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C L A S S A C T I O N R E P O R T E R
Monday, June 16, 2003, Vol. 5, No. 117
Headlines
BIG LOTS: Employees Commence Two Overtime Wage Suits in CA Court
CALIFORNIA: Los Angeles To Settle Lawsuit Over Homeless Sweeps
CANADA: Quebec Court Upholds Settlement of Suit V. Royal Trust
DAIMLERCHRYSLER AG: DE Court Certifies Securities Fraud Lawsuit
DELOITTE & TOUCHE: Firm To Delay Summons For LeisureNet Lawsuit
DYNEGY INC.: Three Former Execs Charged With Conspiracy, Fraud
EXXON MOBIL: Appeals Court Upholds $1.2B Award in Fraud Lawsuit
GROUP HEALTH: Class in Lawsuit Given One Week To Submit Claims
LANTRONIX INC.: Plaintiffs File Consolidated Stock Lawsuit in CA
MBNA CORPORATION: Faces Lawsuit Over TWA Frequent Flyer Program
OKLAHOMA: Pilcher, School District Join Tar Creek Superfund Suit
SCHWEGMANN GIANT: LA Appeals Court Upholds $5.4M Award
THQ INC.: CA Court Grants Approval to Fraud Suit Settlement
UNITED STATES: Representatives Pass Class Action Fairness Act
WASHINGTON DC: Court Rules in City's Favor in Red Light Lawsuit
WORLDCOM INC.: Judge Considers Stock Award, Along with $5M Pact
New Securities Fraud Cases
BARRICK GOLD: Cauley Geller Lodges Securities Fraud Suit in NY
BARRICK GOLD: Milberg Weiss Files Securities Suit in S.D. NY
eUNIVERSE INC.: Abbey Gardy Commences Securities Suit in C.D. CA
FEDERAL HOME: Wolf Haldenstein Lodges Securities Suit in E.D. VA
GOLDMAN SACHS: Pomerantz Haudek Files Securities Suit in S.D. NY
MERRILL LYNCH: Berger& Montague Files Securities Suit in S.D. NY
ORTHODONTIC CENTERS: Marc Henzel Lodges Securities Lawsuit in LA
ORTHODONTIC CENTERS: Schatz & Nobel Lodges Securities Suit in LA
PARADIGM MEDICAL: Marc Henzel Lodges Securities Lawsuit in Utah
REGENERON PHARMACEUTICALS: Marc Henzel Files Stock Lawsuit in NY
SARA LEE: Marc Henzel Commences Securities Fraud Suit in N.D. CA
SUPERGEN INC.: Marc Henzel Lodges Securities Lawsuit in N.D. CA
ULTIMATE ELECTRONICS: Marc Henzel Lodges Securities Suit in CO
UNUMPROVIDENT CORPORATION: Marc Henzel Files TN Securities Suit
*********
BIG LOTS: Employees Commence Two Overtime Wage Suits in CA Court
----------------------------------------------------------------
Big Lots, Inc. faces two class actions filed in the Superior
Court of San Bernardino County, California, relating to the
calculation of earned overtime wages for certain of the
Company's former and current store managers and assistant store
managers in that state.
Each of the lawsuits was filed by plaintiffs who are current or
former store managers or assistant store managers on behalf of
themselves and other similarly situated store managers and
assistant store managers. The lawsuits allege that the Company
improperly classified such employees as exempt under
California's wage and hour laws and seek damages, restitution,
reclassification and attorneys fees and costs.
While the alleged damages in these lawsuits are substantial, the
Company denies these actions and is pursuing alternative dispute
resolution possibilities. The Company believes that if an
adverse resolution of these cases occurs, it could have a
material adverse effect on the Company's results of operations
for the year in which resolution occurs. However, management
does not believe that such an adverse resolution would have a
material adverse effect on the Company's financial condition or
liquidity. Where and to the extent that the Company believes
that a loss is probable and can be reasonably estimated, the
Company will record a liability.
CALIFORNIA: Los Angeles To Settle Lawsuit Over Homeless Sweeps
--------------------------------------------------------------
The City of Los Angeles, California reached an agreement for the
lawsuit filed on behalf of 58 people who were improperly
arrested in November as part of law enforcement sweeps of
downtown's skid row, NBCTV4 reports.
The suit was commenced after city authorities conducted a joint
sweep of the city in November, arresting more than 200 people on
streets and in hotels on skid row. The suit states 84 of the
people arrested were taken in for alleged parole violations.
The suit asserts that police had warrants for only 26 of the
parolees and that there was no reason to detain the others, and
that the police violated the people's constitutional rights.
The Federal Court issued an injunction against the City in April
after the lawsuit was filed.
City officials told NBCTV4 that they have agreed to pay $75,000
in damages to the plaintiffs, who were either taken into custody
or are other skid row residents who may have been caught up in
similar sweeps. The money will be distributed according to a
still-to-be determined formula based on time spent in jail and
any other losses. The officials also said they would stop from
rounding up low-income and homeless people unless there is a
reasonable suspicion that they have committed a crime.
"I hope it makes a difference," attorney Carol Sobel, who joined
the American Civil Liberties Union in bringing the suit told
NBCTV4. "The police retain the right to question and do
consensual stuff on skid row, but the presence of police in an
area where people are poor and homeless limits their consent to
a great degree."
The court must still approve the terms of the settlement, which
could be amended pending legal challenges to a separate federal
suit over parolee searches.
CANADA: Quebec Court Upholds Settlement of Suit V. Royal Trust
--------------------------------------------------------------
Quebec Superior Court (Canada) Justice Claude Pellier upheld an
earlier judgment of an Ontario Superior Court ruling by Mr.
Justice Haines, approving the settlement of a class action
against Royal Trust.
The settlement will result in more than 8,500 pension plan
members across Canada receiving an average settlement of $24,000
in cash and/or enhanced pensions, with those entitled receiving
no less than $2,000 and some receiving substantially more than
the average settlement. The judgments are based upon an
agreement between the Association for Pension Enhancement at
Royal Trust (APERT), acting on behalf of the pension plan
members and the Royal Bank of Canada, the parent company of
Royal Trust. The settlement is valued at approximately $50.9
million.
"At issue was administration of the Royal Trust Pension Plan
before and after Royal Trust was purchased by the Royal Bank of
Canada in 1993," says Iain Sneddon, partner with Cohen Highley
LLP and co-counsel for the class action. "This settlement will
benefit Royal Trust families across the country."
The suit originated in 1996 when several Royal Trust pension
plan members retained Cohen Highley LLP to obtain a preliminary
opinion on their entitlement to a substantial surplus in the
plan.
John Burleton, Chairman of APERT's Negotiating and Executive
Committee, is delighted with the judgment and resulting benefits
to members and their families. "Cohen Highley brought together
the concerns of our members in collective and effective way.
The APERT members' support of and participation in this class
action to resolve these issues and find a solution has clearly
paid dividends today."
For more information, contact Iain Sneddon, Partner, Cohen
Highley LLP, by Phone: (519) 636-4666 or (519) 672-9330 or visit
the website: http://www.cohenhighley.comor by E-mail:
lawyers@cohenhighley.com
DAIMLERCHRYSLER AG: DE Court Certifies Securities Fraud Lawsuit
---------------------------------------------------------------
Wilmington, Delaware Federal Judge Joseph J. Farnan granted
class action certification to the multi-billion dollar
securities suit filed against DaimlerChrysler AG, Dow Jones
reports.
The decision puts shareholders, led by billionaire investor Kirk
Kerkorian, in a better position for a settlement, lawyers
assert. The judge also excluded non-US Chrysler shareholders
from the class action certification, adding that a December 1
trial date was set for the suit, which began in 2000.
Dow Jones noted that the group of former Chrysler shareholders
claims that DaimlerBenz AG and its Chief Executive, Juergen
Schrempp, planned and executed a takeover of Chrysler in 1998,
although the company called the deal a "merger of equals."
Chrysler shareholders as a group would have received $5 billion
to $10 billion more as a premium for giving up control to
Daimler had the companies had a takeover agreement, they say,
Dow Jones noted.
Dow Jones said the suit began after a story in the Financial
Times quoted Mr. Schrempp saying that he had always planned a
takeover but that Chrysler would agree only to a merger.
According to the news agency, Michael Schell, lawyer for
DaimlerChrysler, on Thursday called the judge's certification of
the class action "routine."
The company believes the suit has no merit, he continued. The
Company contends the transaction was a "merger of equals," and
shareholders suffered no damages. Further, the suit came after
a one-year statute of limitations expired on litigation related
to the merger.
Richard Bemporad, lawyer for an institutional investor,
Glickenhaus & Co., told Dow Jones that his client and some other
investors are pursuing separate suits because they also are
seeking punitive damages for fraud.
DELOITTE & TOUCHE: Firm To Delay Summons For LeisureNet Lawsuit
---------------------------------------------------------------
Empowerment company Sekunjalo Investments will delay issuing
summons in its planned class action against accounting firm
Deloitte & Touche, over its role in the collapse of the
LeisureNet group in 2000, iafrica.com reports.
Sekunjalo previously said it would sue the firm for damages, on
the grounds that Deloitte should have warned shareholders
against investing in LeisureNet. "In preparing the papers, it
has now become apparent that the basis on which Sekunjalo will
sue Deloittes is possibly unique to Sekunjalo. This is because
of the specific factual circumstances behind Sekunjalo"s
investments in LeisureNet," the group said in a SENS
announcement, iafrica.com reports.
However its lawyers had not yet ruled out the class action. The
group also urged Leisurenet's liquidators to pursue
investigations overseas, "such as Malta, England and Germany",
where Leisurenet's health arm Healthland operated. Sekunjalo
said a development in that regard might well impact on the
claim.
DYNEGY INC.: Three Former Execs Charged With Conspiracy, Fraud
--------------------------------------------------------------
Three former Dynegy, Inc. executives were charged in a federal
indictment of conspiracy and fraud over their roles in
accounting transactions that improperly boosted the energy
company's cash flow and lowered its taxes, the Associated Press
reports. The three officers also face a civil lawsuit filed by
the United States Securities and Exchange Commission.
The three officers were:
(1) Jamie Olis, 37, former senior director of tax planning,
(2) Gene Shannon Foster, 44, former vice president of tax,
and
(3) Helen Christine Sharkey, 31, a former member of
the Company's risk control and deal structure group
The suit charges them with conspiracy, securities fraud, mail
fraud and wire fraud. The defendants are scheduled to appear
before a federal magistrate this week.
"These defendants are accused of withholding the truth about
Dynegy's true fiscal condition from the SEC, shareholders and
the public," US Attorney Michael Shelby told AP.
The Company agreed to pay $3 million to the SEC last September
to settle its probe of a natural gas deal called Project Alpha
which allegedly improperly boosted the company's cash flow. The
government alleges the defendants had a role in the deal.
EXXON MOBIL: Appeals Court Upholds $1.2B Award in Fraud Lawsuit
---------------------------------------------------------------
Exxon Mobil Corporation was ordered to pay $1.2 billion to its
service station operators, as the United States Appeals court
affirmed a jury verdict in a class action filed against it,
Reuters reports.
The jury had found the Company guilty of overcharging the
operators for motor fuel and trying to conceal it. The class
action suit was filed on behalf of about 10,000 current or
former Exxon dealers who operated a service station between
March 1, 1983 and August 28, 1994.
GROUP HEALTH: Class in Lawsuit Given One Week To Submit Claims
--------------------------------------------------------------
Thousands of class members in a class action against Group
Health Cooperative have one week left to submit claims to obtain
reimbursement for alternative health care, according to Sirianni
Youtz Meier & Spoonemore. The deadline for submitting claims is
June 19, 2003.
The opportunity to be reimbursed for care provided by
naturopaths, acupuncturists and massage therapists is the result
of a settlement earlier this year in a class action filed
against the Company.
Tens of thousands of current and former members of Group Health
Cooperative, Group Health Options and Group Health Northwest are
eligible for reimbursement of what will add up to millions of
dollars in fees they paid for alternative medical services. To
obtain reimbursement, people who were insured with Group Health
between June 1996 and December 2002 must complete a claim form
and mail it to Group Health. There is no fee or charge for
filing a claim.
The settlement would reimburse eligible consumers for all of the
money they spent out of pocket, except for a "co-pay" fee of
$8.65 per visit that would be deducted from the reimbursement.
The settlement was reached earlier this year after two class
actions were filed in state and federal court against Group
Health.
Both lawsuits made similar allegations that Group Health
illegally required members to exhaust "traditional" medical
treatment and imposed strict requirements on physician referrals
before they could receive treatment by naturopaths,
acupuncturists or massage therapists. The lawsuit is based on
Washington's 1996 "Every Category of Provider" law, which
requires health care insurers to cover all forms of state-
licensed, regulated health care on the same basis.
In the settlement, Group Health denies that it violated the law.
The settlement has been granted preliminary approval by both a
state and federal court. Final approval will be sought from
both courts next week.
For more information, contact Jonathan Meier or Rick Spoonemore
by Phone: 866-510-1792 by E-mail: altcarelaw@sylaw.com or visit
the firm's Website: http://www.altcarelaw.com.
LANTRONIX INC.: Plaintiffs File Consolidated Stock Lawsuit in CA
----------------------------------------------------------------
Plaintiffs in the securities class actions filed against
Lantronix, Inc. (Nasdaq: LTRX) and other defendants filed a
first consolidated amended complaint in the United States
District Court for the Central District of California.
The consolidated complaint contains new allegations, including
allegations against defendants for the issuance of false
statements in connection with Lantronix's initial public
offering (IPO) on August 4, 2000 and its secondary public
offering on July 17, 2001.
The original suits were filed against the Company and certain of
its current and former officers and directors alleging
violations of the Securities Exchange Act of 1934, as amended.
The suits, filed on behalf of persons who purchased or otherwise
acquired the Company's common stock during the period of April
25, 2001 through May 30, 2002, inclusive, allege that the
defendants caused the Company to improperly recognize revenue
and made false and misleading statements about the Company's
business.
The suits further allege that that the Company materially
overstated its reported financial results, thereby inflating the
Company's stock price during its secondary Offering in July
2001, as well facilitating the use of the Company's stock as
consideration in acquisitions.
For more information, contact Elizabeth P. Lin of Weiss &
Yourman - Los Angeles by Phone: (800) 437-7918 by E-mail:
info@wyca.com or visit the firm's Website: http://www.wyca.com
MBNA CORPORATION: Faces Lawsuit Over TWA Frequent Flyer Program
---------------------------------------------------------------
The law firm of Weiss & Yourman is currently asking for
information in connection with a pending class action against
MBNA Corporation, MBNA America Bank, N.A. and American Airlines
on behalf of consumers who applied for and received an MBNA/TWA
Aviators Visa or MasterCard Credit Card.
The consumers paid an enrollment and/or annual fee for the
credit card and earned frequent flier TWA Aviator miles for
every dollar they spent using the credit card, which miles could
be used to fly on TWA and/or affiliated partners. However, TWA
filed for bankruptcy in January 2001. American Airlines
acquired TWA and publicly announced that it would definitely
honor the TWA Aviator miles, promising to transfer and post the
miles into American Airline's AAdvantage Program.
The lawsuit alleges that consumers were promised by MBNA and
American Airlines, but did not receive within a reasonable
amount of time or at all, the frequent flier miles posted to the
American Airline's AAdvantage Program. Moreover, the lawsuit
alleges that MBNA has failed to provide a refund, on a pro rata
basis, of the annual fees based on the unused portion of the
Credit Card following termination of the MBNA/TWA Aviators
Program on September 24, 2001.
Following the lawsuit's filing, American Airlines admitted that
it had not posted all the Aviator miles to the American Airlines
AAdvantage Program, and that by the end of January 2003, it had
finally credited consumers with all miles due.
For more information, contact Zev B. Zysman by Phone:
800-437-7318 or visit the firm's Website: http://www.wyca.com
OKLAHOMA: Pilcher, School District Join Tar Creek Superfund Suit
----------------------------------------------------------------
The city of Picher and the Picher-Cardin School District joined
a class action filed in the United States District Court in
Tulsa, Oklahoma against six mining companies who were associated
with the Tar Creek Superfund Site, the Joplin Globe reports.
The Tar Creek Site is a former lead mining field and has been
targeted for federal lead clean up for many years. The suit
wants the companies to pay for a relocation program for area
residents. The suit is separate from those filed last year by
eight Picher area families against the mining companies, through
a Tulsa law firm.
The suit also seeks damages equal to the amount of the loss of
value of the plaintiffs' properties, plus attorney fees and
cost. The suit further seeks an "independently supervised
medical monitoring program" for all class members and the
establishment of an "independently supervised relocation program
that will ensure the residents of the contaminated properties
will be provided support and financial assistance in relocating
away from the contaminated areas."
John Sparkman, a member of the Picher-Cardin Board of Education,
told the Joplin Globe that the board voted at its last meeting
to join the class action, in which the city already had filed
its claim.
A cleanup plan for the Tar Creek site being put forward by Rep.
Brad Carson, D-Okla., includes a buyout of Picher and Cardin
properties to move residents away from the mountains of chat,
the flint-rock waste left after the lead and zinc ores were
milled out, the Joplin Globe reports.
Bob Walker, superintendent of Picher-Cardin schools, said at a
meeting Wednesday that while his name appears on the suit on
behalf of the school district and Board of Education, he does
not see a buyout plan as the best way to serve the area's
children.
"We have students with very definite learning disabilities we
feel are linked to high blood-lead levels," he told the Globe.
"We also have a unique teaching staff who are completely
familiar with these children's special needs, and have dealt
with them and continue to find new ways to help them learn . If
you take these kids and scatter them to the four winds, then
they're not going to find the same educational environment in
other districts, and their educational progress will suffer for
that."
The class action also names as plaintiffs Picher Mayor Sam
Freeman, and residents Betty Jean Cole, John Frazier, Patsy
Huffman, Edwin Kerley, Patricia Kerley, Larry Olds, H.C.
Baughman, Rayma Grimes and Susie Stone. The suit names as
defendants:
(1) ASARCO Inc.,
(2) Blue Tee Corporation,
(3) Goldfields Mining Corporation,
(4) NL Industries Inc.,
(5) Childress Royalty Co. and
(6) Doe Run Corporation
The mining companies have 30 days in which to file an initial
response to the suit. Responses they have filed in the previous
individual suits claim no liability for lead contamination
because state-of-the-art mining techniques were used, and the
hazards were not known or recognized at the time.
SCHWEGMANN GIANT: LA Appeals Court Upholds $5.4M Award
------------------------------------------------------
New Orleans appeals court ordered former supermarket magnate
John Schwegmann of Schwegmann Giant Super Markets to pay US$5.4M
to retirees of his grocery chain over food vouchers that were
promised before the company was sold and eventually went out of
business, the Associated Press reports.
200 retired employees of the Company filed the suit in 1997,
also naming as defendants the Company, a Schwegmann family
trust, and insurer United States Fidelity & Guaranty Co.
(USF&G), which underwrote insurance for retirement benefits.
The United States Fifth Circuit Court of Appeals upheld a lower
court ruling awarding the plaintiffs $5.4 million. However, it
essentially cleared USF&G of liability. Thus Mr. Schwegmann and
the other defendants are now responsible for the whole amount.
However, Mr. Schwegmann's attorney John Gegenheimer, said his
client does not have the assets to pay. Mr. Gegenheimer said
his client will request a rehearing by the appeals court and
will consider appealing the case to the US Supreme Court if the
judgment stands.
"Unfortunately for Mr. Schwegmann, he is stuck with everything,"
Metairie attorney Howard Kaplan, who represented USF&G in the
case, told AP.
Starting in 1985, retiring employees, 60 or older, and who had
worked for the Company for twenty years were promised $216 in
food vouchers each month until death. Most of these employees
worked without the benefit of a retirement plan during much of
their careers.
The Schwegmann chain slid into financial problems in the mid-
1990s because of an ill-timed expansion plan and increased
competition. The chain was sold to Kohlberg & Co. in 1997,
placed in bankruptcy in 1999 and eventually sold off in pieces,
AP reports.
THQ INC.: CA Court Grants Approval to Fraud Suit Settlement
-----------------------------------------------------------
The United States District Court for the Central District of
California granted preliminary approval to the settlement of a
securities class action filed against THQ Inc. and certain of
its officers and directors.
The suit alleges that defendants violated Rule 10b-5 and Section
20(a) of the Securities Exchange Act of 1934, including
allegations that defendants:
(1) manipulated the Company's stock price;
(2) distributed false and misleading information concerning
revenue recognition, forecasts and earnings estimates;
(3) selectively disclosed material information; and
(4) engaged in insider trading.
The Company entered into a settlement agreement with the
plaintiffs. While it continues to deny plaintiffs' allegations,
the Company agreed to pay $10.2 million under the terms of the
settlement agreement to resolve all claims by plaintiffs against
all defendants. A hearing to consider final approval is
currently scheduled for June 30, 2003.
UNITED STATES: Representatives Pass Class Action Fairness Act
-------------------------------------------------------------
The United States House of Representatives passed the Class
Action Fairness Act of 2003 (H.R. 1115) sponsored by Rep. Bob
Goodlatte, R-Va., by a vote of 253 to 170,
PropertyandCasualty.com reports.
The bill allows for the removal of certain interstate class
actions to federal court from state court if requested by either
plaintiffs or defendants in lawsuits where there is at least $5
million in controversy and the class members meet certain set
requirements. The legislation also sets forth a consumer class
action bill of rights that would include provisions for judicial
review of non-cash settlements, protection against loss by class
members, and clearer settlement information.
The National Association of Mutual Insurance Companies (NAMIC)
praised the passage of the bill. "This bill directly and
effectively addresses the issue of abusive class action
lawsuits," said Monte Ward, NAMIC's federal affairs vice
president, according to PropertyandCasualty.com. "NAMIC
believes that Congress must pass this legislation to stop the
current class action crisis and put interstate class actions in
federal court where they are more appropriate."
"The bi-partisan Class Action Fairness Act is a narrowly-
tailored bill that allows large interstate class actions to more
easily be heard in federal court rather than forcing them to
remain in state courts selected through `forum shopping' by
trial lawyers," Mr. Ward continued.
In the Senate, a companion class action reform bill, S. 274, was
favorably reported out of the Senate Judiciary Committee by a
12-7 margin in early April. The Senate is expected to take up
the bill sometime this summer.
WASHINGTON DC: Court Rules in City's Favor in Red Light Lawsuit
---------------------------------------------------------------
Washington DC Superior Court ruled in favor of the city, saying
that it did not violate the Constitution by imposing fines on
car owners caught on camera speeding down streets or running red
lights, the Washington Post reports.
The suit was filed on behalf of owners of vehicles caught by red
light and photo radar traffic cameras, but who were not driving
them at the time, an earlier Class Action Reporter story states.
The cameras register vehicles that run red lights or exceed the
speed limit.
The plaintiffs are a Howard University student, who owed more
than $1,500 in speeding tickets, and a District of Columbia cab
leasing company, Auto Ward Inc., whose owner Muhammad Seleem
estimated he owed $18,000 in fines. The lawsuit charges that
the city's automatic traffic enforcement system violates the
defendants' rights to due process because it ultimately holds
the vehicle owner responsible, rather than the driver.
In a 14-page decision delivered in court yesterday, Judge Melvin
R. Wright rejected the attorneys' assertions and threw out the
lawsuit. He said the city can presume the owner of the car to
be guilty, as long as the owner is given ample opportunity to
rebut the charge.
"The statute as passed has in essence removed all criminal
penalties for its violation and instead has imposed the
equivalent of a civil fine," Judge Wright wrote, the Post
reports. "No points are (assessed) nor can any person be
imprisoned or have his/her license or registration revoked . for
failure to pay the fine."
The plaintiffs' attorneys questioned the decision. "We're not
going to stop," Mr. Bradshaw said. "This fight isn't over.
We've gone this far with it, and the citizens want us to keep
going."
What was most frustrating, they said, was the judge's
unwillingness to let the case have its day. "The judge is not
going to give the people a hearing in court," Mr. Bradshaw told
the Post. "He is not giving the argument a chance to be heard.
It is possible the case will be forwarded to the D.C. Court of
Appeals, is one possibility, the attorneys said. They might
also consider going to the D.C. Council, with the backing of
motorists who have been snared by the cameras, and pushing for a
change in the law is another, the Post states.
Kevin P. Morison, a spokesman for the D.C. police, applauded the
decision, saying "I think it's a really good day for the law-
abiding motorist, the pedestrians, the bicyclists, anyone who
uses the streets of the District of Columbia."
The numbers bear out the cameras' positive effects, Mr. Morison
told the Post. Last year, 50 people were killed in traffic
fatalities in the District, down from 71 in 2001. So far this
year, 25 people have died in traffic fatalities, down from 28 at
this point last year.
WORLDCOM INC.: Judge Considers Stock Award, Along with $5M Pact
---------------------------------------------------------------
Federal Judge Jed S. Rakoff is considering whether WorldCom Inc.
shareholders would benefit from getting stock in the reorganized
company, along with cash from a $500 million settlement the
company and regulators hope he will approve, the Associated
Press reports.
Lawyers for both the Company and the Securities and Exchange
Commission presented their arguments before Judge Rakoff,
seeking for the settlement of fraud charges to be approved.
Judge Rakoff said he has received dozens of letters from
interest groups and individual shareholders who believe the fine
should be far stiffer because WorldCom fraud's wiped out as much
as $200 billion in shareholder value, AP reports. He said he
was intrigued by a proposal made by some former WorldCom
shareholders that they be compensated for their huge losses by
receiving shares of the new company when WorldCom emerges from
bankruptcy.
He ordered lawyers for SEC and WorldCom to examine the idea.
"It is heartbreaking to learn of the way in which these frauds
blew away the limited retirement funds of working people who had
put their money in a communications company because it seemed
like such a safe thing to do," he said, AP reports.
SEC lawyer Peter Bresnan told AP cash payments were probably
more appropriate. "There may be some WorldCom shareholders who
would not be particularly enamored to get stock in the new
company," he said. "They may be very happy to leave their
experience as WorldCom shareholders behind them."
New Securities Fraud Cases
BARRICK GOLD: Cauley Geller Lodges Securities Fraud Suit in NY
--------------------------------------------------------------
Cauley Geller Bowman & Rudman, LLP initiated a securities class
action in the United States District Court for the Southern
District of New York on behalf of purchasers of Barrick Gold
Corporation (NYSE: ABX) publicly traded securities during the
period between February 14, 2002 and September 26, 2002,
inclusive. The suit names as defendants the Company and:
(1) Randall Oliphant (CEO and President until February 12,
2003),
(2) John K. Carrington (COO and Vice Chairman) and
(3) Jamie C. Sokalsky (CFO)
The suit alleges violations of Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder, by issuing a series of materially false and
misleading statements to the market between February 14, 2002
and September 26, 2002.
For example, throughout the class period, Barrick assured the
markets that it was improving its operations by keeping its
production costs in check and that the Company expected to earn
$0.42-$0.47 per share in 2002, even taking into account the
phasing out of several mines and decreasing ore quality (which
increases costs) in several of its mines.
These representations were materially false and misleading,
according to the complaint, because they failed to disclose that
the Company's expected costs for the year would be well above
the figures highlighted to the public, that Barrick's costs per
ounce had increased dramatically in 2002 and would continue to
increase throughout the year, and that the Company's repeated
assurances that production and costs would continue to improve
in 2002 were lacking in any reasonable basis and were
contradicted by facts known to defendants, or, at the very
least, recklessly disregarded by them.
On September 26, 2002, the Company announced that it expects to
earn materially less in 2002 than previously announced, due to
increased costs stemming from production issues at several mines
(which, the Company misleadingly represented during the class
period, would be resolved in the second half of 2002).
In reaction to the announcement, which came only days after the
Company reiterated its positive expectations, Barrick's stock
fell by 10.5% in one day, from $17.77 on September 25, 2002 to
$15.90 on September 26, on extremely heavy trading volume.
For more details, contact Samuel H. Rudman, David A. Rosenfeld,
Jackie Addison, Heather Gann or Candace Randle by Mail: P.O. Box
25438, Little Rock, AR 72221-5438 by Phone: 1-888-551-9944 by
Fax: 1-501-312-8505 or by E-mail: info@cauleygeller.com
BARRICK GOLD: Milberg Weiss Files Securities Suit in S.D. NY
------------------------------------------------------------
Milberg Weiss Bershad Hynes & Lerach LLP initiated a securities
class action on behalf of purchasers of the securities of
Barrick Gold Corporation (NYSE: ABX) between February 14, 2002
and September 26, 2002 inclusive, in the United States District
Court for the Southern District of New York against the Company
and:
(1) Randall Oliphant (CEO and President until February 12,
2003),
(2) John K. Carrington (COO and Vice Chairman) and
(3) Jamie C. Sokalsky (CFO)
The complaint charges that defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder, by issuing a series of materially false
and misleading statements to the market between February 14,
2002 and September 26, 2002.
For example, throughout the class period, Barrick assured the
markets that it was improving its operations by keeping its
production costs in check and that the Company expected to earn
$0.42-$0.47 per share in 2002, even taking into account the
phasing out of several mines and decreasing ore quality (which
increases costs) in several of its mines.
These representations were materially false and misleading,
according to the complaint, because they failed to disclose that
the Company's expected costs for the year would be well above
the figures highlighted to the public, that Barrick's costs per
ounce had increased dramatically in 2002 and would continue to
increase throughout the year, and that the Company's repeated
assurances that production and costs would continue to improve
in 2002 were lacking in any reasonable basis and were
contradicted by facts known to defendants, or, at the very
least, recklessly disregarded by them.
On September 26, 2002, the Company announced that it expects to
earn materially less in 2002 than previously announced, due to
increased costs stemming from production issues at several mines
(which, the Company misleadingly represented during the class
period, would be resolved in the second half of 2002). In
reaction to the announcement, which came only days after the
Company reiterated its positive expectations, Barrick's stock
fell by 10.5% in one day, from $17.77 on September 25, 2002 to
$15.90 on September 26, on extremely heavy trading volume.
For more details, contact Steven G. Schulman by Mail: One
Pennsylvania Plaza, 49th fl., New York, NY, 10119-0165 by Phone:
(800)-320-5081 by E-mail: barrickcase@milbergNY.com or visit the
firm's Website: http://www.milberg.com
eUNIVERSE INC.: Abbey Gardy Commences Securities Suit in C.D. CA
----------------------------------------------------------------
Abbey Gardy, LLP initiated a securities class action on behalf
of all persons who purchased securities of eUniverse, Inc.
(NasdaqSC:EUNI) between July 30, 2002 and May 5, 2003 inclusive,
in the United States District Court for the Central District of
California.
The complaint alleges that defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder, by issuing a series of material
misrepresentations to the market during the class period thereby
artificially inflating the price of eUniverse securities.
The complaint alleges that eUniverse, issued false and
misleading press releases and SEC filing concerning its publicly
reported sales and earnings. In particular, the complaint
alleges that defendants overstated the Company's revenues and
net income for the second and third quarters, and possibly the
first, of the Company's fiscal year ended March 31, 2003.
For more details, contact Nancy Kaboolian by Phone:
(212) 889-3700 or 800-889-3701 or by E-mail:
nkaboolian@abbeygardy.com
FEDERAL HOME: Wolf Haldenstein Lodges Securities Suit in E.D. VA
----------------------------------------------------------------
Wolf Haldenstein Adler Freeman & Herz LLP initiated a securities
class action in the United States District Court for the Eastern
District of Virginia, on behalf of all persons who purchased or
otherwise acquired the securities of Federal Home Loan Mortgage
Corporation (NYSE: FRE) between April 18, 2000 and June 6, 2003,
inclusive, against Freddie Mac and certain officers of the
Company.
The complaint alleges that throughout the class period,
defendants issued statements, press releases, and filed
quarterly and annual reports with the SEC describing the
Company's business operations and financial condition. These
representations were materially false and misleading because
they failed to disclose that throughout the class period, the
Company had materially misstated its operating earnings.
Specifically, during the relevant time period, it has been
reported that Freddie Mac may have earned more than it reported
and had a higher capital surplus. This practice, called
"smoothing" allows companies to meet or exceed earnings
estimates and report substantial growth going forward by
deferring present gains to future periods.
The effect of this practice is to create the impression that
earnings growth is steady and the Company meets or exceeds
analysts' expectations on a regular basis. This practice is
also called "cookie jar" accounting and violates Generally
Accepted Accounting Principles and the SEC has pledged to stop
its practice among public companies.
On June 9, 2003, before the market opened, Freddie Mac issued a
press release announcing that it had fired defendant David Glenn
because of "serious questions about the timeliness and
completeness of his cooperation and candor with the board's
audit committee counsel," that defendant Leland C. Brendsel had
retired and that defendant Vaughn Clarke had resigned. On this
news, shares of Freddie Mac, which had closed at $59.87 on June
6, 2003, fell to $52 in midday trading on June 9, 2003.
Following these revelations, on June 11, 2003, numerous news
sources reported that the US Attorney's office for Eastern
Virginia confirmed that the office was investigating Freddie Mac
and that the SEC was also investigating whether Freddie Mac
deferred income to smooth out results in future periods.
Moreover, the SEC is reportedly investigating whether Freddie
Mac's CEO and CFO certified otherwise false financial statements
in violation of Sarbanes-Oxley. The full scope and contours of
defendants' concerted fraud continues to be revealed.
For more details, contact Gred Taylor Isquith, Gregory Nespole,
Michael Miske, Christopher Hinton, George Peters or Derek Behnke
by Mail: 270 Madison Avenue, New York, New York 10016, by Phone:
(800) 575-0735 by E-mail at classmember@whafh.com or visit the
firm's Website: http://www.whafh.com. All e-mail correspondence
should make reference to Freddie Mac.
GOLDMAN SACHS: Pomerantz Haudek Files Securities Suit in S.D. NY
----------------------------------------------------------------
Pomerantz Haudek Block Grossman & Gross LLP and Vianale &
Vianale initiated a securities class action in the United States
District Court for the Southern District of New York against
Goldman Sachs & Co. (NYSE:GS) on behalf of investors who
purchased the common stock of Exodus Communications, Inc.
pursuant or traceable to a Registration Statement/Prospectus
filed with the Securities and Exchange Commission (SEC) on June
28, 2000, as amended on July 18, 2000, declared effective on
July 20, 2000 and supplemented on February 5, 2001.
The lawsuit charges that Goldman Sachs, a joint book-running
manager of the Offering, violated Sections 11 and 12(a)(2) of
the Securities Act of 1933. On February 6, 2001, the Company
completed a public offering of 13,000,000 shares of its common
stock at $18.50 per share for proceeds of $240,500,000.
However, it is alleged that the Registration Statement was false
and misleading because it overstated net income for at least the
nine months ended September 30, 2000 and failed to disclose that
the Company was improperly capitalizing expenses.
On September 26, 2001, Exodus filed for bankruptcy protection
under Chapter 11 of the US Bankruptcy Code. All of the
outstanding shares of common stock of Exodus were cancelled and
ceased to be outstanding as of June 19, 2002, the effective date
of the plan of reorganization.
For more details, contact Andrew G. Tolan by Phone:
(888) 476-6529 / (888) 4-POMLAW or by E-mail: agtolan@pomlaw.com
MERRILL LYNCH: Berger& Montague Files Securities Suit in S.D. NY
----------------------------------------------------------------
Berger & Montague, PC initiated a securities class action
against Merrill Lynch Pierce Fenner & Smith Incorporated and its
former analyst Phua Young, on behalf of persons who purchased
securities of Tyco International Ltd. (NYSE: TYC) between
February 14, 2002 through June 6, 2002, inclusive. The suit was
filed in the United States District Court for the Southern
District of New York.
The complaint alleges that defendants engaged in a scheme to
defraud Tyco investors in violation of SEC Rule 10b-5 by issuing
numerous misleading research reports on Tyco during the class
period. More specifically, Mr. Young expressed very positive
opinions in his research reports on Tyco that were entirely
inconsistent with his own private views which he expressed in
internal emails.
Indeed, Mr. Young's internal emails show that he did not believe
his own publicly-issued research reports concluding that Tyco's
subsidiary, CIT Group, could be sold for as high as $7-8
billion. Mr. Young privately expressed his true view that CIT
would sell at far less, which it did.
As a result of issuing false research reports and engaging in
other wrongdoing, the NASD recently filed a disciplinary
proceeding against Mr. Young, charging him with numerous
violations of NASD Rules of Conduct.
For more details, contact Todd S. Collins, Michael T. Fantini or
Kimberly A. Walker by Mail: Berger & Montague, P.C., 1622 Locust
Street, Philadelphia, PA 19103 by Phone: 888-891-2289 or
215-875-3000 by Fax: 215-875-5715 by E-mail:
InvestorProtect@bm.net or visit the firm's Website:
http://www.bergermontague.com
ORTHODONTIC CENTERS: Marc Henzel Lodges Securities Lawsuit in LA
----------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class
action in the United States District Court for the Eastern
District of Louisiana on behalf of purchasers of the securities
of Orthodontic Centers of America, Inc. (NYSE: OCA) between
November 14, 2002 and March 18, 2003 inclusive. The suit names
as defendants the Company and:
(1) Bartholomew Palmisano, Sr. (President and CEO),
(2) Bartholomew Palmisano, Jr. (COO) and
(3) Thomas Sandeman (CFO)
The complaint alleges that defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder, by issuing a series of materially false
and misleading statements to the market between November 14,
2002 and March 18, 2003.
Specifically, the complaint alleges that OCA was at all relevant
times a provider of integrated business services to orthodontic
and pediatric dental practices. In May 2001, OCA announced that
it had entered into a definitive merger agreement whereby a
wholly owned subsidiary of OCA would merge into OrthAlliance in
a stock-for-stock transaction, with OrthAlliance becoming a
wholly owned subsidiary of OCA.
Following the May 2001 announcement, a number of OrthAlliance's
affiliated practices filed lawsuits against OrthAlliance and/or
notified OrthAlliance that it was in default under their
service, management service, and consulting agreements and that
these practices had stopped paying their service fees. At all
relevant times, the Company stated that it had anticipated such
lawsuits and that the integration of OrthAlliance and OCA was
not only going as planned but also "very very well."
The complaint further alleges that the statements disseminated
by defendants during the class period and with respect to the
financial well-being of the Company were each materially false
and misleading because:
(1) the integration of OrthAlliance practices was not going
"very very well" but on the contrary, it was going very
poorly and, consequently, the Company's actual revenue
and earnings were decreasing;
(2) not only had some OrthAlliance practices sued but other
OrthAlliance practices had discontinued paying their
services fees;
(3) the Company continued to recognize revenue from
OrthAlliance practices that were in litigation and from
those that had stopped paying their service fees and
was thereby violating Generally Accepted Accounting
Principles (GAAP); and
(4) the defendants were actively concealing these facts in
order to manipulate the Company's earnings outlook and
thereby maintain its favorable stock prices.
The Complaint further alleges that on March 18, 2003 the Company
announced its financial results for the fourth quarter ended
December 31, 2002. The Company reported fourth quarter earnings
of $0.17 per share, compared to fourth quarter 2001 earnings of
$0.34 per share, on fee revenue of $102.1 million compared to
fourth quarter fee 2001 revenue of $104.4 million. The Company
attributed the decline in revenue and earnings to "26
OrthAlliance affiliated practices that paid service fees in the
fourth quarter of 2001 and stopped paying service fees during
the third and fourth quarters of 2002."
On this news, OCA's share price dropped 41% from a closing price
of $9.57 on March 18, 2003 to a closing price of $5.64 on March
19, 2003.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery
Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or
888-643-6735 by Fax: 610-660-8080 or by E-Mail:
mhenzel182@aol.com
ORTHODONTIC CENTERS: Schatz & Nobel Lodges Securities Suit in LA
----------------------------------------------------------------
Schatz & Nobel PC initiated a securities class action in the
United States District Court for the Eastern District of
Louisiana on behalf of all persons who purchased the securities
of Orthodontic Centers of America, Inc. (NYSE: OCA) from
November 14, 2002 through March 18, 2003, inclusive.
The complaint alleges that OCA and certain of its officers and
directors issued materially false and misleading statements
concerning the Company's business condition. Specifically, on
May 17, 2001, OCA and OrthAlliance announced that the parties
had "entered into a definitive merger agreement, whereby a
wholly-owned subsidiary of OCA would merge into OrthAlliance in
a stock for stock transaction, with OrthAlliance becoming a
wholly-owned subsidiary of OCA."
Following the May 17 2001, announcement, a number of
OrthAlliance's affiliated practices filed lawsuits against
OrthAlliance and/or notified OrthAlliance that it was in default
under their service, management service and consulting
agreements. Throughout the class period, OCA concealed these
facts and maintained that the merger was a positive development
for the Company.
Following the close of the markets on March 18, 2003, OCA issued
a press release announcing its year end earnings for 2002
wherein the Company reported that earnings and fee revenue were
down from the previous year. The decline in fee revenue
resulted from numerous OrthAlliance affiliated practices that
discontinued paying fees required under their service
management, service and consulting agreements in 2002.
For more details, contact Andrew M. Schatz or Nancy A. Kulesa by
Phone: (800) 797-5499, by E-mail: sn06106@aol.com or visit the
firm's Website: http://www.snlaw.net.
PARADIGM MEDICAL: Marc Henzel Lodges Securities Lawsuit in Utah
---------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class
action in the United States District Court for the District of
Utah on behalf of purchasers of Paradigm Medical Industries,
Inc. (NasdaqSC: PMED) publicly traded securities during the
period from April 25, 2001 through May 14, 2003, inclusive.
The complaint charges that Paradigm and certain of its current
and former officers and directors violated Section 10b of the
Securities Exchange Act of 1934 by issuing a series of
materially false and misleading statements to the market
beginning on April 25, 2001 and continuing through December
2002.
Paradigm develops and sells laser surgical systems, including
the Ocular Blood Flow Analyzer (BFA). The complaint alleges
that Paradigm misrepresented in its Securities & Exchange
Commission (SEC) filings and in press releases that it had
received authorization from the American Medical Association for
a Common Procedure Terminology code facilitating insurance
reimbursement to doctors for performing medical procedures with
the BFA.
Additionally, the complaint alleges that the Company
misrepresented in a press release that it had received a $105
million purchase order, when no such purchase order existed. As
a result of these misrepresentations, according to the
complaint, the price of PMED securities was artificially
inflated during the class period.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery
Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or
888-643-6735 by Fax: 610-660-8080 or by E-Mail:
mhenzel182@aol.com
REGENERON PHARMACEUTICALS: Marc Henzel Files Stock Lawsuit in NY
----------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class
action in the United States District Court for the Southern
District of New York, on behalf of purchasers of the securities
of Regeneron Pharmaceuticals, Inc. (Nasdaq: REGN) between March
28, 2000 and March 30, 2003, inclusive, (the "Class Period"),
and who suffered damages thereby. The action, is pending
against the Company and:
(1) Leonard S. Schleifer (President and CEO),
(2) George D. Yancopoulos (Chief Scientific Officer),
(3) Hans-Peter Guler (VP of Clinical Studies),
(4) Neil Stahl (VP) and
(5) Murray A. Goldberg (CFO)
The complaint charges that defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder, by issuing a series of materially false
and misleading statements to the market between March 28, 2000
and March 30, 2003.
Regeneron is a biopharmaceutical company that discovers,
develops and intends to commercialize therapeutic drugs for the
treatment of serious medical conditions. During the class
period, Regeneron initiated Phase II clinical trials for its
diet drug AXOKINE for use in obese patients.
The complaint alleges that the defendants claimed that AXOKINE
would help patients lose weight better than a placebo over a
year. However, more than two-thirds of the 1,467 patients on
the medicine in the clinical trials developed antibodies to it
after three months, which made the medicine less effective.
Patients taking AXOKINE, including those who developed
antibodies, lost an average 6.2 pounds, compared with 2.6 pounds
for those on a placebo, which the Company admits is similar to
results dieters get with already available pills. Before
results were released, defendants had led the public to believe
that AXOKINE would have more than $500 million in annual sales.
On March 31, 2003, Regeneron admitted AXOKINE lost effectiveness
in about 70% of patients in a study. On this news, the
biotechnology company's shares plunged 57%, a market cap loss of
more than $500 million. However, even defendants' admission was
false, as, in fact, defendants manipulated the results of the
study. In truth, 73.5% of the patients developed antibodies to
the drug.
As a result of the defendants' false statements, Regeneron's
stock price traded at inflated levels during the Class Period,
increasing to as high as $40 on December 18, 2000, whereby the
Company and its top officers and directors sold more than $430
million worth of their own securities.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery
Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or
888-643-6735 by Fax: 610-660-8080 or by E-Mail:
mhenzel182@aol.com
SARA LEE: Marc Henzel Commences Securities Fraud Suit in N.D. CA
----------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class
action in the United States District Court for the Northern
District of Illinois on behalf of purchasers of Sara Lee
Corporation (NYSE: SLE) publicly traded securities during the
period between August 1, 2002 to April 24, 2003, inclusive.
The complaint alleges that defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder, by issuing a series of material
misrepresentations to the market between August 1, 2002 and
April 24, 2003, thereby artificially inflating the price of Sara
Lee securities.
The complaint also alleges that defendants issued a series of
materially false and misleading statements concerning the
Company's operations and prospects. In particular, the
complaint alleges that the statements were materially false and
misleading because they failed to disclose:
(1) that, despite the Company Reshaping program, the
Company was still burdened with numerous poorly
performing businesses and would have to reevaluate its
various businesses. Accordingly, Sara Lee did not have
"the right mix of businesses" in that several material
businesses were "not growing" or were "in significant
decline;"
(2) that the Company's underperforming businesses were
causing the Company to experience declining results
and, as a result, the Company would not be growing at
the rates represented to the market;
(3) due to a lack of proper internal or financial controls,
Sara Lee failed to identify or recognize those
businesses or brands among its portfolio of companies
that would need to be "run dramatically differently in
the future;" and
(4) based on the foregoing, Sara Lee lacked any reasonable
basis upon which to project it would experience
"double-digit operating income increase" for fiscal
2003 among its "five lines of business" or have diluted
EPS for fiscal 2003 in the range of $1.54 to $1.60.
On April 24, 2003, Sara Lee shocked the public when it issued a
press release announcing its financial results for the third
quarter, the period ending March 31, 2003. The Company
announced that it was reducing earnings for fiscal 2003 to $1.50
to $1.52 per share, significantly below consensus expectations
of $1.59. In response to this announcement, the price of Sara
Lee common stock dropped by 10%.
During the class period, Sara Lee insiders sold more than $23
million of their personally-held Sara Lee common stock to the
unsuspecting public.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery
Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or
888-643-6735 by Fax: 610-660-8080 or by E-Mail:
mhenzel182@aol.com
SUPERGEN INC.: Marc Henzel Lodges Securities Lawsuit in N.D. CA
---------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class
action in the United States District Court for the Northern
District of California on behalf of purchasers of SuperGen Inc.
(NASDAQ: SUPG) common stock during the period between April 18,
2000 and March 13, 2003.
The complaint charges SuperGen and its chairman, president and
chief executive officer with violations of the Securities
Exchange Act of 1934. SuperGen is a pharmaceutical company
dedicated to the development and commercialization of products
intended to treat life-threatening diseases, particularly cancer
and blood cell disorders, as well as other serious conditions
such as obesity and diabetes.
The complaint alleges that during the class period, one of the
Company's leading drug candidates was Mitozytrex, a proprietary
reformulation of the approved anticancer drug Mitomycin C, which
is used primarily to treat gastric and pancreatic cancers.
SuperGen's reformulation is based on technology designed to
improve the handling characteristics and safety profile of
mitomycin and other anticancer drugs by enhancing the drug's
stability in solution form and "shielding" it at the injection
site. SuperGen sold millions of shares and notes for $25
million in proceeds so as to provide it with ample monies to
fund its operations.
However, this all took place prior to revelations concerning the
veracity of the Company's statements regarding Mitozytrex. The
Federal Food, Drug and Cosmetic Act gives the FDA authority to
disseminate information to the public regarding drugs and other
products within the FDA's jurisdiction to address imminent
health dangers or gross deception. To protect the public health
due to the improper statements by the Company, the FDA notified
the public that SuperGen's product, Mitozytrex, has not been
found by the agency to have benefits that the Company claimed.
The truth, actually known by each defendant:
(1) That Mitozytrex caused adverse reactions such as fever,
anorexia, nausea and vomiting, together with
myelosuppression and hemolytic uremic syndrome;
(2) That Mitozytrex was merely a bioequivalent to the
innovator mitomycin. It differed from the innovator
formulation only in that the Company's product
contained hydroxypropyl-beta-cyclodextrin (HPCD). No
evidence exists to support the Company's claims that
Mitoyztrex is superior to the existing formulations of
mitomycin;
(3) That there is no existing evidence that the addition of
HPCD yields any clinical advantage over the original
formulation of mitomycin;
(4) That SuperGen's "Extra" technology did not shield the
drug at the injection site; and
(5) That the so-called "advantages" of the Company's
product, including increased solubility, stability and
shelf-life, were non-existent.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery
Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or
888-643-6735 by Fax: 610-660-8080 or by E-Mail:
mhenzel182@aol.com
ULTIMATE ELECTRONICS: Marc Henzel Lodges Securities Suit in CO
--------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class
action in the United States District Court for the District of
Colorado, on behalf of purchasers of Ultimate Electronics, Inc.
(Nasdaq: ULTE) publicly traded securities during the period
between March 13, 2002 and August 8, 2002, inclusive.
The complaint charges that during the class period, the
defendants issued and/or failed to correct false and misleading
financial statements and press releases concerning the Company's
publicly reported revenues and earnings directed to the
investing public.
Throughout the class period, the Company maintained that it
could offset any reduction in margins incurred as a result of
this transition through continued sales of high margin items,
including direct broadcast satellite (DBS) service and systems
and audio equipment.
Yet, in part to enjoy a large economic windfall as a result of
its class period offering of Ultimate stock, the Company failed
to disclose that high margin sales were decreasing rapidly and
with it, a critical stabilizer to the Company's bottom line. On
August 8, 2002 the Company finally disclosed that because of the
reduction in high margin sales, the Company would miss its
second quarter earnings EPS outlook by almost 50%.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery
Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or
888-643-6735 by Fax: 610-660-8080 or by E-Mail:
mhenzel182@aol.com
UNUMPROVIDENT CORPORATION: Marc Henzel Files TN Securities Suit
---------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class
action in the United States District Court for the Eastern
District of Tennessee on behalf of purchasers of UnumProvident
Corporation (NYSE: UNM) publicly traded securities during the
period between May 7, 2001 and February 4, 2003.
The complaint charges UnumProvident and certain of its officers
and directors with violations of the Securities Exchange Act of
1934. UnumProvident provides group disability and special risk
insurance, as well as group life insurance, long-term care
insurance, and payroll-deducted voluntary benefits offered to
employees at their worksites. UnumProvident operates around the
World.
The complaint alleges that during the class period, defendants
caused UnumProvident's shares to trade at artificially inflated
levels through the issuance of false and misleading financial
statements. The Company failed to properly record the
impairment to its investments and operated "long-term denial
factories," causing the Company's financial results to be
inflated.
As a result, the Company's shares traded at inflated prices
enabling UnumProvident to raise proceeds of $250 million on June
13, 2002 in its bond offering.
UnumProvident and its top officers inflated the prices of the
Company's securities in order to pursue an accelerated
securities sale program. Defendants knew that by concealing
UnumProvident's true financial results they could foster the
perception in the business community that UnumProvident was a
"growth company," i.e., it was the only way UnumProvident could
post the revenue and earnings per share growth claimed by
defendants.
On February 5, 2003, UnumProvident announced that it had
recorded investment losses of $93 million and also reported that
it was responding to Securities and Exchange Commission requests
for information relating to its investment disclosures.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery
Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: 610-660-8000 or
888-643-6735 by Fax: 610-660-8080 or by E-Mail:
mhenzel182@aol.com
*********
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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. The Asbestos Defendant Profiles is backed by an
online database created to respond to custom searches. Go to
http://litigationdatasource.com/asbestos_defendant_profiles.html
*********
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
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Fatima Antonio and Lyndsey Resnick, Editors.
Copyright 2003. All rights reserved. ISSN 1525-2272.
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