 Quay Ct., Palmyra, New
Jersey, is charged with four counts of insurance fraud,
three counts of corrupt organizations, two counts of
theft by deception and two counts of conspiracy.
(3) William F. Bowen Jr., 58, 3521 N. 23rd St.,
Philadelphia, is charged with two counts of corrupt
organizations, two counts of insurance fraud and one
count of criminal conspiracy.
(4) Claude Descardes, 23, 1254 Kerper St., Philadelphia, is
charged with two counts of corrupt organizations, two
counts of insurance fraud and one count of criminal
conspiracy.
(5) Tanya Gaddy-Thomas, 40, 639 Adams Ave., Philadelphia,
is charged with two counts of corrupt organizations,
two counts of insurance fraud and one count of criminal
conspiracy.
(6) Max Guerin, 51, 4300 Decatur St., Philadelphia, is
charged with two counts of corrupt organizations, two
counts of insurance fraud and one count of criminal
conspiracy.
(7) Anthony Mark Harris, 34, 9485 Woodbridge Road,
Philadelphia, is charged with two counts of corrupt
organizations, two counts of insurance fraud and one
count of criminal conspiracy.
(8) Philip Jenkins, 38, 3268 Creekway Dr., Decatur,
Georgia, is charged with two counts of corrupt
organizations, two counts of insurance fraud and one
count of criminal conspiracy.
(9) Samson Lors, 26, 7810 Algon Ave., Apt A-105,
Philadelphia, is charged with two counts of corrupt
organizations, two counts of insurance fraud and one
count of criminal conspiracy.
(10) Salat Saunders, 29, 5940 Belmar St., Philadelphia, is
charged with two counts of corrupt organizations, two
counts of insurance fraud and one count of criminal
conspiracy.
(11) Jafus Carde Simmons III, 33, of 4631 Tackawanna St.,
Philadelphia, is charged with two counts of corrupt
organizations, two counts of insurance fraud and one
count of criminal conspiracy.
(12) Tahib Smith, 28, 844 Foulkrod St., Philadelphia, is
charged with two counts of corrupt organizations, two
counts of insurance fraud and one count of criminal
conspiracy.
(13) James Statham, 26, 4633 Tackawanna St., Philadelphia,
is charged with two counts of corrupt organizations,
two counts of insurance fraud and one count of criminal
conspiracy.
(14) Eugene Thomas, 39, 639 Adams Ave., Philadelphia, is
charged with two counts of corrupt organizations, two
counts of insurance fraud and one count of criminal
conspiracy.
(15) Michael Thompson, 43, 1722 Orthodox St., Philadelphia,
is charged with two counts of corrupt organizations,
two counts of insurance fraud and one count of criminal
conspiracy.
(16) Harvey Walinsky, 61, 13109 Bustleton Ave., Apt. D-6,
Philadelphia, is charged with two counts of corrupt
organizations, two counts of insurance fraud and one
count of criminal conspiracy.
(17) Shirley Ward, 43, 3737 Richmond St., Philadelphia, is
charged with two counts of corrupt organizations, two
counts of insurance fraud and one count of criminal
conspiracy.
(18) Mark Waugh, 38, 4129 Maywood St., Philadelphia, is
charged with two counts of corrupt organizations, two
counts of insurance fraud and one count of criminal
conspiracy.
(19) Bethenia Wilkerson, 54, 1626 Pennington Rd.,
Philadelphia, is charged with two counts of corrupt
organizations, two counts of insurance fraud and one
count of criminal conspiracy.
(A person charged with a crime is presumed innocent until proven guilty.)
For more details, contact the Attorney General's Press Office by Phone:
717-787-5211 or visit the Website: http://www.attorneygeneral.gov/.
RHODE ISLAND: Groups Push For Passing of Consumer Protection Law
----------------------------------------------------------------
Some of the country's leading public interest groups are urging Rhode Island
Gov. Donald Carcieri to sign H. 5985, a landmark bill that stops
corporations from stripping consumers of the right to sue the companies in
class action lawsuits. The bipartisan measure, which passed both houses of
the state legislature by wide margins, would prevent corporations from
slipping class action waivers into the fine print of their standard form
contracts, where consumers are unlikely to see them or may have no choice
but to accept their prejudicial terms.
Corporations are increasingly inserting clauses in contracts for everything
from credit cards to car purchases that prohibit consumers from banding
together in a class action lawsuit when they are victims of fraudulent and
abusive business practices. Class actions level the playing field by
allowing consumers whose individual claims are too small to warrant the
expense of going to court to sue a corporation with far greater financial
resources. Without this mechanism, corporations can break the law with
virtual impunity, knowing that consumers will have no meaningful way to hold
them legally accountable.
Rep. Charlene Lima introduced the Model Fair Consumer Contracts Act, as the
bill is called, to solve this problem. It rebalances the scales of justice
that were steeply tipped in favor of big business by a 1968 Rhode Island law
shielding industries subject to state regulation from consumer lawsuits.
Repealing this provision would restore the ability of individuals to take
the corporations that harm them to court. It also would restore consumer
class actions as a powerful deterrent against corporate wrongdoing.
Consumer advocates have applauded passage of the legislation, holding it up
as a model for other state legislatures seeking ways to protect their
citizens from coercive consumer contracts. Unsurprisingly, a coalition of
large corporations is heavily lobbying Carcieri to kill the bill.
"When corporations cheat consumers or break consumer protection law, they
should not be able to avoid accountability by prohibiting consumers from
joining together to challenge them," said Joan Claybrook, president of
Public Citizen.
"This is a matter of basic fairness," said Ira Rheingold, executive director
of the National Association of Consumer Advocates. "Corporations want to put
themselves beyond the reach of the law by blocking the courthouse doors to
injured consumers. American citizens have certain fundamental rights that
they should not be forced to give up."
"This bipartisan consumer bill restores the right of the little guys, the
men and women and families of Rhode Island, to hold big corporations
accountable when they break the law," said Ed Mierzwinski, national consumer
program director of Rhode Island Public Interest Research Group (RIPIRG).
"So on behalf of our members and all Rhode Islanders we urge Governor
Carcieri to sign it into law."
"Big Business uses these stealth waivers to strip away the rights of victims
of consumer and civil rights violations," said Michael Foreman, deputy
director of legal programs for the Lawyers' Committee for Civil Rights Under
Law. "The bill is a step in the right direction to allow the everyday person
to level the playing field."
The groups that issued the statement are:
(1) ACORN,
(2) Alliance for Justice,
(3) American Association for People with Disabilities,
(4) Center for Auto Safety,
(5) Center for Responsible Lending,
(6) Consumer Action,
(7) Consumer Federation of America,
(8) Consumer Task Force for Automotive Issues,
(9) Consumers for Auto Reliability and Safety,
(10) Consumers Union,
(11) National Association of Consumer Advocates,
(12) Lawyers' Committee for Civil Rights Under Law,
(13) National Community Reinvestment Coalition,
(14) National Consumer Law Center,
(15) National Employment Lawyers Association,
(16) Public Citizen,
(17) Rhode Island Public Interest Research Group,
(18) USAction,
(19) Workplace Fairness
SAMSUNG ELECTRONICSS: Transfer Motion For Brooks Case Granted
-------------------------------------------------------------
Madison County Circuit Judge Andy Matoesian transferred a local man's class
action suit against a Samsung Electronics subsidiary to a court in suburban
Chicago, The Madison County Record reports.
By granting Samsung Telecommunications' transfer motion on July 8, the judge
bounced the case of plaintiff James Brooks to the Du Page County courthouse
in Wheaton.
Mr. Brooks, of Bethalto, sued Samsung Telecommunications last year,
complaining that the screen on his wireless phone went blank. In the suit,
Mr. Brooks stated that he received a replacement phone from a store, but the
same thing happened. His attorney, Evan Buxner of Brentwood, Missouri asked
Judge Matoesian to certify Mr. Brooks as representative of all buyers of the
phone.
Samsung Telecommunications attorney Troy Bozarth of Edwardsville moved in
November for transfer, arguing that Mr. Brooks did not buy the phone in
Madison County. He argued that the company had no office nor did any
business in Madison County. Additionally, Mr. Bozarth told, Judge Matoesian
that the company had offices in Du Page and Cook counties, and asked the
judge to send the case to Du Page County. To reinforce his arguments, he
presented to the judge an affidavit by company executive Roy Cole, which
stated that Mr. Brooks bought the phone in Lewisville, Texas. Judge
Matoesian set hearings on the transfer motion February 2 and March 1, but
each time the parties agreed to continue.
Throughout the case, Mr. Brooks beefed up his legal team, adding Clayton,
Missouri attorneys Jeffrey Lowe and John Carey. He also added attorney
Christopher Byron of Edwardsville. Their response to the transfer motion
argued that the case belonged in Madison County because Mr. Brooks used the
phone there. They also pointed out a blunder in the transfer motion. Mr.
Brooks had not bought the phone in Texas. He had bought it in Fairview
Heights in St. Clair County.
Samsung executive Mr. Cole filed an affidavit June 2, retracting his earlier
statement. Mr. Bozarth filed an amended motion for transfer the next day
arguing that Samsung Telecommunications does not manufacture phones. He also
pointed out that Brooks could not remember if his phone failed in Madison
County. He wrote in the motion, "It would be ludicrous to take the position
that the simple use of a product in a specific location could subject the
product's seller to venue in that location." He further wrote, "If that were
the case venue requirements would be meaningless for all products except
those few that are simply too heavy to be moved."
However, in response, Mr. Buxner challenged the company's assertion that it
had an office in Du Page County. He wrote that the person who the company
identified as its representative in the county worked at home. Finally, on
July 8, Judge Matoesian after hearing oral arguments granted the transfer
motion.
SEITEL INC.: Securities Settlement Hearing Set July 29, 2005
------------------------------------------------------------
The United States District Court for the Southern District of Texas, Houston
Division will hold a fairness hearing for the proposed settlement in the
matter: In re Seitel, Inc. Securities Litigation, Civil Action No. 02-1566,
on behalf of all persons who purchased or otherwise acquired the common
stock of Seitel, Inc. in the open market during the period from May 5, 2000,
through and including May 3, 2002.
The hearing will be held before the Honorable Vanessa D. Gilmore in the
United States Courthouse, 515 Rusk St., Houston, TX, 77002, at 9:00 a.m., on
July 29, 2005.
For more details, contact In re Seitel, Inc. Securities Litigation, c/o
Complete Claims Solution, Inc., P.O. Box 24601, West Palm Beach, FL, 33416
OR Carl L. Stine, Esq. of Wolf Popper LLP, 845 Third Ave., New York, NY,
10022, Phone: 212-759-4600, Web site: http://www.wolfpopper.com.
SONY CORPORATION: Recalls 16KT LCD Televisions For Shock Hazard
---------------------------------------------------------------
Sony Corporation is recalling about 16,000 liquid-crystal-display
televisions sold only in Japan that may cause electric shock, the Japanese
electronics and entertainment company said Wednesday, according to the
Associated Press.
The 28-inch screen model KDL-L28HX2, manufactured between November 2003 and
May 2005, was found to have design defects in parts used inside the display
that may cause electric shock or throw home circuit breakersl, Sony
spokeswoman Mina Naito told AP. One case of a problem has been reported,
but there have been no injuries, she said. The model was not exported.
The recall is expected to cost 300 million yen ($2.7 million) and not affect
Sony's forecasts for 80 billion yen ($722 million) profit for the fiscal
year ending March 31, 2006, down 51 percent from the previous year.
SOUTH AFRICA: Labor Commission Processes 130T Claims in Lawsuit
---------------------------------------------------------------
South Africa's Department of Labor compensation commission has processed
130,000 claims in the class action filed by the Legal Resources Center (LRC)
on behalf of disabled Eastern Cape residents, the Business Report states.
The suit was filed when social grants for the disabled were unilaterally
suspended in 1996, apparently the result of a poorly devised plan to root
out fraudulent claims, according to an earlier Class Action Reporter story
(November 20,2001) reports. A 2001 provincial welfare department
investigation discovered that a number of disabled people living in the
Eastern Cape suffered real hardship when their social grants were suspended.
In terms of the law, disabled people who earn more than R12000 a year do not
qualify for social pensions, and no Eastern Cape public servant earns less
than R1000 a month.
An out-of-court settlement was reached in May. Page Boikanyao, the
department of labour's spokesperson, told Business Report that the
commission had processed 130,000 cases amounting to millions of rands on
behalf of 250,000 claimants.
"We have set up task teams to speed up the processing of claims, some of
which date back 10 years. This also means drafting regulations that will
enable us to process claims that are not supported by employers' reports in
the cases of workplace injuries or diseases," Mr. Boikanyo told the Business
Report. The department had until February to process the remaining 120,000
cases, he said.
The fund, which has over R11 billion in reserves, processes claims resulting
from injuries and diseases sustained at work. Mr. Boikanyo said accidents
could be reported at the nearest office of the department. When a worker
suffers a work injury, the employer must complete a report of the accident
and submit it to the commissioner's office within seven days.
Paula Howell, a paralegal officer at the LRC, said: "Sadly, it takes on
average 90 days for employers to report accidents. The employer must then
collect all medical reports and forward them to the commissioner's office."
If the employer failed to report an accident in which an employee was
injured, the worker could report the accident personally. Failure by an
employer to report an accident was an offence. The outstanding claims that
had not been processed were placed in the temporary claims section of the
commissioner's office because employers had failed or refused to complete
accident reports, Ms. Howell told the Business Report.
STAR TRIBUNE: Updated Complaint Filed Over Circulation Rates
------------------------------------------------------------
Advertisers filed an updated Complaint in light of key developments in the
lawsuit against the Star Tribune and its parent company, The McClatchy Co.
(NYSE:MNI), according to the firm of Halunen & Associates.
Employment agencies who advertise in the Star Tribune filed the Amended
Complaint in Federal Court claiming that the newspaper overstated its paid
circulation rates, resulting in fraudulently inflated prices. The Amended
Complaint exposes the Star Tribune's practice of requiring distributors and
agents to order surplus papers; it asserts that the Star Tribune required
distributors to attest that their return rates - a measure of unsold
papers - were not more than 18-19% when, in fact, they were much greater.
According to Boris Parker, one of the attorneys representing the employment
agencies, "Since the filing of the Complaint, a number of distributors and
agents have come forward and confirmed that they too were forced to order
surplus papers and provide inaccurate information to the agency that audits
the Star Tribune's paid circulation figures." Parker added, "After the Star
Tribune denied the earlier allegations, these people felt compelled to do
the right thing and come forward with what they know. We encourage others to
do the same."
Advertisers are suing the Star Tribune, alleging that the newspaper inflated
its paid circulation rates, resulting in higher, unjustified advertising
rates. The lawsuit is filed in the U.S. District Court for the District of
Minnesota and seeks reimbursement for the overpayments during the past 6
years.
The Minneapolis law firms of Zimmerman Reed, PLLP, Halunen & Associates, and
Saliterman & Siefferman represent the advertisers.
For more details, contact Clayton Halunen of Halunen & Associates, Phone:
612-605-4098 or 612-221-8920, Web site:
http://www.zimmreed.com/Includes/pdf/Strib_Amended_Complaint.pdf
SUPREMA SPECIALTIES: SEC Files NJ Fraud Suit V. Former CEO, CFO
---------------------------------------------------------------
The Securities and Exchange Commission filed a civil complaint in the U.S.
District Court for the District of New Jersey charging the former CEO,
president and chairman of the board of directors, Mark Cocchiola, and the
former CFO, secretary and director, Steven Venechanos, of Suprema
Specialties, Inc. (Suprema), with violating the antifraud and other
provisions of the federal securities laws in connection with their
participation in a multi-year fraud orchestrated by Suprema's senior
management. Prior to its delisting in early 2002, Suprema -- a Paterson,
New Jersey-based cheese manufacturer -- was a public company whose
securities traded on the Nasdaq National Market System.
In its complaint, the Commission alleges that Suprema engaged in fraudulent
"round-tripping" transactions that resulted in total misstatements of
Suprema's reported revenue of between approximately 35% and over 60% in each
of the 1999, 2000 and 2001 fiscal years, and in the first quarter of fiscal
year 2002. The complaint further alleges that the scheme resulted in total
misstatements of Suprema's reported accounts receivable of 60% or more in
each of the 1999, 2000 and 2001 fiscal years.
According to the complaint, the "round-tripping" transactions were
effectuated through "circles" of entities, each of which included Suprema, a
third-party "customer," and a related "vendor." As the complaint alleges,
the customer and vendor in each circle tended to have a common owner. The
complaint alleges that false paperwork was created documenting the
fictitious transactions, and checks were circulated in purported payment for
the transactions. Participants allegedly received a kickback or
"commission" on each transaction, the funds for which were generally drawn
from Suprema's line of credit, which increased as Suprema's accounts
receivable grew. With rare exceptions, the complaint alleges, no goods were
actually sold, purchased, or exchanged in these transactions.
The Commission alleges that Mr. Cocchiola and Mr. Venechanos were aware of,
approved of, and participated in the fraud from at least in or around
February 2000. The complaint alleges that, among other things, Mr. Cocchiola
and Mr. Venechanos signed and caused to be filed an annual report on Form
10-K for the 2000 and 2001 fiscal year, and a registration statement on Form
S-2 for secondary public offerings of Suprema stock in August 2000 and
November 2001, which included financial statements for the fiscal year 1999
and subsequent reporting periods, which Mr. Cocchiola and Mr. Venechanos
knew, were reckless in not knowing, or should have known were materially
false and misleading. The complaint further alleges that Mr. Cocchiola and
Mr. Venechanos signed and caused to be filed a Form 10-Q for the first
quarter of the 2002 fiscal year, which included financial statements for the
quarter ended on Sept. 30, 2001, which Mr. Cocchiola and Mr. Venechanos
knew, were reckless in not knowing, or should have known were materially
false and misleading. Furthermore, the complaint alleges that Mr. Cocchiola
and Mr. Venechanos received illicit gains of over $4.8 million and $1.4
million, respectively, by selling Suprema stock during the commission of the
fraud.
Based on these allegations, the Commission charged Mr. Cocchiola and Mr.
Venechanos with:
(1) securities fraud in violation of Section 17(a) of the
Securities Act of 1933 and Section 10(b) of the
Securities Exchange Act of 1934 (Exchange Act) and
Exchange Act Rule 10b-5;
(2) knowingly circumventing internal accounting controls
and knowingly falsifying corporate books and records in
violation of Exchange Act Section 13(b)(5) and Exchange
Act Rule 13b2-1;
(3) lying to the company's independent auditors in
violation of Exchange Act Rule 13b2-2; and
(4) aiding and abetting Suprema's violations of the
periodic reporting, books and records, and internal
accounting controls provisions of Exchange Act
Sections 13(a) and 13(b)(2)(A) and (B) and Exchange
Act Rules 12b-20, 13a-1, and 13a-13. The Commission is
seeking permanent injunctions, officer and director
bars, civil penalties, and disgorgement with
prejudgment interest. The Action is styled, SEC v. Mark
Cocchiola, et al., Civil Action No. 05-3450 (D.N.J.).
Previously, in January 2004, the Commission filed securities fraud and
related charges against the former controller, former operations manager,
and several former customers and vendors of Suprema and their owners in
federal district court for the District of New Jersey for their
participation in the financial fraud at Suprema. The action is styled, SEC
v. Robert Quattrone, et al., Civil Action No. 04-33(SRC) (D.N.J.).
In March 2005, the Commission filed securities fraud and related charges in
the same court against the part owner and operator of other participating
customers and vendors, and certain of those entities. The action is styled,
SEC v. Jack Gaglio, Civil Action No. 3:05-CV-01195-SRC-TJB (D.N.J.).
All the defendants in those actions have settled the Commission's claims for
injunctive relief and officer and director bars, and consented to the Court
determining at a later date the Commission's claims against them for
monetary relief.
Also on July 11, the U.S. Attorney for the District of New Jersey announced
the indictment of Mr. Cocchiola and Mr. Venechanos on 38 felony counts of
conspiracy, bank fraud, securities fraud, mail fraud and wire fraud.
The Commission acknowledges the assistance of the U.S. Attorney's Office for
the District of New Jersey, the Newark Office of the Federal Bureau of
Investigation, and the Office of Criminal Investigations of the U.S. Food
and Drug Administration in Jersey City, New Jersey in its investigation. The
action is styled, SEC v. Mark Cocchiola, et al., Civil Action No. 05-3450
(D.N.J.) (LR-19300).
SYCAMORE KIDS: Recalls 2.2T Jogging Strollers For Injury Hazard
----------------------------------------------------------------
In cooperation with the U.S. Consumer Product Safety Commission (CPSC),
Sycamore Kids Inc., of Fort Collins, Colorado is voluntarily recalling about
2,200 units of Mountain Buggy Urban Single and Urban Double Jogging
Strollers.
The handlebar can crack or break causing the handlebar to possibly detach
while in use, posing a risk of injury to young children. Sycamore has
received 10 reports of handlebar either cracking or breaking when the
stroller was pulled up or taken down stairs. No injuries were reported.
The recalled strollers have a metal frame and a cloth seat with a sun
canopy. The strollers were sold in a variety of solid colors, including
navy, red, black, silver and orange. A metal plate above the footrest shows
the Mountain Buggy logo with "Mountain Buggy" written underneath. "URBAN"
also is written on the metal plates. The recalled Mountain Buggy Urban
Single strollers have item number U1204-002, and serial numbers between
000000 and 0003342. The recalled Mountain Buggy Urban Double strollers have
item number U2204-002, and serial numbers between 000000 and 006957. The
serial number and model number are on the back of the metal plate.
Manufactured in New Zealand, the strollers were sold at baby furniture and
baby product stores nationwide and Web retailers from December 2004 through
July 2005 for between $400 and $600.
Contact Sycamore Kids to find an authorized repair center to receive a free
replacement handlebar ratchet.
Consumer Contact: Call Sycamore Kids Inc. toll-free at (866) 524-8805
anytime, or write to support@mountainbuggyusa.com. This recall information
also can be found on the firm's Web site: http://www.mountainbuggyusa.com.
TOYOBO COMPANY: NH AG Reveals Details of Zylon Vest Settlement
--------------------------------------------------------------
A $29 million class action settlement was reached between a certified
national class of consumers who purchased Second Chance Ultima, Ultimax, and
Tri-Flex vests, and defendants Toyobo Company, Ltd. and Toyobo America, Inc,
New Hampshire Attorney General Kelly A. Ayotte announced in a statement.
Second Chance Body Armor manufactures bulletproof vests, some of which
contain Zylon, a fiber manufactured and sold by Toyobo. The class action
lawsuit alleges that the defendants knew or should have known that Zylon is
defective because it is subject to degradation under conditions of high heat
and humidity and that such degradation renders bulletproof vests ineffective
and unsuitable for their intended use, and that the defendants failed to
disclose this information. This settlement does not resolve claims against
Second Chance, which is in Chapter 11 bankruptcy.
The settlement, in summary, provides the following benefits to Class
Members, i.e., purchasers and owners of Second Chance vests containing
Zylon, including the Ultima, Ultimax and TriFlex models (even those who
received performance pacs or replacement Monarch vests from Second Chance):
(1) Option 1 - A cash option to receive a pro rata share of
the $29,000,000.00 Settlement Fund. The amount each
officer or agency receives is dependent on the total
number of Class Members that participate in the
Settlement and submit bona-fide claims. Each Class
Member selecting this option is free to use the money
received from the Settlement Fund in any manner they
choose. The amount of money available to each Class
Member will depend on the number of participants in the
settlement.
(2) Option 2 - Class Members will have the option to use
their share of cash from the Settlement Fund to
purchase a replacement vest from Armor Holdings
Products, L.L.C. ("Armor") at a the most favorable
negotiated state contract and/or agency commercial
prices made available by Armor directly to domestic law
enforcement officers. Each replacement Armor vest will
come with a five year warranty, and one extra carrier
(for a total of 2 carriers). Armor shall be responsible
for all transaction costs associated with the purchase
and delivery of these vests and shall set up an
administration process at its own expense and insure
that trained personnel are available to assist Class
Members with the Replacement Vest Option.
(3) Option 3 - Rather than taking their cash share of the
Settlement Fund and keeping it or later using it to
purchase a vest, Class Members may elect to receive a
nonrefundable credit or voucher from Armor worth
twenty-five dollars ($25.00) more than their share of
cash from the Settlement Fund to purchase an Armor
replacement vest or any other Armor product available
from Armor's distributors. For example, the Armor
credit or voucher can be used to buy holsters, batons,
helmets, gloves, etc., from any authorized Armor
distributor. Any Settlement Class Member who chooses an
Armor credit or voucher must do so in the first
instance as opposed to receiving cash and use the
credit or voucher within five (5) years from the date
the Settlement becomes Final.
The Company is also required to instruct its customers to do used vest
testing to ensure the products perform as expected for their useful life.
Additionally, any attorney fees awarded by the Court will be paid by Toyobo
in addition to the $29,000,000 and thus, will not reduce the size of the
Settlement Fund for Class Members.
The settlement arose in the national class action captioned Lemmings, et al.
v. Second Chance Body Armor, et al., No. CJ-2004-64, District Court for
Mayes County, Oklahoma, in which a class was certified in February 2005,
defined as follows:
All persons and entities in the United States and its territories, who have
purchased, possess or own a bullet proof vest manufactured by Defendant
Second Chance Body Armor, Inc., which contains ZylonŽ, a fiber manufactured
and sold by Defendants Toyobo Company, Ltd., and Toyobo America, Inc.
Excluded from the Class are Defendants; Defendants' affiliates, parents and
subsidiaries; all directors, officers, agents, and employees of Defendants;
any person or entity who timely opts out of this proceeding; and any claims
belonging to the federal government. This class does not include or affect
present or future personal injury claims.
In plain language, this means, all law enforcement officers or agencies that
bought these vests. Anyone who previously "opted out" of this case may opt
back in. Judge Goodpaster entered an order Preliminarily Approving the
proposed Settlement on July 12, 2005. Formal notice of this settlement will
be provided to all law enforcement agencies.
For further information about the settlement, please visit the settlement
website: http://www.zylonvestclassaction.comor call 1-877-567-2754. In
addition, please feel free to contact Senior Assistant Attorney General
Connie Stratton in the Consumer Protection and Antitrust Bureau at 271-3643
with any questions regarding this matter.
TOYOBO COMPANY: WI AG Bares Bullet-Proof Vest Settlement Details
----------------------------------------------------------------
Wisconsin law enforcement officers and agencies that purchased faulty
bullet-proof vests will be compensated through the $29 million settlement of
a private class action lawsuit brought against the suppliers of Zylon, state
Attorney General Peg Lautenschlager announced in a statement. Zylon is the
material manufacturers used in making the vests.
"Wisconsin's men and women in law enforcement face life and death situations
in which the effectiveness of a bullet-proof vest must be reliable," Ms.
Lautenschlager said. "This settlement replaces faulty vests, provides
benefits for those who have purchased them, and sends a message that the
safety of those who serve and protect us in Wisconsin will never be
compromised."
The Wisconsin Department of Justice (DOJ) received official notice of the
$29 million class action settlement, reached between a certified national
class of consumers who purchased Second Chance Ultima, Ultimax, and Tri-Flex
vests and defendants Toyobo Company, Ltd. and Toyobo America, Inc. DOJ
reports that members of the Wisconsin law enforcement community who
purchased bullet-proof vests from Second Chance or one of the related
entities will be notified of the benefits they will receive as a result of
participation in this settlement.
In summary, the settlement provides benefits to class members who are
purchasers and owners of Second Chance vests containing Zylon, which has
been alleged to be defective in providing the protection it is purported to
insure. The settlement fund of $29 million plus accrued interest will be
deposited within ten days and ultimately divided among purchasers of the
vests on a prorata basis. There will be no reduction for costs for
administration, notice or attorneys' fees, as Toyobo has agreed to pay these
separately. Each purchaser entitled to participate in the settlement will
be notified of his/her rights and offered an opportunity to submit a claim.
Each recipient of settlement monies is free to use the money received from
the settlement fund in any manner he/she chooses.
DOJ is working with Wisconsin's law enforcement organizations to determine
how many direct purchasers of Second Chance vests have been impacted. They
will be notified by the Attorney General's Office as well as counsel for the
class action settlement. In addition to participation in the settlement
fund, purchasers may be entitled to a replacement vest program in which
replacement vests can be purchased at a negotiated reduced price.
This settlement was preliminarily approved on July 12, 2005, by the District
Court of Mayes County, Oklahoma, in which the class action suit was
certified. The next hearing is scheduled for September 23, 2005. Further
information about the settlement can be found by calling the settlement
administrator by Phone: 1-877-567-2754 or visiting the Website:
http://www.zylonvestclassaction.com.
UNITED STATES: SEC Starts Proceeding V. 20 Firms Over Filings
-------------------------------------------------------------
The Securities and Exchange Commission instituted a public administrative
proceeding pursuant to Section 12(j) of the Securities Exchange Act of 1934
against twenty public companies to determine whether the registration of
each company's securities should be revoked or suspended for failing to
comply with Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13
thereunder, which require the filing of periodic reports with the
Commission. The Respondents are: American Machine, Inc.; Asia4Sale.com,
Inc.; Pacific Vision Group, Inc.; Preferred Investments, Inc.; Deerwood,
Inc.; Nascent Technology, Inc.; Profits Emporium, Inc.; Ring of Fire
Marketing, LTD.; Seminar Strategies & Marketing, Inc.; Social Engagements
International, Inc.; Passover Management International, LTD.; Triumphant
Endeavors, Inc.; Idoleyez Corporation (a/k/a ISEmployment.Com, Inc.) (f/k/a
Magical Marketing, Inc.); Sun Asset Holdings, Inc. (f/k/a Coyote Canyon
Corporation); Sino Pharmaceuticals Corporation (f/k/a Unimann, Inc.);
Premium Financial Services & Leasing, Inc.; Arcadia Investments
Corporation; Easy Living Investments, Inc.; Vinex Wines, Inc.; and Western
Financial Corporation.
The Division of Enforcement alleges that each of the above-listed companies
is at least one year delinquent in its required periodic filings with the
Commission and has failed to comply with Exchange Act Section 13(a) and
Rules 13a-1 and 13a-13 thereunder. A hearing will be scheduled before an
administrative law judge to determine whether the allegations contained in
the Order are true, to provide each of the companies an opportunity to
dispute the allegations, and to determine whether it is necessary and
appropriate for the protection of investors to suspend or revoke the
registration of each company's securities. The Commission directed that an
administrative law judge shall issue an initial decision in this matter
within 120 days from service of the Order upon the listed companies.
VILLAGE LIFE: Shareholders To File Lawsuit For Securities Fraud
---------------------------------------------------------------
Troubled retirement homes company Village Life Ltd (VLL) faces a potential
class action filed on behalf of investors who purchased its shares during
its float in November 2003, and subsequently on the market, the Sydney
Morning Herald reports.
Last Friday, litigation funder IMF announced it would fund a class action
against the group for alleged poor disclosure and possible misleading and
deceptive conduct. The action alleges a possible contravention of the
Corporations Act, the Australian Stock Exchange listing rules and provisions
of the Trade Practices Act.
In a statement, Village Life said it remains committed to the principles of
continuous disclosure. "VLL intends to vigorously defend any ensuing
litigious claims with respect to the actions of its board of directors and
executive management team," it said, the Sydney Morning Herald reports.
"The company strongly refutes any allegations that loss and damage was
sustained by shareholders as a result of VLL and its directors engaging in
misleading and deceptive conduct," the Company added.
The Company's prospectus had provided bullish construction and financial
forecasts. Its shares, which peaked at $2.79 on January 4 this year, fell
to as low as 30 cents on June 23 in the wake of three profit downgrades in
response to poor construction and lower profit expectations.
WASHINGTON: AG Warns V. Sexually-Explicit, Violent Game Content
---------------------------------------------------------------
As new legislation goes into effect this month requiring Washington
retailers to inform consumers about video game ratings, state Attorney
General Rob McKenna and State Rep. Mary Lou Dickerson, D-Seattle, are
warning consumers about the availability of violent and sexually explicit
content.
"Parents need to be aware that some of the most popular video games contain
content that is potentially harmful for youths and may be deemed offensive
by some adults," Mr. McKenna said. "At the same time, the video game
industry and retailers have a responsibility to assure that minors are not
able to purchase or download games inappropriate for their age and that
consumers are able to make informed decisions."
Video games are rated by the Entertainment Software Rating Board, a
self-regulatory entity supported by the entertainment industry. Beginning
July 24, new state legislation requires video game retailers to post signs
in prominent locations that inform consumers about the ratings and to
explain the system to anyone who requests information.
Mr. McKenna and Ms. Dickerson warned consumers that despite the new
legislation, it may still be possible for minors to acquire games rated for
older players. The National Institute of Media and the Family estimates that
50 percent of boys between the ages of 7 and 14 are able to buy games rated
for those ages 17 or older.
An example of a controversial video game is "Grand Theft Auto-San Andreas,"
rated "M" for mature audiences ages 17 or older. Scores of Internet sites
recently began offering a code that enables "Grand Theft Auto-San Andreas"
to include pornographic scenes.
"I was shocked by a video clip of the unlocked pornography in 'San Andreas,'"
said Ms. Dickerson. "But it is even more alarming to imagine children
playing these first-person pornographic scenes interactively to engage in
graphic virtual sex."
The game's manufacturer, Rockstar Games, issued a statement denying
responsiblity for the sexually explicit content and blaming hackers for
altering the game's source code. The statement stops short of directly
answering whether the content "unlocked" by the code is present on the game
discs.
"Parents who don't want pornography in the hands of their children need to
be aware of what is contained in this game," Mr. McKenna said.
More than 12 million copies of "Grand Theft Auto: San Andreas" have been
sold since October, according to its manufacturer. As recently as March,
Toydirectory.com listed "San Andreas" as the third-best selling game in the
United States. It was still the fifth top-selling game at Amazon.com as of
this morning.
The video games rating system is as follows:
EC (Early Childhood): Content may be suitable for ages 3 and older. Contains
no material that parents would find inappropriate.
E (Everyone): Content may be suitable for ages 6 and older. Titles in this
category may contain minimal cartoon, fantasy or mild violence and/or
infrequent use of mild language.
E10+ (Everyone 10 and Older): Content may be suitable for ages 10 and older.
Titles in this category may contain more cartoon, fantasy or mild violence,
mild language, and/or minimal suggestive themes.
T (Teen): Content may be suitable for ages 13 and older. Titles in this
category may contain violence, suggestive themes, crude humor, minimal blood
and/or infrequent use of strong language.
M (Mature): Content may be suitable for persons ages 17 and older. Titles in
this category may contain intense violence, blood and gore, sexual content,
and/or strong language.
AO (Adults Only): Content should only be played by persons 18 years and
older. Titles in this category may include prolonged scenes of intense
violence and/or graphic sexual content and nudity.
RP (Rating Pending): Titles have been submitted to the ESRB and are awaiting
final rating. This symbol appears only in advertising prior to a game's
release.
Additional information about the ratings is available from the Entertainment
Software Rating Board at http://www.esrb.org.
For more details, contact Kristin Alexander, Public Information Officer,
Attorney General's Office, by Phone: (206) 464-6432 or contact Robin Boyes,
Public Information Officer for Rep. Mary Lou Dickerson, by Phone: (360)
786-7225 or visit the Website: http://www.atg.wa.gov/
WISCONSIN: High Court Refuses To Allow Church Sex Abuse Lawsuit
---------------------------------------------------------------
The Wisconsin Supreme Court refused to allow a man to file a sexual abuse
suit against the Archdiocese of Milwaukee, because there is no proof church
leaders knew the priest was a child molester at the time, the Associated
Press reports.
The plaintiff, identified only as John Doe 67F, alleged the Roman Catholic
archdiocese was negligent in its supervision of the Rev. George Nuedling,
who died in 1974. The plaintiff said church leaders just moved him from
parish to parish even if they knew he abused children.
However, the court ruled there was no proof church leaders had reason to
believe Rev. Nuedling was abusing children from 1960 to 1962, when Mr. Doe
claims he was abused, AP reports. Since the justices ruled the suit could
not continue, they refused to review their 1995 decision giving religious
organizations immunity from civil suits over their hiring practices.
Though the court was unanimous in dismissing the suit, three justices said
they believed the 1995 decision should be reversed to allow such suits in
the future, AP reports. "This court should not allow church officials to be
beyond reproach of the law," wrote Justice Ann Walsh Bradley.
In all, 10 people filed civil lawsuits in 2002 alleging abuse by Nuedling
between 1960 and 1980. An attorney representing John Doe 67F did not
immediately return a phone call Wednesday seeking comment, AP reports. An
archdiocese attorney, John Rothstein, said he could not comment until he
read the decision.
WORLDCOM INC.: NY Judge Hands Founder 25-Year Prison Sentence
-------------------------------------------------------------
In imposing what could be a life sentence on one of the nation's most
prominent chief executives, U.S. District Judge Barbara Jones sentenced
WorldCom Inc. founder Bernard J. Ebbers to 25 years in prison, The
Washington Post reports.
After the sentencing, attorneys for Mr. Ebbers, who is scheduled to report
to prison in October, told the media that they would appeal the decision and
asked that he remain free pending that appeal.
When the sentence was imposed, the 63-year-old founder's wife Kristie began
to cry and as the proceeding ended around noon, she approached Mr. Ebbers,
hugged him and cried on his shoulder. More than 160 family members, friends
and neighbors in his adopted Mississippi town sent letters to Judge Jones,
urging leniency and citing Mr. Ebbers's heart problems and extensive
charitable donations. However, federal judge rejected those pleas because
of the seriousness of the crime and its impact on investors. Despite the
lengthy sentence, the judge asked that prison officials consider placing Mr.
Ebbers in a low-security facility, which generally is reserved for prisoners
with sentences of less than 23 years and 6 months.
In March, a New York jury convicted Mr. Ebbers of nine counts of conspiracy,
false statements and securities fraud. Prosecutors argued that he stood at
the center of a scheme to inflate WorldCom's earnings and improperly lower
expenses by a total of $11 billion. When the fraud came to light in 2002,
WorldCom filed for bankruptcy protection, the largest such case in history.
WorldCom has since reemerged from that bankruptcy and under new management,
as MCI Inc.
Last month, Mr. Ebbers agreed to give up his Mississippi mansion and to hand
over cash and assets that could be worth as much as $45 million to settle a
class action lawsuit filed by defrauded investors. As part of the
settlement, Assistant U.S. Attorney David Anders agreed not to seek
restitution from Mr. Ebbers.
Mr. Ebbers is the first of several former WorldCom officials to receive a
prison sentence. Five subordinates who took part in the fraud to be
sentenced later this summer, among them is onetime finance chief Scott D.
Sullivan, who pleaded guilty to conspiracy and testified against Mr. Ebbers.
Mr. Sullivan faces as many as 25 years behind bars, although experts told
The Washington Post that he would likely win a significant reduction in
prison time given his cooperation with prosecutors. He is to be sentenced on
August 4.
WORLDCOM INC.: SEC Files NY Fraud Suit V. Ex-CEO Bernard Ebbers
---------------------------------------------------------------
The Securities an Exchange Commission announced on July 13 that it filed a
civil fraud action against Bernard J. Ebbers, the former Chief Executive
Officer of WorldCom, Inc. (now known as MCI, Inc.), for his role in the
WorldCom fraud. Mr. Ebbers has agreed to settle the matter by consenting,
without admitting or denying the allegations in the Commission's complaint,
to the entry of a final judgment enjoining him from violating the anti-fraud
and other provisions of the federal securities laws, and permanently barring
him from serving as an officer or director of a public company. The
settlement is subject to the approval of the Court.
The Commission's action against Ebbers is its sixth civil enforcement action
related to the WorldCom fraud. The complaint filed today alleges that Mr.
Ebbers, along with other WorldCom senior officers, caused numerous
fraudulent adjustments and entries in WorldCom's books and records, often in
the hundreds of millions of dollars, in furtherance of a scheme to make the
Company's publicly reported financial results appear to meet
Wall Street's expectations. The complaint further alleges that these market
expectations were based, in some instances, on financial performance targets
set by Mr. Ebbers that he knew could not be attained by legitimate means. In
addition, the Commission alleged that Mr. Ebbers made numerous false and
misleading public statements about WorldCom's financial condition and
performance, and signed multiple SEC filings that contained false and
misleading material information.
If the settlement is approved by the Court, Mr. Ebbers will be enjoined from
future violations of the antifraud, reporting, books and records, internal
controls, and lying-to-auditors provisions of the federal securities
laws-Section 17(a) of the Securities Act of 1933 and Sections 10(b), 13(a),
13(b)(2) and 13(b)(5) of the Securities Exchange Act of 1934 and Rules
10b-5, 12b-20, 13a-1, 13a-13, 13b2-1 and 13b2-2 thereunder.
The Commission acknowledges the assistance and cooperation of the U.S.
Attorney's Office for the Southern District of New York and the Federal
Bureau of Investigation. The action is styled, SEC v. Bernard J. Ebbers,
Civil Action No. 05 Civ 6378, USDC, SDNY] LR-19301.
New Securities Fraud Cases
CARRIER ACCESS: Marc S. Henzel Files Securities Fraud Suit in CO
----------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a class action lawsuit in the
United States District Court for the District of Colorado on behalf of
purchasers of Carrier Access Corporation (NASDAQ: CACSE) publicly traded
securities during the period between October 21, 2003 and May 20, 2005 (the
"Class Period").
The complaint alleges that during the Class Period, defendants made
materially false and misleading statements regarding the Company's financial
results and its business prospects. As a result of these false statements,
the Company's shares traded at inflated levels during the Class Period,
allowing the defendants to use the Company's shares as currency in its
acquisition of Paragon Networks and to sell 6 million shares to the public
in a secondary offering, raising proceeds of $78 million.
However, according to the complaint, by July 20, 2004, due to the
defendants' concerns about the government's stance towards accounting fraud,
the Company announced a reduction in the Company's projections, sending its
shares down 37%, a loss of $4.73 to $8.06. On May 5, 2005, the Company
issued a press release in which it announced it had received a Nasdaq Staff
Determination letter which indicated that, "Although the company filed its
Form 10-K for the fiscal year ended December 31, 2004, the filing did not
include management's assessment of its internal controls over financial
reporting and the associated auditor attestation report." As a result, the
Company's stock was subject to delisting on the Nasdaq Stock Market. Then on
May 20, 2005, the Company issued a press release stating that it was in the
process of performing a detailed review of all significant customer
relationships and as part of those reviews was evaluating the propriety of
the timing of revenue and cost recognition and other revenue recognition
issues. The release stated: "At this point in time, the Company has
determined that certain revenues and direct costs have been recorded in
incorrect periods. The amounts that have been quantified to date are
significant and, as a result, previously issued financial statements for the
year ended December 31, 2004, and certain interim periods in each of the
years ended December 31, 2004, and 2003, will be restated." On this news the
Company's stock fell to $4.60 per share.
For more details, contact the Law Offices of Marc S. Henzel, 273 Montgomery
Ave., Suite 202, Bala Cynwyd, PA, 19004, Phone: 610-660-8000 or
888-643-6735, Fax: 610-660-8080, E-Mail: mhenzel182@aol.com, Web site:
http://members.aol.com/mhenzel182.
CYBERONICS INC.: Marc S. Henzel Files Securities Suit in S.D. TX
----------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a class action lawsuit in the
United States District Court for the Southern District of Texas on behalf of
the purchasers of Cyberonics, Inc. (NASDAQ: CYBX) securities during the
Class Period between June 15, 2004, through October 1, 2004, inclusive (the
"Class").
Cyberonics engages in the design, development, and commercialization of
medical devices, which claim to provide therapy, Vagus Nerve Stimulation
(VNS), for the treatment of epilepsy and other debilitating neurological and
psychiatric disorders. Plaintiff alleges that defendants violated the
federal securities laws (Securities Exchange Act of 1934) during the Class
Period by failing to disclose and misrepresenting material adverse facts
known to defendants or recklessly disregarded by them, including that
defendants were engaged in serious violative manufacturing and quality
practices that would have a serious negative impact on prospects for the
Company's VNC product approval and that, while well aware of true nature of
the serious issues facing FDA approval of the VNC system for the depression
indication, Company insiders sold over $1.98 million of Company stock during
the Class Period. As a result, the Complaint alleges, the value of the
Company's stock was materially and artificially inflated during the Class
Period.
For more details, contact the Law Offices of Marc S. Henzel, 273 Montgomery
Ave., Suite 202, Bala Cynwyd, PA, 19004, Phone: 610-660-8000 or
888-643-6735, Fax: 610-660-8080, E-Mail: mhenzel182@aol.com, Web site:
http://members.aol.com/mhenzel182.
GUIDANT CORPORATION: Goldman Scarlato Lodges IN Securities Suit
---------------------------------------------------------------
The law firm of Goldman Scarlato & Karon, P.C., initiated lawsuit in the
United States District Court for the Southern District of Indiana, on behalf
of persons who purchased or otherwise acquired publicly traded securities of
Guidant Corporation ("Guidant" or the "Company") (NYSE: GDT) between
December 15, 2004 and June 23, 2005, inclusive, (the "Class Period"). The
lawsuit was filed against Guidant and certain officers and directors
("Defendants").
The complaint alleges that Defendants violated the Securities Exchange Act
of 1934. Specifically, on December 15, 2004, Guidant management entered into
a merger with Johnson & Johnson, valued at $24.5 billion. While Guidant
asserted its defibrillator business was a key component to the value it was
able to exact in the deal for its shares, the Complaint alleges that Guidant
concealed from investors and patients material product defects and potential
liabilities of its defibrillator product lines, thus inflating its share
price. More specifically, the complaint alleges that Guidant knew but
concealed that serious health issues encountered by patients were caused by
the defective nature of the defibrillators, and that the disclosure of the
product issues could potentially derail a merger with Johnson & Johnson.
On June 17, 2005, the FDA issued a national recall notice, after deaths had
been linked to the failure of a magnetic switch. In that notice, the FDA
advised the public that the malfunction could lead to serious
life-threatening issues for a patient. In reaction to this news, Guidant's
shares fell $3.36, losing 4.5% of their value in the two days following the
FDA recall. On June 24, 2005, Guidant announced that it would voluntarily
advise physicians about important safety information regarding a number of
its defibrillator products. The Company indicated that as a precautionary
measure, physicians should discontinue implants of the suspect devices. In
reaction to this news, Guidant fell $4.70 per share, or approximately 6.9%
to close at $63.90 per share.
For more details, contact Goldman Scarlato & Karon, P.C., Phone: (888)
753-2796, E-mail: Scarlato@gsk-law.com.
STARTEK INC.: Marc S. Henzel Lodges Securities Fraud Suit in CO
---------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a class action lawsuit in the
United States District Court for the United States District Court for the
District of Colorado on behalf of purchasers of StarTek, Inc. (NYSE: SRT)
common stock during the period between February 26, 2003 and May 5, 2005
(the "Class Period").
The complaint charges StarTek and certain of its officers and directors with
violations of the Securities Act of 1933 and the Securities Exchange Act of
1934. StarTek is a provider of business process outsourced services, which
consist of business process management and supply chain management services.
The complaint alleges that defendants issued false statements about strong
existing demand for StarTek's outsourced services from four of the Company's
customers that accounted for 90% of StarTek's revenue, the Company's healthy
sales pipeline, and the completion of a management transition and
restructuring plan, which artificially inflated StarTek's stock price during
the Class Period. Then, on May 6, 2005, StarTek announced that its first
quarter 2005 "earnings per share from continuing operations decreased...to
$0.18 compared to $0.49 for the first quarter of 2004." The Company also
announced that its revenues declined 14.2% from the same period in 2004. On
this news, StarTek's stock price fell over 18% from a closing price on May
5, 2005 of $15.20 to $12.40 per share on May 6, 2005.
For more details, contact the Law Offices of Marc S. Henzel, 273 Montgomery
Ave., Suite 202, Bala Cynwyd, PA, 19004, Phone: 610-660-8000 or
888-643-6735, Fax: 610-660-8080, E-Mail: mhenzel182@aol.com, Web site:
http://members.aol.com/mhenzel182.
TREX COMPANY: Marc S. Henzel Lodges Securities Fraud Suit in VA
---------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a class action lawsuit in the
United States District Court for the United States District Court for the
Western District of Virginia on behalf of all persons who purchased the
publicly traded securities of Trex Company, Inc. (NYSE: TWP) between October
25, 2004 and June 22, 2005, inclusive (the "Class Period").
The Complaint alleges that Trex, and certain of its officers and directors
violated federal securities laws by issuing false and misleading statements.
Specifically, defendants misrepresented the following material adverse
facts:
(1) that the expected re-orders of inventory were not
materializing, as Trex distributors worked to dispose
of excess inventory;
(2) that the expansion of the Company's distribution
program with The Home Depot materially slowed due to
delays in rolling out the Company's products;
(3) that the Company's cost cutting initiatives failed to
limit the impact of higher raw material costs;
(4) that there were manufacturing issues with the Artisan
and Brasilia rail lines; and
(5) that as a result of the foregoing, defendants' positive
statements about the Company's growth and progress
lacked in any reasonable basis when made.
On June 22, 2005, Trex announced that the Company expected a substantial
loss for the quarter and guided its earnings lower for the year. On this
news, shares of Trex fell $10.59 per share, or 29.66%, on June 23, 2005, to
close at $25.11 per share. During the Class Period, while Trex stock was
trading at artificially inflated prices, insiders sold 680,395 shares for
gross proceeds of $29,833,121.
For more details, contact the Law Offices of Marc S. Henzel, 273 Montgomery
Ave., Suite 202, Bala Cynwyd, PA, 19004, Phone: 610-660-8000 or
888-643-6735, Fax: 610-660-8080, E-Mail: mhenzel182@aol.com, Web site:
http://members.aol.com/mhenzel182.
*********
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the Class Action Reporter. Submissions
via e-mail to carconf@beard.com are encouraged.
Each Friday's edition of the CAR includes a section featuring
news on asbestos-related litigation and profiles of target
asbestos defendants that, according to independent researches,
collectively face billions of dollars in asbestos-related
liabilities.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Class Action Reporter is a daily newsletter, co-published by
Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland
USA. Glenn Ruel Senorin, Aurora Fatima Antonio and Lyndsey Resnick,
Editors.
Copyright 2005. All rights reserved. ISSN 1525-2272.
This material is copyrighted and any commercial use, resale or publication
in any form (including e-mail forwarding, electronic re-mailing and
photocopying) is strictly prohibited without prior written permission of the
publishers.
Information contained herein is obtained from sources believed to be
reliable, but is not guaranteed.
The CAR subscription rate is $575 for six months delivered via e-mail.
Additional e-mail subscriptions for members of the same firm for the term of
the initial subscription or balance thereof are $25 each. For subscription
information, contact Christopher Beard at 240/629-3300.
* * * End of Transmission * * *