/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/990305.MBX C L A S S A C T I O N R E P O R T E R Friday, March 5, 1999, Vol. 1, No. 21 Headlines AFRO-AMERICAN FARMERS: Discrimination Settlement Still Under Fire AMERICAN BANKNOTE: Bernstein Litowitz Files Complaint in New York AT&T WIRELESS: Comment Favoring Full Minute Billing Practice BENNETT FUNDING: Mistrial Declared on Major Criminal Counts CHEVRON CORP.: Settles Kennedy Heights Pollution Litigation ELBIT, LTD.: Warrantholders Ask for Class Action in Tel Aviv GREENLAND INUITS: Demanding Compensation for Displaced Homes HOLOCAUST VICTIMS: Plaintiffs Say Fund Lacks Framework JDA SOFTWARE: States Intention to Defend "Copycat" Lawsuits MINNESOTA PRISIONS: Correction Workers File Discrimination Suit ORBITAL SCIENCES: Mehri Malkin Files Complaint in Virginia PRIMADONNA RESORTS: Shareholder Sues to Block MGM Grand Merger SMART CHOICE: Milberg Weiss Files Complaint in Florida WORLD ACCESS: Wechsler Harwood Files Complaint in Georgia Y2K LITIGATION: Semiconductor Lobbying Group Pushing Legislation ********* AFRO-AMERICAN FARMERS: Discrimination Settlement Still Under Fire ----------------------------------------------------------------- Dr. Joseph E. Lowery, former president of the Southern Christian Leadership Council, says the USDA's proposed discrimination settlement with black farmers needs strengthening. Lowery, chairman of the Black Leadership Forum Inc., proposed several changes Tuesday before U.S. Disctrict Judge Paul Friedman in Washington. Lowery spoke on behalf of 13 farm advocacy groups. Lowery hailed the plan but said eligibility for the funds isn't clear enough. He also called for stronger guarantees that loans owed to the government would be forgiven, and assurances that rights of appeal by farmers who participate in the settlement will not be denied. Some 13,000 farmers have already signed up to participate in the agreement, UPI indicates. AMERICAN BANKNOTE: Bernstein Litowitz Files Complaint in New York ----------------------------------------------------------------- Bernstein Litowitz Berger & Grossmann LLP, on January 26, 1999, filed a class action lawsuit in the United States District Court for the Southern District of New York, on behalf of all purchasers of American Bank Note Holographics Inc. (NYSE:ABH) common stock during the period July 14, 1998 through January 15, 1999 inclusive against American Bank Note and certain officers and directors of the Company. The complaint alleges that defendants violated Sections 11 and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by making material misrepresentations in the Registration Statement and Prospectus that was filed with the SEC and distributed to investors in connection with the initial public offering ("IPO") on July 14, 1998. Pursuant to the IPO, American Bank Note sold more than 13.6 million shares of common stock to investors, realizing proceeds of more than $106 million. On January 19, 1998, prior to the opening of the market, the Company announced that (i) sales and net income for the second and third quarters of 1998 -- the Company's entire history as a public company -- had been materially overstated; (ii) as a result of these accounting misstatements, the Company would restate its publicly reported results for the second and third quarters. The Company also announced that it had retained an outside law firm and its outside auditors to conduct an investigation into the misstatements, and that the results of the investigation "could impact future results of operations." Additionally, the Company announced that, as a result of its improper accounting practices, revenues and net income for the fourth quarter of 1998 would be "significantly lower" than that of the fourth quarter of 1997. Following these disclosures, the trading price of the stock dropped from approximately $15 to less than $5 per share. AT&T WIRELESS: Comment Favoring Full Minute Billing Practice ------------------------------------------------------------ "If you buy a Big Mac and only eat half of it, you're not entitled to a refund," Brian Adamik, an analyst at The Yankee Group, is quoted as saying in the Arizona Republic, commenting on AT&T Wireless' practice of billing customers for a full minute even if they're on the phone for part of a minute -- a billing practice that has led to a class-action suit against AT&T. BENNETT FUNDING: Mistrial Declared on Major Criminal Counts ---------------------------------------------------------------- Gail Appleson, a Law Correspondent for Reuters, reports that a mistrial was declared Tuesday on 53 key fraud and money laundering charges against Bennett Funding Group's former chief financial officer, who is accused of orchestrating one of the biggest financial frauds in U.S. history. While the federal jury hearing the case against Patrick Bennett, 47, was deadlocked on the majority of the charges, it did find the former financial officer guilty of seven lesser counts accusing him of obstructing Securities and Exchange Commission investigations and perjury. The mistrial was a blow, Ms. Appleson said, to prosecutors as every other defendant in the case, including Bennett's brother Michael, pleaded guilty to charges relating to their role in the scheme. Patrick Bennett, who then stood trial alone, broke down in tears when he recently took the stand and admitted that he had lied to the SEC to hide illegal business transactions. Federal prosecutors said they would retry Bennett on the counts that the jury could not decide. Bennett faces a maximum possible sentence of five years in prison and a $250,000 fine on each of the seven counts on which he was convicted. Earlier Tuesday the jurors, who had been deliberating since Feb. 18, told Griesa that they could not reach an agreement on most of the counts. This was the second time they reported an impasse. They first reported a deadlock on Feb. 23, but Griesa asked them to keep trying. After receiving Tuesday's note, Griesa urged them again to try to reach a verdict but not to keep deliberating if they felt their efforts were useless. Although they returned to deliberations, they told him shortly afterwards their attempts were fruitless. In their final note to the judge the jurors said they realized the trial had been long and expensive and they appreciated the judge's efforts to help them reach a decision. "However, after considering the court's appeal to try once more to find some ground for agreement on the disputed counts we have been unsuccessful," the jury said. Bennett is accused of securities, bank and mail fraud, money laundering, obstruction of justice and other charges in what the federal prosecutors say was one of the biggest Ponzi, or pyramid, schemes in U.S. history. Prosecutors allege that Bennett turned a staid equipment-leasing family business into a sham operation that bilked more than 10,000 investors -- mostly retirees -- out of some $700 million. Bennett Funding of Syracuse, N.Y., founded by the defendant's father, filed for bankruptcy in 1996 after being sued by securities regulators. The fraud extended to 46 states, with the majority of victims living in New York, New Jersey and Florida. Richard Breeden, former Securities and Exchange Commission chairman, is serving as the court-appointed trustee for the bankrupt Bennett companies and is trying to recover money for investors. CHEVRON CORP.: Settles Kennedy Heights Pollution Litigation ----------------------------------------------------------- Chevron Corp. announced that the Kennedy Heights lawsuit is expected to end without another trial, it was announced today by Mickey Mills, the Special Master appointed by U.S. District Judge David Hittner, on behalf of both parties, Chevron Corp. and the neighborhood residents. "I've been working on this case for 20 months now, and based on the law and the scientific evidence, there is no indication that oil stored on the property in the 1920s ever posed a health or safety risk to the Kennedy Heights residents," said Mills. "There is no proof of harmful contamination in the soil, water, or air in Kennedy Heights and no connection between the residents' illnesses and the use of the land for crude oil storage 70 years ago. The drinking water for Kennedy Heights is, and always has been, provided by the City of Houston and test results conducted by the City of Houston show that the drinking water there is safe." His investigation also showed that race was never a factor in Gulf-Chevron decisions about the Kennedy Heights property and its residents, Mills said. Gulf sold the land 30 years ago before homes were built there to the now-defunct Log Development Co., which knew that the property had been used for crude oil storage and determined that it was suitable for residential housing. "Though Chevron has no legal obligation to do so," Mills added, "to resolve this lengthy and expensive case, the company has agreed to establish a settlement fund of approximately $8 million for distribution to the plaintiffs. I, as Special Master, will allocate the settlement fund to the plaintiffs, subject to the Court's approval and the execution by the parties of final settlement documents. The settlement fund is intended by Chevron to help Kennedy Heights residents whose property may have been devalued as a result of media attention to the case." The Settlement will separately provide partial reimbursement for reasonable expenses incurred by plaintiffs' attorneys in the investigation of their claims and costs associated with administration of the settlements," said Mills, "but Chevron will not pay any money into the fund for any specific items of damages and no funds will be paid for attorney fees. The plaintiffs' attorneys have agreed to waive their fees in order for their clients to take advantage of this settlement opportunity. "To date, the parties combined have spent more than $30 million in trying this case," said Mills. "It is a cage that resulted in a mistrial while pending before U.S. District Judge Kenneth Hoyt, and without settlement, continuation of this lawsuit and its likely appeals would increase both the costs for all concerned and the uncertainty for Kennedy Heights residents." Mills said he experts the settlement to be finalized very soon. ELBIT, LTD.: Warrantholders Ask for Class Action in Tel Aviv ------------------------------------------------------------ Elbit Ltd. (Nasdaq: ELBTF) announced that, further to its earlier notice concerning a class action claim served on November 16, 1998 in the name of all holders of warrants (series 2) (the "First Claim"), for non-disclosure of information concerning confidential negotiations for the sale of some of the assets of Elscint Ltd. (a subsidiary of Elbit Medical Imaging Ltd.), it has received notice of a claim presented against it in the District Court of Tel Aviv -- Jaffa (the "Second Claim") together with an application that the above court will recognize the claim as a class suit. To the best of Elbit's knowledge, the Second Claim is based on grounds that are identical to the grounds of the First Claim, and concern the same subject. The Second Claim was presented in the name of all those who sold the said warrants between August 1, 1998 and August 31, 1998. The lead plaintiffs seek monetary compensation, in the sum of approximately $26,077, and damages for injury allegedly caused to the entire group of claimants who sold warrants at a price lower than that which would have been received had the said information been disclosed, which they allege amounts to about $1,623,000. The notice states that the Second Claim was presented against the Company, Elbit Medical Imaging Ltd., Elron Electronic Industries Ltd., EMI and Mr. Emmanuel Gill. Elbit, at this stage, cannot assess the results of the Second Claim, nor its influence, if any, on its business. Elbit entirely rejects the claim presented against it and will act resolutely to have it dismissed. GREENLAND INUITS: Demanding Compensation for Displaced Homes ------------------------------------------------------------ >From Copenhagen, Denmark, the Associated Press reports that a group of Greenland Inuits started a court case this week demanding compensation for being forced out of their homes when a U.S. air base was expanded. The case stems from 1953, when the United States expanded its air base at Thule. The base in the northwestern sector of the Danish territory was a key installation of the Cold War. Denmark allows the United States to use Greenland, the world's largest island, for certain military purposes. But the American presence is resented by many Inuits, the indigenous people of Greenland. The group of 79 Inuits, calling themselves " Hingitaq 1953", meaning "Outcasts 1953" in Greenlandic, are demanding $23.1 million in compensation for hunting grounds lost when they were moved out of the area. In another recent dispute involving the Thule air base, the AP relates, the Danish government paid a total $15.5 million to 1,700 radiation-injured Danes and Greenlanders in 1995. The victims were local residents and workers cleaning up after a U.S. bomber carrying atomic bombs crashed in 1968, spreading radiation over a wide area. HOLOCAUST VICTIMS: Plaintiffs Say Fund Lacks Framework ------------------------------------------------------ Joan Gralla, writing for Reuters from New York, reports that U.S. lawyers for Holocaust victims, who are suing German banks and industrial companies for compensation, soon plan to present the German government with a framework for the country's proposed billion-dollar Holocaust fund, according to one of the attorneys. Michael Hausfeld, a partner with Washington-based Cohen, Milstein, Hausfeld & Toll, told Reuters that the new German fund, which will be privately financed, could not be modelled after the $1.25 billion fund set up last year by Swiss banks for Holocaust victims because the issues were more complex. While saying that German companies were showing good faith in the negotiations, Hausfeld took issue with the efforts so far because no accord has yet been reached on any sort of global settlement that would wrap up the U.S. lawsuits brought by former slave labourers and other Holocaust victims, in addition to other claims. The situation facing the German banks, insurers, industrial and agricultural companies is far more complicated than the Swiss accord, Hausfeld said. "You can't roll everything into one fund. There are different victims for the most part, different liabilities, and clearly, for example, you've got extensions in banking and insurance areas, which anticipate heirs, which you don't necessarily have in the slave labour area," Hausfeld said. "That's why in our view, nothing really can get done without the framework," he said. Then you can assess within the framework the liability of each of those entities." The process "is not proceeding on there being any rational framework in which the fund would compensate victims or terminate German firms exposure in U.S. litigation," he said, in a telephone interview. Hausfeld said he planned to present Germany's Chancellery Minister, Bodo Hombach, who has taken part in the negotiations, with the plaintiffs' proposal on March 9. "We'll be happy to consider their proposals," Elan Steinberg, World Jewish Congress executive director said, when asked about the plaintiff attorneys' plans by Ms. Gralla. JDA SOFTWARE: States Intention to Defend "Copycat" Lawsuits ----------------------------------------------------------- JDA Software Group Inc. (NASDAQ:JDAS) said that is was aware that a number of "copycat" lawsuits have been filed against it and certain of its directors and officers in the wake of a lawsuit styled as a shareholder class action which was filed in January of this year in U.S. District Court in Arizona. These lawsuits contain allegations and arguments virtually identical to the initial lawsuit. The company expects that all of these lawsuits will be consolidated into one action as has been the case in dozens of other purported shareholder class actions filed throughout the country against other companies. The company believes that these actions against it and its directors and officers are without merit and intends to defend them vigorously. MINNESOTA PRISIONS: Correction Workers File Discrimination Suit --------------------------------------------------------------- Several African-American correction workers are filing a class- action lawsuit against the Minnesota Department of Corrections, reports United Press International. They say there's long- standing and widespread racism in the Department. The suit seeks monetary damages for past and present African-American employees who have been treated unfairly. It also asks for an immediate injunction against further promotions until the Court installs a fair and equal system. The employees claim discrimination in promotions, retention and treatment of African-American employees. ORBITAL SCIENCES: Mehri Malkin Files Complaint in Virginia ---------------------------------------------------------- Mehri, Malkin & Ross PLLC commenced a class action lawsuit on February 23, 1999, in the United States District Court for the Eastern District of Virginia on behalf of purchasers of the common stock of Orbital Sciences Corp., from April 21, 1998 through February 16, 1999, inclusive. The complaint charges Orbital, and certain of its officers and directors, with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as well as SEC Rule 10b-5 promulgated thereunder. Specifically, the complaint alleges that, during the Class Period, Orbital issued materially false and misleading financial statements for its first three quarters of fiscal 1998, that artificially inflated the Company's financial results through the improper recognition of revenue in violation of generally accepted accounting principles. The Complaint further alleges that defendants utilized their inside information regarding the artificial inflation of the Company's stock price to sell significant amounts of their own personal Orbital holdings, with one member of upper management selling over 99% of his personal Orbital holdings. Proceeds from insider sales exceeded $3 million during the class period. PRIMADONNA RESORTS: Shareholder Sues to Block MGM Grand Merger ---------------------------------------------------------------- A Las Vegas man who owns 100 shares of Primadonna Resorts Inc. common stock has filed a class action lawsuit that seeks to block MGM Grand's announced $612 million stock and debt purchase of Primadonna, reports Carri Geer, writing for the Las Vegas Review- Journal. Michael Shapiro, who is represented by attorney Mark Albright, filed the complaint after hours Thursday in U.S. District Court. According to the lawsuit, Shapiro "seeks to ensure that the class of minority shareholders have a fair opportunity to vote their shares without any vote made by the controlling shareholder." Named as defendants are Primadonna Resorts; the company's chairman and chief executive officer, Gary Primm, who owns 30.5 percent of Primadonna's outstanding common stock; other controlling shareholders; and MGM Grand. Sharei Yeshua Inc., a company that owns an unspecified amount of Primadonna common stock, filed a lawsuit last month in Clark County District Court that also seeks to stop the proposed merger, the Journal notes. The MGM Grand merger proposes to swap 0.33 shares of MGM Grand stock for every Primadonna share, or $277 million, and MGM would assume $335 million of Primadonna debt. Nevada gaming regulators are scheduled to consider the deal after a vote of shareholders this week, majority approval of which is anticipated. SMART CHOICE: Milberg Weiss Files Complaint in Florida ------------------------------------------------------ Milberg Weiss Bershad Hynes & Lerach commenced a class action lawsuit on March 2, 1999, in the United States District Court for the Middle District of Florida on behalf of all persons who purchased the common stock of Smart Choice Automotive, Inc. (NASDAQ: SMCH), between April 15, 1998 and February 26, 1999, inclusive. The complaint charges Smart Choice and certain officers and directors with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 as well as Rule 10b-5 promulgated thereunder. The complaint alleges that defendants issued a series of materially false and misleading statements concerning the Company's revenues and results of operations. Because of the issuance of a series of false and misleading statements, the price of Smart Choice common stock was artificially inflated during the Class Period. WORLD ACCESS: Wechsler Harwood Files Complaint in Georgia --------------------------------------------------------- Wechsler Harwood Halebian & Feffer LLP commenced a class action lawsuit was filed against World Access, Inc. (NASDAQ:WAXS) a telecommunications company, charging that the company pursued an aggressive takeover and merger policy in 1998, based upon false and misleading statements that lured unsuspecting shareholders. The suit charges that World Access and its management violated the Securities Exchange Act of 1934 by issuing false and misleading statements concerning the company's operations thereby artificially inflating the company's stock price. The complaint was filed in the United States District Court for the Northern District of Georgia on behalf of all persons who purchased or otherwise acquired the common stock of World Access, Inc. between October 7, 1998, and February 11, 1999. According to the complaint World Access, during the fourth quarter of 1998, was desperate to complete its acquisition of NACT Telecommunications, Telco Communications and Resurgens Communications Group. World Access made several public statements to show a 60 percent increase in net income and represent that it was well positioned to share in the tremendous growth projected for the global telecommunications market. At the same time, in November 1998 key World Access insiders, including Controller Martin Kidder and Chief Financial Officer Mark Gergel sold more than 82,000 shares for $1.9 million. On January 5, 1999, in direct contrast to its earlier positive statements World Access was forced to reveal that its 4th quarter earnings per share were $.15 and not $.31 per share as expected: World Access stock plummeted 42 percent. Finally, on February 11th the company stunned its investors by revealing that its operations showed a net loss of $.22 per share. On this news the stock price of World Access fell an additional $3.75 per share. Y2K LITIGATION: Semiconductor Lobbying Group Pushing Legislation ---------------------------------------------------------------- Semiconductor Equipment and Materials International (SEMI) is urging Congress to quickly pass critical 'Year 2000' (Y2K) legislation now before the House and Senate. The Year 2000 Readiness and Responsibility Act (H.R. 775), introduced last week in the U.S. House of Representatives by Reps. Tom Davis (R-VA), David Dreier (R- CA) and others; and the Year 2000 Fairness and Responsibility Act (S. 461), brought forward by Senators Orrin Hatch (R-UT) and Diane Feinstein (D-CA), seek to encourage the fair remediation -- rather than litigation -- of Y2K disputes. The proposed legislation would set pre-trial guidelines for the resolution of Y2K issues between plaintiffs and defendants, providing the opportunity to address the grievance before the filing of a lawsuit. Additionally, defendants would be protected against certain damages and liabilities if they have taken reasonable good-faith measures to prevent the Y2K problems in question. Both bills seek to "screen out" insubstantial lawsuits while protecting the rights of plaintiffs who suffer real injuries. "With the Year 2000 rapidly approaching, it is imperative that our members be focused on helping to resolve potential Y2K problems rather than having to worry about defending themselves in a Y2K dispute," said Stanley T. Myers, president of SEMI. "This legislation creates the necessary incentives for companies to redouble their efforts to fix Y2K problems and guards them against wasting time in defending frivolous lawsuits." SEMI is working in cooperation with its members and their customers in the semiconductor industry to provide guidance on Y2K issues for our industry. Based in Mountain View, Calif., SEMI is an international trade association serving more than 2,300 companies participating in the $65 billion semiconductor and flat panel display equipment and materials markets. SEMI maintains offices in Austin, Beijing, Boston, Brussels, Hsinchu, Moscow, Seoul, Singapore, Tokyo and Washington, D.C. More information about SEMI's activities in this area, including links to other organizations working on Y2K issues, may be found at SEMI's website at http://www.semi.orgvia the Internet. ********* 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., Princeton, NJ, and Beard Group, Inc., Washington, DC. Peter A. Chapman, Editor. Copyright 1999. All rights reserved. ISSN XXXX-XXXX. 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 301/951-6400. * * * End of Transmission * * *