CAR_Public/990422.MBX              C L A S S   A C T I O N   R E P O R T E R

              Thursday, April 22, 1999, Vol. 1, No. 55

                            Headlines

AMERICAN FAMILY: Discrimination Settlement Helping Homeowners
CHS ELECTRONICS: Burt & Pucillo File Complaint in Florida
COMPAQ COMPUTER: Berger & Montague File Complaint in Texas
COMPAQ COMPUTER: Berman DeValerio Files Complaint in Texas
COMPAQ COMPUTER: Pasternak Feldman Files Complaint in Texas

KTI, INC.: Schatz & Nobel File Complaint in New Jersey
NETWORK ASSOCIATES: Finkelstein Thompson Files California Suit
NETWORK ASSOCIATES: Reinhardt & Anderson File Suit in California
OHIO MENTAL HOSPITALS: End of Negotiations Over Community Care
PIPER FUND: Celox Laboratories Reports Settlement Recovery

SHOLODGE, INC.: Trial Reset to September 13, Pending Appeal
SOFTWARE AG: Finkelstein Thompson Files Complaint in Virginia
SOFTWARE AG: Schiffrin & Barroway File Complaint in Virginia
SOFTWARE AG: Weiss & Yourman File Complaint in Virginia
SUN HEALTHCARE: Gilman and Pastor File Complaint in New Mexico

SUN HEALTHCARE: Liebenberg & White File Complaint in New Mexico
TOBACCO LITIGATION: Industry Targeted Teens, Old Smoker Dies
WESTERN RESOURCES: Hasn't Received Protection One Lawsuit


                            *********


AMERICAN FAMILY: Discrimination Settlement Helping Homeowners
-------------------------------------------------------------
The Milwaukee Sentinel & Journal reported that an NAACP
committee assessing the impact of a $9.5 million central city
homeowners program, funded through the settlement of the
landmark American Family Insurance discrimination lawsuit, is
giving out generally high marks.

"During the last 31/2 years, the settlement funds have helped to
revitalize central city homes and neighborhoods," Lois Parker,
chairwoman of the NAACP committee, told the Milwaukee Sentinel &
Journal. "The funds have enabled hundreds of homeowners to
purchase, maintain and improve their properties," she said. "It
has made a difference."

The Milwaukee Sentinel & Journal reported that the Greenline
Homeowner Assistance Programs, which began in 1995, have
provided low-interest mortgage and home improvement loans,
grants for down payments, closing costs, and emergency repairs
needed to qualify for home insurance, and home buyer counseling.
According to the 21-page "Greenlining: A Progress Report
Insuring Homes and Improving the Community," 1,652 new
homeowners insurance policies were written in the central city
area. That area was the focus of the settlement of the
"redlining" case against the insurance company. Redlining is the
practice of excluding some neighborhoods from insurance coverage
and home mortgages.

"It's been very positive," Ald. Marvin Pratt told the Milwaukee
Sentinel & Journal. Pratt is one of eight African-American
homeowners who, along with the local NAACP, filed the
discrimination case against American Family in 1990. The class-
action lawsuit was filed on behalf of all black homeowners in
the city of Milwaukee.

The Madison-based American Family, the state's largest seller of
homeowners insurance, reportedly paid more than $16.5 million to
settle the case, $5 million of which went directly to the
plaintiffs in the suit. The Milwaukee Sentinel & Journal wrote
that the agreement also called for American Family to set a goal
of adding 1,800 policies during the five-year Greenline program.
American Family is also fulfilling its agreement to hire more
African-American agents. Before the lawsuit, there were four
African-American agents; there are now 18.

Homeownership and revitalization efforts, through the Greenline
program, have also increased, according to the Milwaukee
Sentinel & Journal. As of January, an estimated $2.3 million had
been allocated to subsidize mortgages for 375 homeowners. As of
December, an estimated $1 million was allocated to 96 families
for home improvement loans, with the average loan amount being
about $10,000. At least $271,328 has been allocated in grants
for down payments and closing costs for 197 families. Also, $1.2
million in loans and $88,649 in grants have been allocated to
help 259 families make emergency repairs.

The Milwaukee Sentinel & Journal also noted that as part of the
program, $320,000 has been granted to Housing Resource Inc. and
Neighborhood Housing Services to provide new and additional
homeownership, home maintenance and credit counseling
opportunities for homeowners, and people seeking to be
homeowners. So far, that program has helped 779 homeowners.

Rose Cameron-Rollins, executive director of the Williamsburg
Heights Community Center, told the Milwaukee Sentinel & Journal
that not enough was being done to promote the programs
throughout the community. She added that some of the loan and
grant programs involved too much red tape.

In the Milwaukee Sentinel & Journal story, Pratt said that more
attention will be paid to making it easier for residents to get
home improvement loans. "This is an area that we haven't been
able to make much headway on," he said. "We are going to make
riskier home improvement loans." He said plans are in the making
to place $200,000 in settlement funds into a new city home and
capital improvement program.

The NAACP committee is also looking to raise the cap on
emergency repair grant funds from $1,500 to $3,000.


CHS ELECTRONICS: Burt & Pucillo File Complaint in Florida
---------------------------------------------------------
Burt & Pucillo, LLP filed a class action lawsuit alleging
violations of the federal securities laws in the United States
District Court for the Southern District of Florida, Miami
Division against CHS Electronics Corp. (NYSE: HS) and its senior
management, Claudio Osorio (Chief Executive Officer), Craig Toll
(Chief Financial Officer) and Pasquale Giordano (the head of
European operations where the overstatement of revenue and
earnings occurred). The action is brought on behalf of a class
of persons who purchased the common stock of the Company during
the period from June 19, 1998 through March 19, 1999.

The Complaint in this action alleges that purchasers of the
Company's common stock during this time were damaged by reason
of the fact that the Company's revenue and earnings were
materially overstated. Specifically, during the second, third
and fourth quarters of 1998, vendor rebates were overstated. The
complaint further alleges that preliminary fourth quarter
earnings were overstated by 50%, when, in fact, the Company
earned $13 million in the quarter other than the $26.2 million
previously reported.

For more information, call Michael J. Pucillo or Wendy H.
Zoberman at 561-835-9400 or 800-349-4612, or write to them at
law@burt-pucillo.com via email.


COMPAQ COMPUTER: Berger & Montague File Complaint in Texas
----------------------------------------------------------
Berger & Montague, P.C. and Susman Godfrey filed a class action
lawsuit on behalf of Robert C. Daniels and those persons who
purchased securities of Compaq Computer Corporation (NYSE: CPQ)
between January 27, 1999 and April 9, 1999 in the United States
District Court for the Southern District of Texas.

It charges Compaq, its President and Chief Executive Officer,
Eckhard Pfeiffer, its Chief Financial Officer, Earl L. Mason,
and two senior vice presidents, William Strecker and Michael
Winkler, with violating the federal securities laws by
misrepresenting and failing to disclose material information
regarding weakening demand in certain market sectors which led
to slower sales of Compaq's products in those markets and
declining profitability from what Compaq and the market had
forecast. It alleges that at the same time that Compaq was
experiencing a slow down in sales to small and medium size
businesses, particularly in North America and Europe, defendants
repeatedly made statements to the market directly and through
securities analysts that demand for Compaq's products and
services remained strong.

Defendants Mason, Strecker and Winkler and other executives of
the Company took advantage of the inflated stock price by
selling over $50 million in Compaq stock while those shares were
trading at inflated prices. When Compaq belatedly revealed the
slow down in demand and the fact that first quarter 1999
earnings would be less than half what Compaq and analysts had
forecast, the price of Compaq shares plummeted, and investors
who purchased Compaq securities were damaged.

To learn more, call Sherrie R. Savett, Esq., at 888-891-2289, or
write investorprotect@bm.net via email.


COMPAQ COMPUTER: Berman DeValerio Files Complaint in Texas
----------------------------------------------------------
Berman, DeValerio & Pease LLP filed a complaint against Compaq
Computer Corp. (NYSE: CPQ) in the United States District Court
for the Southern District of Texas. The lawsuit, which seeks
class action status, is brought for violations of Section 10(b)
of the Securities Exchange Act of 1934 on behalf of purchasers
of Compaq Computer's common stock during the period January 27,
1999 through April 9, 1999.

According to attorney Jeffrey Block, "the action charges that
certain of Compaq's senior officers made knowingly false and
misleading statements concerning Compaq's 1999 first quarter
performance. It is also alleged that certain Compaq insiders
sold millions of dollars of Compaq common stock during the class
period." On April, 12, 1999, after Compaq revealed it would not
meet 1999 first quarter earnings estimates, its common stock
price plummeted 22% to close at $24 1/16 on April 12, 1999. The
stock recently traded as high as $47 5/8.

For more information, contact Leslie R. Stern, Esq., Jeffrey C.
Block, Esq., at bdplaw@bermanesq.com or 800-516-9926.


COMPAQ COMPUTER: Pasternak Feldman Files Complaint in Texas
-----------------------------------------------------------
A lawsuit has been filed by the law firm of Pasternak, Feldman &
Plutnick, P.A., of Livingston, New Jersey on behalf of two
Plaintiffs and a proposed class of purchasers of Compaq common
stock and options for common stock and sellers of put options
for Compaq common stock against Compaq Computer Corporation
(NYSE: CPQ) and certain officers and directors for the period
January 27, 1999 through April 9, 1999. The suit is filed in the
U.S. District Court for the Southern District of Texas where
Compaq maintains its U.S. headquarters.

The complaint alleges that Compaq and certain officers and
directors violated Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 and Rule 10b-5 by making false and
misleading statements concerning the company's financial
condition, particularly with respect to earnings and revenue
during the first quarter of 1999, and that as a result of these
alleged violations, the price of common shares of Compaq was
artificially inflated.

Furthermore, the complaint alleges that, during the period
defendants made false and misleading statements, certain Compaq
officers and at least one director of Compaq sold shares at
artificially inflated prices, using material inside information.

For more information, call Steven Pasternak at 888-478-4334 or
973-994-7900, or write pasternaks@aol.com via email.


KTI, INC.: Schatz & Nobel File Complaint in New Jersey
------------------------------------------------------
A class action complaint was commenced by the law firm of Schatz
& Nobel, P.C., on April 16, 1999 in the United States District
Court for the District of New Jersey on behalf of all purchasers
of KTI, Inc. (NASDAQ: KTIE) common stock from May 4, 1998 to
August 14, 1998.

The Complaint charges that KTI and certain of its officers and
directors violated Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 by, among other things, knowingly or
recklessly making misrepresentations about the Company's
financial condition. The Complaint further alleges that by
making these material misrepresentations, the Defendants
artificially inflated the price of the Company's common stock.

To learn more, call Andrew M. Schatz or Jeffrey S. Nobel at 800-
797-5499 or write to SN06106@aol.com via email.


NETWORK ASSOCIATES: Finkelstein Thompson Files California Suit
--------------------------------------------------------------
Finkelstein, Thompson & Loughran filed a securities fraud class
action lawsuit in the United States District Court for the
Northern District of California, on behalf of purchasers of
Network Associates, Inc. (Nasdaq: NETA) securities between
January 20, 1998 and April 6, 1999. Defendants include Network
Associates and a certain officer and director.

The Complaint charges that defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5
by misrepresenting the financial condition of Network Associates
by issuing false and misleading financial statements for the
1997 and 1998 fiscal reporting periods, and thereby artificially
inflating the Company's share price. On April 6, 1999 Network
Associates shocked the market by announcing that first-quarter
profits would fall short of estimates as a result of a slowdown
in demand and concerns that it would have to restate fourth-
quarter earnings downward after a review by the U.S. Securities
and Exchange Commission of write-offs taken by Network in
connection with its 1997 and 1998 acquisitions. As a result of
the SEC review, Network Associates decreased its write-offs for
acquired in-process research and development by $169 million in
1998 and $45 million in 1997.

To learn more, call Shannon P. Keniry at 888-333-4409 or 202-
337-8000, or write SPK@FTLLAW.com via email, or call Joshua
Staub at 800-557-5674.


NETWORK ASSOCIATES: Reinhardt & Anderson File Suit in California
----------------------------------------------------------------
A class action has been commenced by the law firm of Reinhardt &
Anderson in the United States District Court for the Northern
District of on behalf of persons who purchased the publicly
traded securities of Network Associates, Inc. (Nasdaq: NETA)
between January 20, 1998 and April 6, 1999, including those
persons who received shares of Network Associates in exchange
for the American Depository Receipts (ADR's) of Doctor Solomon's
Group PLC (Nasdaq: SOLLY) and (Nasdaq: SOLL), in connection with
Network Associates' acquisition of Doctor Solomon's on August
13, 1998.

The complaint alleges that Network Associates and certain of its
officers and directors violated Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934. The complaint charges that
defendants issued a series of materially false and misleading
public statements about Network Associates, its financial
results and its business prospects, including that the Company
was experiencing strong pricing trends, its business was
healthy, its outlook had never been better and, as a result, it
would earn EPS of $2.12 in 1999. During this time, several
officers of the Company sold over 852,500 shares of Network
Associates stock at artificially inflated prices which enabled
them to realize proceeds of approximately $33 million.

After the market closed on April 6, 1999, Network Associates
shocked the market by admitting that in connection with the
SEC's investigation, Network Associates had determined that: its
in-process research and development expenditures were overstated
by $45 million in 1997; its amortization expenses were
materially understated in 1997; its in-process research and
development expenditures were overstated by $169 million in
1998; its amortization expenses were materially understated in
1998; and its amortization expenses for the First Quarter of
1999 would increase to $58 million from planned expense of $22
million.

To learn more, call Randall H. Steinmeyer at 888-253-5139 or
651-227-9990 or write to ralaw@minn.net via email.


OHIO MENTAL HOSPITALS: End of Negotiations Over Community Care
--------------------------------------------------------------
The United Press International reported that negotiations are at
an end in a class-action lawsuit for patients in state mental
hospitals which could force the state to expand its community-
based care system. The Ohio Legal Rights Service, an independent
state advocacy office, claims Ohio is violating the federal
Rehabilitation Act and Medicaid regulations. The lawsuit also
alleges the state is denying the rights of seven-thousand
patients who are mentally retarded or developmentally delayed.

US District Court Magistrate Norah McCann King issued a stay
last fall to allow the Legal Rights Service time to negotiate
with the state M-R D-D department and county mental health
associations. UPI reports that the case centers on whether Ohio
is spending enough to help hospitalized clients waiting to live
in group homes. State officials told UPI that setting up small
homes will add millions to the department's proposed one-point-
six-billion-dollar budget.


PIPER FUND: Celox Laboratories Reports Settlement Recovery
----------------------------------------------------------
Reporting its operating results for the quarter ended February
28, 1999, CELOX LABORATORIES INC., recorded an Investor
Settlement Receivable in the amount of $133,000 on its Balance
Sheet in order to reflect the expected settlement proceeds from
a class action lawsuit which was brought on behalf of investors
in the Piper Fund.

In December, 1995, the District Court Judge approved the Class
Action Settlement. Payments from the Piper Fund have been
received in accordance with the schedule agreed upon in the
settlement. In Fiscal 1998, the Company received a final payment
of $22,446 plus interest. The total payments received exceeded
the estimated recovery of $133,000 and the excess was credited
to other income. In September, 1998 a final check in the amount
of $5,682 was received. This payment represented a residual
distribution of unclaimed funds and money previously reserved
for potential income tax liability on behalf of the settlement
fund.

A separate Class Action lawsuit against Piper Fund's auditors,
KPMG Peat Marwick, has been certified by the Court. Celox is a
member of the Class identified by the lawsuit, but it has not
directly participated in the litigation. Celox expects the
attorneys for the plaintiffs will continue to pursue this
litigation in the federal court in Minneapolis.


SHOLODGE, INC.: Trial Reset to September 13, Pending Appeal
-----------------------------------------------------------
Paul Senior v. ShoLodge, Inc., Leon Moore and Bob Marlowe, Case
No. 98C-136, Chancery Court for Sumner County, Tennessee at
Gallatin, filed April 29, 1998, names the Company and two of its
officers, Leon Moore and Bob Marlowe, as defendants in a class
action lawsuit by plaintiffs who claim to be shareholders of the
Company. The case originally named Michael A. Corbett, former
chief financial officer of the Company, as a defendant, but the
plaintiffs subsequently deleted Mr. Corbett as a named
defendant.

The Senior Case alleges that the Company violated certain anti-
fraud provisions of the Tennessee Securities Act of 1980, as
amended, by issuing allegedly false and misleading statements
and financial information to the investing public during the
first three quarters of 1997. The Company moved to dismiss the
complaint on the basis that the plaintiff's allegations failed
to state a cause of action under the Tennessee Securities Act of
1980. The court denied the motion but granted the Company's
request that the Tennessee Court of Appeals review the court's
decision on an interlocutory basis. The court's denial of the
Company's motion is now before the Court of Appeals.

On January 29, 1999, the Company filed its appellate brief. A
date for oral argument before the Court of Appeals has not as
yet been set. Because of the pendency of the appeal, the
chancery court has continued the trial date to September 13,
1999.


SOFTWARE AG: Finkelstein Thompson Files Complaint in Virginia
-------------------------------------------------------------
Finkelstein, Thompson & Loughran filed a class action lawsuit in
the United States District Court for the Eastern District of
Virginia on behalf of investors who bought Software AG Systems,
Inc. (NYSE: AGS) stock between November 17, 1997 and April 5,
1999. The lawsuit charges Software AG, several of its top
officers and Thayer Equity Investors III, LP with violations of
the securities laws and regulations of the United States.

The complaint alleges that defendants falsely reported the
Company's financial results and overstated its sales growth
causing the Company's stock price to trade at an artificially
high price and allowing defendants to use inside information to
sell their shares of Software AG common stock for millions of
dollars of personal profit. On April 5, 1999, the Company
disclosed that its revenues and earnings were well below
analysts' expectations. On the release of this news the
Company's stock price dropped 29%.

To learn more, call Donald J. Enright at 888-333-4409 or 202-
337-8000, or write DJE@FTLLAW.com via email.


SOFTWARE AG: Schiffrin & Barroway File Complaint in Virginia
------------------------------------------------------------
The law firm of Schiffrin & Barroway, LLP filed a class action
lawsuit in the United States District Court for the Eastern
District of Virginia on behalf of all purchasers of the common
stock of Software AG Systems Inc. (NYSE: AGS) from Nov. 18, 1997
through April 2, 1999. The complaint charges Software AG Systems
and certain of its officers and directors with issuing false and
misleading statements concerning the Company's financial
condition.

To learn more, call Andrew L. Barroway, Esq. at 888-299-7706 or
610-667-7706 or write info@scbclasslaw.com via email.


SOFTWARE AG: Weiss & Yourman File Complaint in Virginia
-------------------------------------------------------
A class action lawsuit against the Software AG Systems, Inc.
(NYSE: AGS) and certain individuals associated with the Company
was filed by Weiss & Yourman in the United States District Court
for the Eastern District of Virginia on behalf of investors who
purchased Software AG shares during the period November 18, 1997
through April 1, 1999.

The complaint alleges that defendants issued materially false
and misleading statements regarding the Company's financial
results and overstated its sales growth. These false and
misleading statements caused the price of Party City's common
stock to be artificially inflated in violation of Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934.

To learn more, call 888-593-4771 or 212-682-3025 or write to
wynyc@aol.com via email.


SUN HEALTHCARE: Gilman and Pastor File Complaint in New Mexico
--------------------------------------------------------------
The law firm of Gilman and Pastor, LLP filed a class action in
the United States District Court for the District of New Mexico,
on behalf of all purchasers of Sun Healthcare Group, Inc. stock
between June 2, 1998 and February 1, 1999. The complaint alleges
that defendants violated Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 as well as Rule 10b-5 by making
false and misleading statements concerning the impact of the
changes in the Medicare reimbursement system on Sun Healthcare's
operating results and business prospects.

To learn more, call Peter A. Lagorio or Daniel D'Angelo by
telephone 617-589-3750 or write pl@gilmanpastor.com by email.


SUN HEALTHCARE: Liebenberg & White File Complaint in New Mexico
---------------------------------------------------------------
Liebenberg & White filed a class action lawsuit in the United
States District Court for the District of New Mexico on behalf
of purchasers of Sun Healthcare Group, Inc. (NYSE: SHG) common
stock from June 2, 1998 through February 1, 1999.

The complaint charges defendants with violations of the federal
securities laws, alleging that the defendants inflated the
market price of Sun Healthcare stock. Specifically, defendants
issued materially false and misleading statements about the
impact of changes in the Medicare reimbursement system on the
Company. The changes, known as the prospective payment system or
"PPS", reduced the reimbursement rate for all post-hospital
extended care services by imposing a per diem flat rate for
those services.

The Complaint alleges that defendants failed to disclose (1) its
substantially lower profit margins and reimbursement rates for
ancillary services under the PPS, (2) the impairment of goodwill
of Sun Healthcare's domestic facilities as a result of the PPS,
and (3) the substantial anticipated losses of Retirement Care
Associates which Sun Healthcare had recently acquired.

On February 1, 1999, Sun Healthcare announced that it expected
to report significant losses from operations for the fourth
quarter and year ended December 31, 1998, and to take charges
against earnings in connection with the massive restructuring of
its operations. The market price of Sun Healthcare stock lost
over 50% of its value the day after the Company's announcement,
closing at $2-1/16 per share.

For more details, contact Ann D. White, Esquire, Natalie A.
Finkelman, Esquire or Mark J. Dorval, Esquire by email at
lawyers@liebenberg.com or call 877-481-0272 or 215-481-0272.


TOBACCO LITIGATION: Industry Targeted Teens, Old Smoker Dies
------------------------------------------------------------
The United Press International reported from Alabama that
prominent trial lawyer Jere Beasley filed another lawsuit
against the tobacco industry. This class action suit claims that
the minor children in Alabama were seduced into smoking either
by peer pressure of by advertising directed at youngsters.

Beasley also wants to have another group benefit as part of the
settlement. "The American Cancer Society, the American Heart
Association, the Lung Association, Coalition for a Tobacco Free
Alabama, Children's Hospitals, and other groups we could agree
on," Beasley told UPI. Beasley said internal documents from the
tobacco industry prove that they deliberately targeted children
as young as twelve in order to keep their sales volume high.

In a separate story, UPI also reported that a Florida man who
filed suit against four tobacco companies, contending smoking
cigarettes ruined his health, has died in St. Petersburg at the
age of 71. Eugene Merkow, a pack-a-day smoker for more than 50
years, had severe emphysema and heart disease.

Merkow's lawsuit claimed his addiction to cigarettes turned him
from a vibrant, successful insurance salesman into a scarecrow-
thin man who could not walk from his car to a client's front
door without running out of breath. According to UPI, the suit
alleged that negligence and conspiracy on the part of cigarette
makers ruined his health. Merkow's complaint is now part of a
class-action suit being tried in Miami-Dade County Circuit
Court. He is survived by his wife and two children.


WESTERN RESOURCES: Hasn't Received Protection One Lawsuit
---------------------------------------------------------
In its latest annual report, WESTERN RESOURCES, INC., tells
investors that it "understands that class action lawsuits
relating to the Protection One restatement of 1997 and 1998
financial statements and subsequent decrease in stock price were
recently filed naming Protection One, Western Resources and
certain officers of Protection One." Western Resources also says
that it has not yet been served with the lawsuits.



                            *********

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  * * *