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C L A S S A C T I O N R E P O R T E R
Tuesday, February 24, 2004, Vol. 6, No. 38
Headlines
ATLANTA: Officials Reach Pact In Elmore Facility Inmates Lawsuit
ARMENIAN GENOCIDE: Court Approves $20M New York Life Settlement
BRIDGESTONE/ FIRESTONE: Certification Hearing Set February 25
CAPRIUS INC.: Asks NJ Court To Dismiss Securities Fraud Lawsuit
CATHOLIC CHURCH: Covington Diocese Discloses New Abuse Claims
CIENA CORPORATION: Reaches Settlement For Securities Suit in NY
CIENA CORPORATION: CA Court To Hear Demurrer To Securities Suit
DIAGEO: Charged With Encouraging Underage Drinkers in U.S. Suit
ENRON CORPORATION: SEC Launches Charges Against Former Executive
FRESH FOODS: Recalls Guacamole Products For Possible Health Risk
HEPATITIS A: Bankruptcy Judge Okays Mediation for Hep A Claims
HOMELESS CHILDREN: NY Federal Lawsuit Seeks Access To Schooling
IDIAL NETWORKS: SEC Launches Securities Fraud Civil Action in TX
INDIANA: AC Reverses Denial For Injunction In Curfew Lawsuit
INFOSPACE INC.: Court Grants Preliminary Approval Of Suit Pact
INTERCEPT: Agrees to Settle Securities Fraud Suits In GA Court
JETBLUE AIRWAYS: Did Not Violate Privacy Laws, Government Says
JORDAN ENTERPRISES: CA Court Enters Final Judgment in Stock Suit
JOSEPH DELLA RUSSO: NJ SC Reverses, Remands Consumer Fraud Suit
LAWYERS TITLE: AC Affirms Denial Of Arbitration In Policy Suit
MARTHA STEWART: Stewart Friend Bares Damaging Testimony in Trial
MUSIC INDUSTRY: NJ Resident Files RICO Violations Suit V. RIAA
SCHRATTER FOODS: Recalls Cheese For Possible Clostridium Content
TOYSMITH: Recalls 40,000 Lollipops For Undeclared Egg/Peanuts
UNITED PARCEL: SC Court Grants Summary Judgment In Bias Lawsuit
New Securities Fraud Cases
AAIPHARMA INC: Milberg Weiss Lodges Securities Suit in S.D. NY
AGCO CORPORATION: Federman & Sherwood Files Stock Lawsuit in IL
DATATEC SYSTEMS: Federman & Sherwood Lodges NJ Securities Suit
DATATEC SYSTEMS: Wechsler Harwood Launches Securities Suit in NJ
EL PASO: Fruchter & Twersky Launches Securities Lawsuit in TX
INTERPOOL INC.: Cauley Geller Lodges Securities Fraud Suit in NJ
INTERPOOL: Schiffrin & Barroway Files Securities Lawsuit in NJ
MEDICAL STAFFING: Brian Felgoise Files Securities Lawsuit in FL
MEDICAL STAFFING: Charles Piven Files Securities Suit in S.D. FL
MICROMUSE INC.: Wechsler Harwood Files Securities Lawsuit in CA
PROGRESS ENERGY: Charles Piven Lodges Securities Suit in S.D. NY
WALT DISNEY CO: Squitieri Fearon Launches Securities Suit in CA
WAVE SYSTEMS: Wechsler Harwood Launches Securities Lawsuit in MA
WHITEHALL JEWELLERS: Zimmerman Levi Files Securities Suit in IL
WHITEHALL JEWELLERS: Berman DeValerio Launches Stock Suit in IL
*********
ATLANTA: Officials Reach Pact In Elmore Facility Inmates Lawsuit
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Atlanta authorities reached a settlement for a federal case
filed by Elmore Correctional Facility inmates, claiming they
were exposed to deadly diseases, such as AIDS, by being forced
to handle medical waste on work details, Atlanta attorney Ty
Alper told The Montgomery Advertiser. "Alabama Department of
Corrections officials agreed to everything that we were asking
for," Mr. Alper said.
Mr. Alper, a staff attorney for the Atlanta-based Southern
Center for Human Rights, filed the suit on behalf of 200 or so
inmates at the Elmore Correctional Facility, in the United
States District Court in Montgomery, Georgia.
Corrections Department attorneys filed the settlement papers
Tuesday afternoon. Under the settlement, the inmates will wear
safer equipment to handle medical waste on work details that
involve picking up and sorting garbage at other correctional
facilities and state agencies across Central Alabama. The new
equipment includes protective eyewear, heavy-duty work gloves,
forearm barriers, work aprons and dust masks approved by the
American National Standards Institute and the National
Institutes of Occupational Safety and Health, attorney for the
plaintiffs Marion Chartoff told the Advertiser.
Inmates performing such work are exposed to hazardous materials
like bloody bandages and used hypodermic needles, placing them
at risk for AIDS-causing HIV, Hepatitis B and other life-
threatening diseases, Mr. Alper said. As a result, the
settlement "will minimize the chance of a public health threat,"
he said. The Department of Corrections also agreed that the
inmates will now be provided with tools for sorting the garbage
rather than having to use their hands.
ARMENIAN GENOCIDE: Court Approves $20M New York Life Settlement
---------------------------------------------------------------
United States District Judge Christina Snyder granted
preliminary approval to a $20 million settlement proposed by New
York Life Insurance Co. to settle a class action filed by
descendants of Armenians killed between 1915 and 1923 in the
Turkish Ottoman Empire, the Associated Press reports.
The suit, filed in the United States District Court in
California, seeks justice for survivors of those killed during
in April 1915, an earlier Class Action Reporter story (January
30,2003) states. The suit seeks unpaid life insurance benefits.
Many Armenians have asserted that 1.5 million people were
executed between 1915 and 1923 by Turkish authorities who
accused them of helping the invading Russian army during World
War I. Turkey has rejected the genocide claim, saying the
Armenians were killed in civil unrest during the collapse of the
Ottoman Empire. France and Russia are among 15 countries that
have recognized the genocide, but the United States has not made
such a declaration.
Under the settlement, about $11 million will be allocated for
claims of heirs of 2,400 policyholders. $3 million will go to
nine Armenian charitable organizations and the rest will pay
attorneys' fees and administrative costs.
Judge Snyder set a July 30 court date to hear any objections
from plaintiffs, who may opt out of the settlement. After that
date, a Web site will be available for those seeking money from
New York Life for unpaid policies. The company also will
advertise in major newspapers alerting people to the settlement,
the plaintiffs' attorney, Brian Kabateck told the Associated
Press.
BRIDGESTONE/ FIRESTONE: Certification Hearing Set February 25
-------------------------------------------------------------
A hearing will take place on February 25 in the Riverside Branch
of the California Superior Court, to determine whether an 18-
month old class action lawsuit against Bridgestone/Firestone,
Inc. (aka Bridgestone/Firestone North American Tire, LLC) for
alleged defects in its Steeltex tire series, will be classified
as a national class action.
Should the certification be granted, the lawsuit would represent
all complainants nationally who have experienced massive tread
separations in Steeltex R4S, R4SII and A/T tires, making it
possibly the largest class action lawsuit in the history of the
United States.
The hearing comes one month (January 29) after Plaintiffs' legal
counsel (Lisoni & Lisoni) granted a request from Bridgestone
Corporation, Inc. of Japan, a co-defendant in the lawsuit, to be
temporarily exempted from the lawsuit, pending completion of
litigation against its own wholly-owned American subsidiary,
Bridgestone/Firestone North American Tire, LLC. It is estimated
that there are over 30 million Steeltex tires on the nation's
roads and highways. The lawsuit, filed on August 13, 2002,
alleges that defects in the design and manufacture of the
Steeltex tires have led to massive tread separations and
resulted in accidents, injuries and deaths. In addition to
individuals, operators of ambulances and emergency vehicles in
34 states have reported severe Steeltex tire failures.
CAPRIUS INC.: Asks NJ Court To Dismiss Securities Fraud Lawsuit
---------------------------------------------------------------
Caprius, Inc. asked the United States District Court of New
Jersey to dismiss the securities class action filed against it
and its principal officers and directors.
The allegations in the complaint cover the period between
February 14, 2000 and June 20, 2002. The plaintiff is a
relative of the wife of the plaintiff in direct and derivative
actions against the defendants. The suit alleges that the
individual defendants made alleged misrepresentations to the
plaintiff upon their acquisition of a controlling interest in
the Company in 1999 and thereafter made other alleged
misrepresentations and took other actions as to the plaintiff to
the supposed detriment of the plaintiff and the Company. The
complaint seeks an unspecified amount of monetary damages, as
well as the removal of the defendant officers as shareholders of
the Company.
No answer has yet been filed to this complaint as the parties
agreed to extend the Company's time to answer it. In January
2003, an order was entered in the Federal District Court in New
Jersey consolidating the derivative action and the class action.
The order further provides that the time for the defendants to
answer or otherwise move with respect to the complaint in the
class action is extended. The order also provides that all
discovery in the consolidated actions is stayed pending
resolution of the motions to dismiss.
On April 9, 2003, an amended complaint was filed in the
purported class action naming an additional plaintiff. On
September 23, 2003, the Court entered an order appointing
plaintiffs Eugene Schwartz and Dallas Williams as lead
plaintiffs; and appointing the law firm of Lowenstein Sandler as
lead counsel for the class.
CATHOLIC CHURCH: Covington Diocese Discloses New Abuse Claims
-------------------------------------------------------------
The Covington Diocese in Kentucky disclosed that nearly 50 more
people were abused by the priests in the diocese than it
previously claimed, The Cincinnati Enquirer reports.
The reports says that 35, or 9.6 percent, of the diocesan
priests abused 205 victims since 1950, showing an increase of 47
reported victims since the last report. The report stated that
the church is allotting an additional $10 million to settle
abuse claims.
The update is the first from the diocese to its parishioners
since August. "It's been six months since our initial of
release of data," Bishop Roger J. Foys said in a statement
Friday, the Enquirer reports. "I made a pledge to keep the
faithful of the diocese informed. Updating these figures at this
time is part of that pledge."
Lawyers in a class action against the Covington Diocese claim
the numbers are higher. "I think it's clear from Covington's
pronouncement that they underestimated (the number of victims)
when they first made their announcement," Bob Steinberg, a
lawyer in a class-action sex abuse case against the Diocese of
Covington, told the Enquirer. "It was 158 then. Now it's over
200. We have always estimated that the number of victims was
over 500 and we still feel that way."
When he appeared in court with co-counsel Stan Chesley two weeks
ago, Mr. Steinberg told the judge he had the names and addresses
of 110 victims. He said attorneys for the class action victims
believe 57 priests or other officials in the church victimized
people - a greater number than the diocese claims.
Mr. Steinberg would not say whether the diocese is doing enough
to help sexual abuse victims. "Our goal is to get compensation
for all the victims," he told the Enquirer. "It is not to
attack the bishop or the diocese."
CIENA CORPORATION: Reaches Settlement For Securities Suit in NY
---------------------------------------------------------------
CIENA Corporation reached a settlement for a consolidated
securities class action filed in the United States District
Court for the Southern District of New York in relation to the
Company's merger with ONI Systems Corporation. The suit names
as defendants the Company, Hugh C. Martin, ONI's former
chairman, president and chief executive officer, Chris A. Davis,
ONI's former executive vice president, chief financial officer
and administrative officer and certain underwriters of ONI's
initial public offering.
The amended complaint alleges, among other things, that the
underwriter defendants violated the securities laws by failing
to disclose alleged compensation arrangements (such as
undisclosed commissions or stock stabilization practices) in the
initial public offering's registration statement and by engaging
in manipulative practices to artificially inflate the price of
ONI's common stock after the initial public offering.
The amended complaint also alleges that ONI and the named former
officers violated the securities laws on the basis of an alleged
failure to disclose the underwriters' alleged compensation
arrangements and manipulative practices. No specific amount of
damages has been claimed.
Similar complaints have been filed against more than 300 other
issuers that have had initial public offerings since 1998, and
all of these actions have been included in a single coordinated
proceeding. Mr. Martin and Ms. Davis have been dismissed from
the action without prejudice pursuant to a tolling agreement.
In July 2002, ONI and other issuers in the consolidated cases
filed motions to dismiss the amended complaint for failure to
state a claim, which was denied as to ONI on February 19, 2003.
CIENA has participated, together with the other issuer
defendants in these cases, in mediated settlement negotiations
that have led to a preliminary agreement among the plaintiffs,
the issuer defendants and their insurers.
The settlement, which is subject to court approval, would result
in the dismissal of the plaintiffs' cases against the issuers.
CIENA has agreed in principle to the terms of this settlement.
Draft settlement documents were circulated for preliminary
review in October 2003 and again in January 2004.
CIENA CORPORATION: CA Court To Hear Demurrer To Securities Suit
---------------------------------------------------------------
The California Superior Court is set to hear in March 2004 Ciena
Corporation's demurrer to the consolidated amended class action
filed against it as a result of its merger with ONI Systems
Corporation.
The Company originally faced two substantially identical
purported class actions filed on behalf of ONI security holders
originally brought against ONI and members of its board of
directors. The complaints allege that the director defendants
breached their fiduciary duties to ONI in approving the merger
with CIENA and seek declaratory, injunctive and other relief
permitted by equity. The plaintiffs failed to obtain an
injunction against completion of the merger.
The first of these cases was filed on February 20, 2002, in the
Superior Court of the State of California, County of San Mateo,
and is captioned "K.W. Sams, On Behalf of Himself and All Others
Similarly Situated v. ONI Systems Corporation, et al." The
second case was brought on March 19, 2002, in the Superior Court
of the State of California, County of Santa Clara, and is
captioned "Steven Myeary, On Behalf of Himself and All Others
Similarly Situated v. ONI Systems Corporation."
On April 14, 2003, the plaintiffs in these cases filed a
consolidated amended complaint and named four additional
defendants:
(1) CIENA Corporation,
(2) James F. Jordan,
(3) Kleiner Perkins Caufield & Byers and
(4) Mohr Davidow Ventures
CIENA and the other defendants subsequently filed a demurrer and
served a motion for sanctions on plaintiffs based on factual
inaccuracies in the consolidated amended complaint. In
response, the plaintiffs filed a corrected consolidated amended
complaint.
The Company believes that these lawsuits are without merit, it
stated in a disclosure to the Securities and Exchange
Commission.
DIAGEO: Charged With Encouraging Underage Drinkers in U.S. Suit
---------------------------------------------------------------
Alcohol firm Diageo faces a lawsuit, charging it with targeting
underage drinkers in the United States, Knight-Ridder / Tribune
Business News reports.
The Guinness-to-Johnnie Walker-whisky giant is struggling as its
alcopop Smirnoff Ice is falling out of fashion, having
revolutionized the GBP1.5 billion UK market for pre-mixed
drinks. Volume sales of Smirnoff Ice slumped 12 percent in the
first six months.
Diageo boss Paul Walsh says the decline in alcopops is "old
news." Marketing spend is being cut as the category shrinks,
although new products are promised for later this year. Mr.
Walsh told the Knight-Ridder young women are drinking less,
adding to the slowdown.
Rising litigation - which is also threatening the food industry
over obesity issues - has embroiled Diageo in three class action
lawsuits in the U.S. In one of the disputes, parents are
demanding that Diageo and others repay them the money their
children spent on alcoholic drinks. The British firm
strenuously denies the claims, pointing to its strong record in
responsible advertising.
"We have to take it very seriously. In my view it will take many
years to play out," Mr. Walsh told the Tribune Business News.
ENRON CORPORATION: SEC Launches Charges Against Former Executive
----------------------------------------------------------------
The Securities and Exchange Commission (SEC) charged Enron's
former president, chief executive officer and chief operating
officer Jeffrey Skilling with fraud, seeking disgorgement of all
ill-gotten gains, including compensation, civil money penalties,
a permanent bar from acting as a director or officer of a
publicly held company, and injunction from future violations of
federal securities laws
The Commission charged Mr. Skilling, with violating, and aiding
and abetting violations of the antifraud statutes, lying to
auditors, periodic reporting, books and records, and internal
controls provisions of the federal securities laws. The
charges, which amend the Commission's Complaint filed against
Richard A. Causey, Enron's former Chief Accounting Officer, in
the United States District Court in Houston, Texas, allege that
Mr. Skilling and others engaged in a wide-ranging scheme to
defraud by manipulating Enron's publicly reported financial
results.
The Amended Complaint alleges that Mr. Skilling and others:
(1) improperly used reserves within Enron's wholesale
energy trading business, Enron Wholesale, to
manufacture and manipulate reported earnings;
(2) manipulated Enron's "business segment reporting" to
conceal losses at Enron's retail energy business, Enron
Energy Services (EES);
(3) manufactured earnings by fraudulently promoting Enron's
broadband unit, Enron Broadband Services (EBS); and
(4) improperly used special purpose entities (SPEs) and the
LJM partnerships to manipulate Enron's financial
results.
In addition, the Amended Complaint alleges that Mr. Skilling
made false and misleading statements concerning Enron's
financial results and the performance of its businesses, and
that these misrepresentations were also contained in Enron's
public filings with the Commission. The Amended Complaint
further alleges that Mr. Skilling sold Enron stock while in
possession of material, non-public information that generated
unlawful proceeds of approximately $63 million.
Specifically, the Commission's Amended Complaint alleges the
Company manufactured and manipulating reported earnings through
Improper Use of Reserves. From the third quarter of 2000
through the third quarter of 2001, Mr. Skilling and others
fraudulently used reserve accounts within Enron Wholesale to
mask the extent and volatility of its windfall trading profits,
particularly its profits from the California energy markets;
avoid reporting large losses in other areas of its business; and
preserve the earnings for use in later quarters. By early 2001,
Enron Wholesale's undisclosed reserve accounts contained over $1
billion in earnings. Mr. Skilling and others improperly used
hundreds of millions of dollars of these reserves to ensure that
analysts' expectations were met. In addition, Mr. Skilling and
others improperly used the reserves to conceal hundreds of
millions of dollars in losses within Enron's EES business unit
from the investing public.
Further, Mr. Skilling and others approved the improper release
of reserves in certain quarters prior to 2001, in order for
Enron to make or exceed analysts' earnings estimates. For
example, in mid-July 2000, well after the end of the second
quarter, Mr. Skilling and others decided to beat Wall Street
analysts' quarterly earnings expectations by two cents a share
and publicly report an earnings-per-share figure of 34 cents.
They did this despite knowing that Enron's performance for the
quarter did not support the 34-cent earnings-per-share figure.
In order to achieve this goal, they caused a senior Enron
executive to release improperly millions of dollars of
"prudency" reserves from Enron's energy trading business into
earnings.
The Company also allegedly concealed EFS failures. Mr. Skilling
and others concealed massive losses in EES by fraudulently
manipulating Enron's "business segment reporting." At the close
of the first quarter of 2001, Mr. Skilling and others approved
moving a large portion of EES's business into Enron Wholesale
under the guise of reorganizing Enron's business segments. Mr.
Skilling and others knew that the reorganization was designed to
fraudulently conceal hundreds of millions of dollars in losses
at EES, Enron's heavily touted retail energy trading business,
losses which Enron otherwise would have had to report. Enron
moved the losing portion of EES's business into Enron Wholesale
because Enron Wholesale had ample earnings, including the
massive reserve accounts described above, to absorb EES's huge
losses while continuing to meet Enron's budget targets.
The Company allegedly promoted EBS to manufacture earnings. Mr.
Skilling and others fraudulently promoted EBS at Enron's January
20, 2000, corporate analyst conference and manufactured earnings
from the resulting increase in Enron's stock price. At the
analyst conference, Mr. Skilling and others knowingly made false
and misleading statements about the status of EBS's broadband
network, EBS's proprietary "network control software," and the
"conservative" value - $30 billion - of EBS's business. In
reality, EBS had neither the broadband network that Mr. Skilling
claimed, nor the critical proprietary network control software
to run it. In addition, Mr. Skilling inflated the value of EBS
by billions of dollars over what both internal and external
valuations had advised.
Knowing about the planned EBS presentation, Mr. Skilling and
others - prior to the analyst conference - constructed and
approved a scheme that allowed Enron to recognize approximately
$85 million in earnings from the increase in the value of its
stock. The earnings were recorded through a partnership
interest Enron held in a large energy investment named JEDI that
held, as on of its investment holdings, Enron stock. In
connection with the January 20, 2000, analyst conference, Enron
and JEDI purportedly executed a series of transactions, known as
"Project Greyhawk," that allowed JEDI's income to increase as
the price of Enron's stock increased. Project Greyhawk allowed
Enron to recognize, through its partnership interest in JEDI,
approximately $85 million in earnings as a result of the
manufactured increase in Enron stock from the false and
misleading presentation at the analyst conference.
The defendants also allegedly used SPEs and LJM Partnerships to
manipulate financial results. Enron entered into fraudulent
transactions with LJM Cayman, L.P and LJM2 Co-Investment, L.P.
(collectively, LJM), two unconsolidated partnerships created and
managed by Andrew Fastow, Enron's then-Chief Financial Officer,
when Mr. Skilling and others knew that LJM was not a legitimate
third party acting independently from Enron. Enron used
transactions with LJM to manipulate its financial results.
For example, Enron and LJM engaged in a series of financial
transactions with four SPEs called Raptor I, Raptor II, Raptor
III and Raptor IV (collectively referred to as the "Raptors").
Mr. Skilling, Mr. Causey, Mr. Fastow and others used the Raptors
to manipulate fraudulently Enron's reported financial results.
They designed Raptor I, among other things, to protect Enron
from having to report publicly decreases in value in large
portions of its energy "merchant asset portfolio" and technology
investments by allowing Enron to "hedge" the value of those
investments with an allegedly independent third party, known as
Talon. The Raptor I structure, however, was invalid under
applicable accounting rules because, among other things, Talon
was not independent from Enron and LJM's investment in Talon was
not at risk, and Mr. Causey and Mr. Fastow had entered into an
oral side agreement that LJM would receive its initial
investment in Talon ($30 million) plus a large profit ($11
million) from Enron, all prior to Talon engaging in any of the
hedging transactions. As a quid pro quo for this payment, Mr.
Fastow agreed with Causey that Enron employees could use Raptor
I to manipulate Enron's financial statements, including by
allowing Enron employees, without negotiation or due diligence
by LJM, to select the values at which the Enron assets were
hedged with Talon. Mr. Skilling was informed of and approved
Mr. Fastow's deal with Mr. Causey in order to ensure that Enron
achieved the financial reporting goals for which Raptor I was
designed, even though it was clear that the Raptor I structure
was not a true hedging device.
In another transaction - the "Cuiaba project" - Mr. Skilling and
others used LJM to move a poorly performing asset temporarily
off Enron's balance sheet, when in fact such off-balance-sheet
treatment was improper. When no true third-party buyer could be
found, Mr. Skilling and others caused Enron to "sell" a portion
of Enron's interest in the Cuiaba project to LJM for $11.3
million. LJM agreed to "buy" this interest only because Mr.
Skilling, Mr. Causey, Mr. Fastow and others, in an undisclosed
side deal, agreed that Enron would buy back the interest, if
necessary, at a profit to LJM. Based on this purported "sale,"
which was in fact an asset parking or warehousing arrangement,
Enron improperly recognized approximately $65 million in income
in the third and fourth quarters of 1999.
In the spring of 2001, even though the project was approximately
$200 million over budget, Mr. Skilling, Mr. Causey and Mr.
Fastow agreed that Enron would buy back LJM's interest in the
Cuiaba project at a considerable profit to LJM. After agreeing
to execute the repurchase, Mr. Skilling, Mr. Causey, Mr. Fastow
and others delayed consummating the deal until Mr. Fastow sold
his interest in LJM so that Mr. Fastow's role in the transaction
would not have to be publicly disclosed.
In the "Nigerian barge" transaction, Mr. Skilling and others
agreed to a sham "sale" of an interest in certain power-
producing barges off the coast of Nigeria to Merrill Lynch so
that Enron could meet its fourth quarter 1999 budget targets.
In order to induce Merrill Lynch to enter into the transaction,
Enron promised - in an oral and undisclosed "handshake" deal -
that Merrill Lynch would receive a return of its investment plus
an agreed-upon profit within six months. As a result, Merrill
Lynch's equity investment was not "at risk" and Enron should not
have treated the transaction as a sale from which it could
record earnings and cash flow. In June 2000, Enron delivered on
its "handshake" promise. Mr. Causey and Mr. Fastow ensured that
LJM repurchased the Nigerian barges from Merrill Lynch at the
agreed-upon profit.
The defendants practiced insider trading. Mr. Skilling profited
from the scheme to defraud by selling large amounts of Enron
stock at the inflated prices. These trades also occurred while
Mr. Skilling was in possession of material non-public
information, including information about Enron's actual
financial performance and the failure of its business units as
described above. From April 2000 to September 2001, Mr.
Skilling sold over one million shares of Enron stock that
generated unlawful proceeds of approximately $63 million.
FRESH FOODS: Recalls Guacamole Products For Possible Health Risk
----------------------------------------------------------------
Fresh Foods Concepts, Inc., in cooperation with the U.S. Food
and Drug Administration (FDA), is recalling 16-ounce cups of
Trader Jos‚'s Fresh Guacamole and Senior Felix's Guacamole
because they have the potential to be contaminated with Listeria
monocytogenes.
Listeria is a common organism that can cause serious and
sometimes fatal infections in young children, frail or elderly
people, and others with a weakened immune system. Although
healthy individuals may suffer only short-term symptoms such as
high fever, severe headache, stiffness, nausea, abdominal pain
and diarrhea, Listeria infection can cause miscarriages and
stillbirths among pregnant women.
The affected products were sold on or after Friday, Feb. 13,
2004, at Trader Joe's stores and Whole Foods outlets throughout
Southern California. The 16-ounce cups of Trader Jose's Fresh
Guacamole have a UPC code of 00320849; the Senor Felix's
Guacamole products have a UPC code of 35196-55200. Products
potentially contaminated have "Use By" expiration listings
between 2/28/04 and 3/4/04. Expiration listings can be found on
the label on the lid or the bottom of the cups.
No illnesses have been reported to date in connection with this
problem. The recall was initiated after an avocado pulp sample
from an outside supplier tested positive for Listeria.
Production and distribution of this product have been suspended
while the company and the Food and Drug Administration
investigate the source of the problem.
Consumers who purchased the 16-ounce cups of Trader Jose's Fresh
Guacamole and Senior Felix's Guacamole products are urged to
return them to the place of purchase for a full refund.
Consumers with questions may contact the company at
(714)-562-5000 between the hours of 8am - 5pm Monday through
Friday PST. Inquiries can also be made anytime at
(626) 347-1073.
HEPATITIS A: Bankruptcy Judge Okays Mediation for Hep A Claims
--------------------------------------------------------------
A bankruptcy judge approved a mediation system for hundreds of
legal claims against Chi-Chi's restaurant, filed by people who
were sickened during a hepatitis A outbreak late last year, the
Associated Press reports.
In November 2003, at least 660 people were infected with
Hepatitis A virus after eating at the restaurant. Three other
customers died. The outbreak, the largest single-source
hepatitis outbreak in the nations history, was later traced to
green onions served at the restaurant about 25 miles northwest
of Pittsburgh.
Claimants can begin submitting lawsuits to nonbinding mediation
in about two weeks, William Marler, a Seattle-based attorney for
67 people who say they were sickened, told AP.
Settling the legal ramifications has been complicated because
Louisville, Kentucky-based Chi-Chi's is in Chapter 11 bankruptcy
protection and can't be sued without court approval. Chi-Chi's
bankruptcy attorney, Alan Friedman, didn't immediately return a
phone call Thursday, the Associated Press reports.
HOMELESS CHILDREN: NY Federal Lawsuit Seeks Access To Schooling
---------------------------------------------------------------
The National Law Center on Homelessness & Poverty (NLCHP) and
the law firm Goodwin Procter LLP announced the filing of a class
action lawsuit on behalf of homeless children and their parents
living in Suffolk County against various New York State and
Suffolk County governmental authorities for denying homeless
children access to public education in violation of federal and
state laws and regulations.
The lawsuit, filed in the United States District Court for the
Eastern District of New York, alleges that state and county
agencies responsible for educating and providing social services
to homeless children in Suffolk County "have, by their neglect
or in some instances malfeasance, added to the tragedy of
homeless children by denying them appropriate access to a basic
public school education."
"Despite their legal obligations, the state, county and local
governments have engaged in a persistent and repeated pattern of
erecting bureaucratic barriers to the education of homeless
children," said Jeffrey Simes, partner at Goodwin Procter. "As a
result, they have denied homeless children a free and
appropriate public education. This lawsuit seeks to remove those
obstacles so that these children can enjoy the benefits of a
public school education, which is their right under federal and
state law."
Simes pointed out that New York State receives federal funds
under the McKinney-Vento Act that mandates that the state
provide for the education of homeless children and youth within
the state. In addition, he noted, the state is required to
ensure that local agencies in the state comply with the Act.
"The denial of basic educational opportunities to homeless
children in Suffolk County not only violates the law, it also
threatens to deprive these children of a chance for a better
future," said Maria Foscarinis, founder and executive director
of NLCHP. "It is time to hold our state and local governments
accountable for this injustice."
"Homeless children by definition endure an uncertain home life,"
said Simes. "In many instances, the school environment can be
the only stable one in the lives of these children. This is why
the federal and state laws were written to give homeless
children the right to stay in their school of origin and receive
transportation to that school. State and local officials are
essentially further victimizing homeless children and
compounding their plight by denying them their educational
rights under these federal and state laws."
The national law firm Goodwin Procter LLP is providing pro bono
services to the plaintiffs.
IDIAL NETWORKS: SEC Launches Securities Fraud Civil Action in TX
----------------------------------------------------------------
The Securities and Exchange Commission filed an emergency civil
action in U.S. District Court in Dallas, alleging that six
individual defendants purchased stock of iDial Networks, Inc.
(OTCBB:IDNW) while they were aware of material nonpublic
information concerning iDial's August 23, 2003, merger with
GlobalNet, Inc.
The Commission sought a permanent injunction and civil money
penalties against the following individual defendants, all of
whom allegedly reside in Panama:
(1) Leon Levy,
(2) Yanni Abecassis,
(3) Ilan Sabbah,
(4) Henry Levy (aka Henry Levy Sakhai),
(5) Hertsel Levy, and
(6) Jacqueline Levy
The Commission also sought disgorgement of illegal profits, plus
prejudgment interest, against those individual defendants and a
single relief defendant, Atlantic 1 Corporation, a Panamanian
corporation that, according to the Commission, is controlled by
Mr. Abecassis and received illegal trading profits from Mr.
Sabbah and Leon Levy.
The Commission simultaneously filed in the civil action, and the
court granted, a motion seeking an asset freeze and other
emergency relief against the defendants and the relief
defendant, in order to prevent the dissipation or concealment of
assets that the Commission claims should be paid as civil money
penalties and as disgorgement of illegal profits.
In its complaint, the Commission alleged that, on August 4,
2003, defendants Abecassis and Leon Levy were present, as
consultants to iDial, at iDial-GlobalNet merger negotiations in
Panama, where they received material nonpublic information about
the merger, as well as instructions from iDial's CEO to keep the
information confidential. The Commission alleged that Leon Levy
thereafter purchased 12,500,000 shares of iDial on the basis of
the material nonpublic information that he received from iDial,
prior to the public announcement of the merger on August 27,
2003.
The Commission further alleged that, in early August 2003, Leon
Levy and Abecassis improperly tipped defendant Sabbah about the
impending merger, and, on the basis of that illegal tip, on
August 8, 2003, Sabbah purchased 12,050,000 shares of iDial
before the public announcement of the merger. Finally, the
Commission alleged that, early in August 2003, Leon Levy also
tipped three other residents of Panama - Henry Levy, Henry's
wife, Jacqueline Levy, and Henry's brother, Hertsel Levy - who
then purchased in total over 12,000,000 shares of iDial stock
before the merger was publicly announced.
According to the Commission's complaint, all of the defendants,
by way of the foregoing conduct, violated Section 10(b) of the
Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
The suit is styled "SEC v. Leon Levy, et al., Civil Action No.
3-04-CV-0351-N, USDC, NDTX (Dallas Division)."
INDIANA: AC Reverses Denial For Injunction In Curfew Lawsuit
------------------------------------------------------------
The United States Court of Appeals, Seventh Circuit, reversed
and remanded a ruling by the U.S. District Court for the
Southern District of Indiana, denying Plaintiffs motion for
preliminary injunction, in regards a lawsuit brought against
Bart Peterson, Mayor of the city of Indianapolis, Indiana, et
al., on behalf of Nancy Hodgkins, et al., challenging the
constitutionality of Indiana's nighttime juvenile curfew law.
A parent and her minor children challenged Indiana's curfew
law claiming that the law violates the First Amendment rights of
minors and impinges on the substantive due process rights of
parents to raise and control the upbringing of their children.
The district court denied the plaintiffs' motion for a
preliminary injunction, holding that the curfew law--which
contains an affirmative defense for minors arrested while
participating in, going to, or returning from an activity
protected under the First Amendment to the United States
Constitution--did not threaten to curtail the First Amendment
rights of juveniles and did not impede the due process rights of
parents to direct their children's upbringing without undue
interference from the government. Plaintiff appealed.
The lawsuit names as defendants the following: Bart Peterson,
Mayor, in his official capacity as mayor of the City of
Indianapolis, Indiana, Jack L. Cottey, Sheriff, in his official
capacity as Marion County Sheriff, and Scott Newman, in his
official capacity as Marion County Prosecutor.
INFOSPACE INC.: Court Grants Preliminary Approval Of Suit Pact
--------------------------------------------------------------
The United States District Court for the Western District of
Washington has issued an order granting preliminary approval of
a settlement of the In Re InfoSpace, Inc. Securities Litigation
class action.
The preliminary settlement calls for payment of $34.3 million to
the class by the Company's insurance carriers, without any
payment by InfoSpace or the other defendants, and for dismissal
of the action with prejudice. Infospace has denied and
continues to deny any and all allegations of wrongdoing in
connection with this matter, but believes that given the
uncertainties and cost associated with litigation, the
settlement is in the best interests of the Company and its
stockholders.
The settlement is conditioned on final court approval after
notice to the plaintiff class and expiration of the time for
appeal from any order of the Court approving the settlement.
There can be no assurance that the final settlement will be
obtained.
INTERCEPT: Agrees to Settle Securities Fraud Suits In GA Court
--------------------------------------------------------------
InterCept, Inc. reached an agreement to settle the class action
securities cases filed in the United States District Court for
the Northern District of Georgia.
Under the terms of the proposed settlement agreement, which was
filed with the court on Tuesday, February 17, 2004, InterCept
and its insurance carrier will pay $5.3 million to the
plaintiffs and their counsel. InterCept will fund $3.95 million
and its insurance carrier will fund $1.35 million of the
proposed settlement, which is subject to Court approval.
InterCept expects to take a one-time charge of approximately
$4.2 million in the fourth quarter of 2003 for the settlement
and related costs and expenses.
Upon final approval of the settlement, the pending claims
against InterCept and the individual defendants will be
dismissed without any admission of liability or wrongdoing.
InterCept's Chairman and Chief Executive Officer, John W.
Collins, stated, "Although we continue to believe that the
plaintiffs' claims are without merit, our board of directors
concluded it was in the best interests of our shareholders to
resolve the case and focus attention on our business. This
settlement will allow us to avoid the disruption and distraction
to the company that often accompanies this type of litigation.
With our recent announcement of the potential sale of our
merchant services division, the settlement of this litigation is
another step in our efforts to focus on the fundamentals of our
financial institution business."
JETBLUE AIRWAYS: Did Not Violate Privacy Laws, Government Says
--------------------------------------------------------------
The Chief Privacy Officer for the Department of Homeland
Security said that federal employees who persuaded JetBlue
Airways Corporation to submit personal information about 1.5
million passengers to a defense contractor, without the
passengers' permission did not violate federal privacy laws, the
Associated Press reports.
Chief Officer Nuala O'Connor Kelly said the employees "broke the
spirit, but not the letter" of federal privacy laws and said
they will have to undergo training about privacy issues. She
said fewer than six current employees were involved.
Ms. Kelly arrived at the conclusions as a result of her internal
investigation, alleging that the TSA didn't violate the law
because it never possessed the passenger data. Willful
violation of the Federal Privacy Act of 1974 is a misdemeanor
and carries a civil fine of up to $5,000.
JetBlue gave the passenger records in September 2002 to Torch
Concepts, a Defense Department contractor that used the
information as part of a study seeking ways to predict who posed
a risk to military installations. The airline turned over to
Torch more than 5 million records - including at least name,
address, telephone number and some itinerary-related information
- representing more than 1.5 million passengers, according to
Ms. Kelly's 10-page report on the investigation, AP reports.
The report said Torch stripped the data of the passengers' name
and later destroyed the tests.
Details of the study and JetBlue's involvement were reported in
September, prompting several class actions, a complaint to the
Federal Trade Commission, a separate investigation by the
Defense Department's inspector general and congressional
inquiries.
JORDAN ENTERPRISES: CA Court Enters Final Judgment in Stock Suit
----------------------------------------------------------------
The Honorable Percy Anderson, U.S. District Judge for the
Central District of California, entered Final Judgments in an
"advance fee" securities fraud case against Leon Jordan II and:
(1) Jordan Enterprises, LLC,
(2) Jordan Holdings, LLC,
(3) Raymond J. Brown, and
(4) Ray Brown & Associates
The Final Judgments restrain and enjoin the defendants from
further violations of the antifraud and broker-dealer
registration provisions of the federal securities laws (Section
17(a) of the Securities Act of 1933 (Securities Act) and Section
15(a)(1) of the Securities Exchange Act of 1934. The defendants
consented to the entry of the judgments without admitting or
denying any of the allegations of the Commission's complaint.
The court's order holds the Jordan defendants jointly and
severally liable for disgorgement and prejudgment interest in
the amounts of $900,000 and $30,329.30, respectively (to be
reduced by $75,000 in disgorgement and $2,611.69 in prejudgment
interest ordered to be paid by defendant Brown), and of those
amounts, orders relief defendant Sheila S. Jordan to pay
disgorgement and prejudgment interest of $390,000 and
$13,142.70, respectively. As partial payment of their financial
obligations, the court also ordered the Jordan defendants and
relief defendant Sheila S. Jordan to transfer certain real
property and previously frozen funds in a bank account to the
clerk of the court within 30 days, and ordered defendant Leon
Jordan to pay a civil penalty in the amount of $125,000. The
court also ordered Brown to pay a civil penalty in the amount of
$25,000. In separate administrative proceedings, Brown and
Jordan also consented to orders permanently barring them from
association with any broker or dealer.
The Commission's complaint alleged that since December 2001, the
defendants fraudulently raised at least $850,000 by offering
unwitting individuals and entities seeking venture capital
(participants) the opportunity, for a fee, to receive proceeds
from bond offerings that did not exist. According to the
complaint, the defendants falsely represented to participants
that:
(i) they were the exclusive coordinators and intermediaries
of several multi-billion dollar bond offerings in which
well known large financial institutions were involved;
(ii) in exchange for a fee (denominated as a "due
diligence" fee), the defendants would assist the
participants in obtaining the proceeds of a specific
bond offering; and
(iii) the participants' fees would be refunded if the
defendants were unable to secure participation in the
proceeds of the bond offering for the participants.
The complaint alleged that the well-known financial institutions
purportedly involved in the defendants' bond offerings
disclaimed any involvement in any bond offering with the
defendants, and that there was no evidence that any of the bond
offerings actually existed.
JOSEPH DELLA RUSSO: NJ SC Reverses, Remands Consumer Fraud Suit
---------------------------------------------------------------
The Supreme Court of New Jersey reversed and remanded a ruling
by the Superior Court, Law Division, Bergen County, granting
defendants' motion to dismiss as to its CFA claim only, a
lawsuit brought against Joseph Dello Russo, M.D. et al., on
behalf of Joseph Macedo, et al., alleging inter alia violation
of the Consumer Fraud Act (CFA), based on representations that
patients would be treated by properly licensed doctors and that
employee "doctor" was a licensed physician.
Plaintiffs Joseph Macedo and Rosemary Lesky sued Dr. Joseph
Dello Russo, the corporate entities he created to perform laser
surgery, and Dr. William T. Kellogg alleging, among other
things, that defendants violated the Consumer Fraud Act (CFA),
when they allowed Kellogg, who was not fully licensed, to treat
plaintiffs. Plaintiffs do not allege that their treatment fell
below the appropriate medical standard of care or that they
suffered any physical injuries as a result thereof, but only
that through their own words and conduct, the defendants
represented to each *240 plaintiff that they would be treated by
properly licensed doctors, with no limitations on
their licenses, and that Kellogg was a licensed physician with
no limitations upon his license, and licensed to provide the
care and treatment which he provided to each plaintiff.
Consequently, plaintiffs claim that they suffered "mental
anguish," loss of enjoyment of life, medical bills and economic
damages for which they seek "compensatory damages, punitive
damages, attorneys fees, interest, [and] costs."
The trial court granted defendants' motion to dismiss the CFA
count because the allegations underlying it implicate the
provision of medical services, a subject outside the purview of
the Act. On leave to appeal, the Appellate Division reversed.
Defendants appealed.
The lawsuit names as defendants Joseph Dello Russo, M.D., P.A.
t/a New Jersey Eye Center, Medical Care, P.L.L.C. d/b/a Dello
Russo Laser Vision, William T. Kellogg, M.D., and John Does 1-10
and ABC Corporations 1-10.
LAWYERS TITLE: AC Affirms Denial Of Arbitration In Policy Suit
--------------------------------------------------------------
The United States Court of Appeals of Ohio, Eight District,
Cuyahoga County affirmed a ruling by the Court of Common Pleas,
denying Defendants Motion to Compel Arbitration in regards a
lawsuit brought against Lawyers Title Insurance Corporation, on
behalf of Miles R. Henderson, et al.
On January 25, 2002, plaintiffs-appellees Miles and Patricia
Henderson filed a class action complaint against Lawyers Title
Insurance Corporation, claiming they purchased two policies of
title insurance from Lawyers Title in connection with the sale
of property located in Shaker Heights and the purchase of
property located in South Russell. Plaintiffs alleged they are
qualified for and entitled to receive a 40 percent reissue
credit against the premiums they paid for the title insurance.
Plaintiffs alleged Lawyers Title failed to inform them that they
were qualified for the credits and failed to give them the
reissue credits. On August 16, 2002, Lawyers Title moved the
trial court for an order compelling arbitration based upon the
policies of title insurance issued to plaintiffs from Lawyers
Title. Plaintiffs opposed the motion to compel arbitration on
the grounds that they did not receive a copy of the title
insurance policy containing the arbitration clause before the
Purchase Transaction closed and never received a copy of the
title insurance policy with respect to the Sale Transaction.
On February 24, 2003, the trial court denied Lawyers Title's
motion to compel arbitration. Defendant appealed.
MARTHA STEWART: Stewart Friend Bares Damaging Testimony in Trial
----------------------------------------------------------------
A close friend of Martha Stewart issued a damaging testimony
against the domestic trendsetter last week, saying Ms. Stewart
told her she knew ImClone Systems founder Sam Waksal was trying
to dump his shares, the Associated Press reports.
In her testimony, Mariana Pasternak also told government
prosecutors that Ms. Stewart also told her "Isn't it nice to
have brokers who tell you those things?" However, under cross-
examination last Friday, Ms. Pasternak wavered slightly on her
testimony, saying that she didn't know if Ms. Stewart had made
that statement or if it was just a thought on her mind.
The government planned to rest its case against Ms. Stewart and
her former broker Peter Bacanovic last Friday. Ms. Stewart and
Mr. Bacanovic are accused of obstruction of justice with regard
to Ms. Stewart's sale of Imclone Systems common stock right
before the stock price plunged, due to a denial of its key drug
application with the Food and Drug Administration.
Prosecutor Michael Schachter, trying to restore Ms. Pasternak's
credibility, asked what her "best belief" was about the remark,
AP reports. Ms. Pasternak answered "That Martha said it." She
did not waver in the central element of her testimony - that Ms.
Stewart was aware when she sold her ImClone stock on December
27, 2001, that Mr. Waksal had been trying to sell as well.
Ms. Stewart has contended that she and Mr. Bacanovic had a
standing agreement to sell ImClone stock when the price fell to
$60.
No other prosecution witnesses were lined up, but prosecutors
hoped to present to the jury new segments of testimony Ms.
Stewart's broker, Peter Bacanovic, gave to investigators.
Stewart lawyer Robert Morvillo also was expected to ask U.S.
District Judge Miriam Goldman Cedarbaum to dismiss all or part
of the indictment against his client, AP reports.
Also Friday, the government sought to bolster the testimony of
Douglas Faneuil, the former Merrill Lynch & Co. assistant who
has testified that he passed the tip about Mr. Waksal from Mr.
Bacanovic, his boss, to Ms. Stewart, AP states.
Two friends of Faneuil testified Friday that he was distraught
in January 2002, long before he changed his account, and that he
confided in them that he was being pressured by his boss to lie.
One of the friends, Zeva Bellel, recalled a January 4, 2002,
conversation in which Mr. Faneuil described asking Mr. Bacanovic
whether it was appropriate for him to pass the tip to Ms.
Stewart. "It's not a question of whether you can do it or not,"
Mr. Faneuil described Mr. Bacanovic saying, according to Ms.
Bellel. "Just do it."
MUSIC INDUSTRY: NJ Resident Files RICO Violations Suit V. RIAA
--------------------------------------------------------------
A New Jersey woman filed a civil lawsuit against the Recording
Industry Association of America (RIAA) labels in the United
States District Court in Newark, New Jersey, accusing it of
trying to blackmail her when it named her as one of the 531
people that illegally downloaded sound recordings off peer-to-
peer networks, Reuters/ Hollywood Reporter states.
Michele Scimeca, of Rockaway Township, N.J., charged the RIAA of
violations of the Racketeer Influenced and Corrupt Organizations
Act (RICO). Attorney for the plaintiff Bart Lombardo told
Reuters that the legal action notices the RIAA delivered warns
the accused copyright pirate that their liability is clear, and
refusal to settle could result in damages of as much as $150,000
per incident and that ignorance of the law is no excuse.
"Essentially they are saying, 'Pay a little now, or pay the full
monty later,"' Mr. Lombardo told Reuters. "This really looks
like extortion, and the facts fit under RICO."
In December, the labels produced 41 pages of copyrighted songs
from Pearl Jam, Korn, Godsmack and other artists, which they
said were offered for illegal swapping over the Kazaa network by
someone with the screen name "DrEeMeR," according to a report in
the New Jersey Star-Ledger.
Ms. Scimeca told the Star-Ledger that was the screen name used
by her 13-year-old daughter, a high school freshman, for a
school project. The family's Optimum Online Internet account was
registered to the mother, whose name was handed over by
Cablevision.
RIAA officials scoffed at the lawsuit, saying the letter is
simply a notification that tells people they can settle without
going to court, Reuters reports. "We are always open to
settlement discussions with anyone," an RIAA spokesman said.
"If someone prefers not to settle, they of course have the
opportunity to raise their objections in court. We stand by our
claims."
SCHRATTER FOODS: Recalls Cheese For Possible Clostridium Content
----------------------------------------------------------------
Schratter Foods Inc. of Fairfield, New Jersey, in cooperation
with the U.S. Food and Drug Administration (FDA), is recalling
all packages of ILE DE FRANCE brand Brie Soft Ripened Cheese in
tins, Net Wt 4.5 oz. (125 grams), and ILE DE FRANCE brand
Camembert Soft Ripened Cheese in tins, Net Wt. 4.5 oz. (125
grams), because they have the potential to be contaminated with
Clostridium botulinum, a bacterium which can cause life-
threatening illness or death. Consumers are warned not to use
these products even if they do not look or smell spoiled.
Botulism, a potentially fatal form of food poisoning, can cause
the following symptoms: general weakness, dizziness, double
vision, and trouble with speaking or swallowing. Difficulty in
breathing, weakness of other muscles, abdominal distension and
constipation may also be common symptoms. People experiencing
these problems should seek immediate medical attention.
The imported cheeses were sold to distributors and retail stores
nationwide.
ILE DE FRANCE Brie and Camembert are individually packed in
hermetically-sealed aluminum tins which are packaged within
individual consumer-size boxes. All date codes ("Best Before")
are being recalled.
No illnesses have been reported to date.
The recall was prompted after routine import sampling by the FDA
revealed that these products are considered low acid canned
foods (LACF) and the labeling failed to bear a "Keep
Refrigerated" statement, and that the foreign manufacturer
failed to provide proper documentation for its manufacturing
process to the agency. The company has ceased distribution of
these products.
Consumers who have purchased the affected imported Brie and/or
Camembert Cheeses in tins are urged to return them to the place
of purchase for a full refund. Consumers with questions may
contact the company at 1-201-641-6851.
TOYSMITH: Recalls 40,000 Lollipops For Undeclared Egg/Peanuts
-------------------------------------------------------------
Toysmith of Auburn, Wash., is recalling some 40,000 insect-
themed lollipops because the candies may contain undeclared egg
and peanuts, posing a risk to people with allergies.
One illness was reported to the company last week.
The recalled "Jelly Pops" were distributed nationwide over the
last two years in toy and gift stores. The candies were
manufactured in China and sold in ladybug, cricket, butterfly
and dragonfly varieties.
The lollipops were sold in 1.25-ounce cellophane-wrapped
packages with a product number "6398." They were packaged in a
24-piece display unit under the heading "Sweet Pops."
Toysmith has discontinued the product and ended its relationship
with the Chinese manufacturer, company spokesman John Ryan said.
Consumers who purchased the lollipops can return them to the
place of purchase for a full refund or call the company at
1-800-356-0474 from 10:30 a.m. to 9 p.m. EST.
UNITED PARCEL: SC Court Grants Summary Judgment In Bias Lawsuit
---------------------------------------------------------------
The United States District Court, D. South Carolina, Columbia
Division granted Defendants Motion for Summary Judgment of a
lawsuit brought against United Parcel Service, Inc. (UPS), on
behalf of Plaintiff Donald Woodward, alleging that UPS
discriminated against him based on his race in violation of 42
U.S.C. 1981 and 1988, and Title VII of the Civil Rights Act of
1964, 42 U.S.C. 2000e.
Specifically, Woodward claims UPS discriminated against him in
terms of pay and by failing to promote him. Furthermore,
Woodward claims that the discrimination created a hostile work
environment, that he was constructively discharged, and that he
was retaliated against. After filing, the case was referred to
Magistrate Judge Bristow Marchant for pretrial proceedings.
UPS filed for summary judgment on February 26, 2003. Judge
Marchant issue a Report and Recommendation on August 29, 2003,
recommending that UPS's motion for summary judgment be granted
as to all claims. On September 15, 2003, Woodward
filed objections to the Report arguing that UPS's motion should
be denied as to the causes of action alleging discrimination in
pay and promotion. UPS replied to Woodward's objections on
October 1, 2003. In addition, at this court's request, both
parties filed supplemental briefs on the statute of limitations
issue on October 7, 2003.
On December 15, 2003, court heard oral argument on UPS's motion
for summary judgment.
New Securities Fraud Cases
AAIPHARMA INC: Milberg Weiss Lodges Securities Suit in S.D. NY
--------------------------------------------------------------
The law firm of Milberg Weiss Bershad Hynes & Lerach LLP
initiated a class action lawsuit, on behalf of purchasers of the
securities of AaiPharma, Inc. between April 24, 2002 and
February 4, 2004, inclusive, seeking to pursue remedies under
the Securities Exchange Act of 1934, against defendants
AaiPharma Inc., and:
(1) Philip S. Tabbiner, and
(2) William L. Ginna, Jr.
The lawsuit charges the defendants with violations of Section
10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule
10b-5 promulgated thereunder. Throughout the Class Period,
defendants issued quarter after quarter of "record" financial
results. Defendants emphasized increased revenues throughout the
Class Period, fueled by strong sales of pharmaceutical products
including sales of Brethine, an asthma medication. Defendants
failed to disclose that these stellar financial results were
only made possible through improper sales practices, such as
"channel stuffing" or flooding wholesalers with products in
order to artificially boost sales, and failing to properly
reserve for product returns in violation of Generally Accepted
Accounting Principles. As a result, defendants' Class Period
financial statements were materially overstated.
On February 5, 2004, before the market opened, defendants
shocked the market by announcing that due to excessive product
returns of products such as Brethine, and necessary additions to
product return reserves, fourth quarter net revenues were
reduced by $15.9 million. In response to the news concerning
AaiPharma's previously undisclosed inventory issues, the price
of AaiPharma stock dropped from over $27 per share on February
4, 2004 to $21.30 on February 5, 2004, a drop of over 23% on
unusually large trading volumes of 4.8 million shares traded.
For more information, contact Steven G. Schulman, by Mail: One
Pennsylvania Plaza, 49th fl., New York, NY, 10119-0165, by
Phone: (800) 320-5081, or by E-mail: aaipharma@milberg.com.
AGCO CORPORATION: Federman & Sherwood Files Stock Lawsuit in IL
---------------------------------------------------------------
Federman & Sherwood initiated a securities class action against
AGCO Corporation (NYSE: AG) in the United States District Court
for the Northern District of Illinois. The suit also names as
defendants Robert J. Ratliff and Andrew H. Beck.
The complaint alleges violations of federal securities laws,
including allegations of improper recognition of revenue in the
financial statements included in certain public reports of the
Company between the dates of February 6, 2003 through February
5, 2004, whereby artificially inflating the price of the AGCO
securities.
For more details, contact William B. Federman by Mail: FEDERMAN
& SHERWOOD, 120 N. Robinson, Suite 2720, Oklahoma City, OK 73102
by Phone: (405) 235-1560 by Fax: (405) 239-2112 or by E-mail:
wfederman@aol.com
DATATEC SYSTEMS: Federman & Sherwood Lodges NJ Securities Suit
--------------------------------------------------------------
Federman & Sherwood initiated a securities class action against
Datatec Systems, Inc. (Nasdaq: DATCE) in the United States
District Court for New Jersey.
The complaint alleges violations of federal securities laws,
including allegations that Datatec's CEO Isaac Gaon falsely
reported to investors the Company's financial position and
continued to obtain financing from IBM Credit, an important
company lender. Datatec surprised investors when it announced
that CEO Gaon had been replaced with CEO Raul Pupo on December
5, 2003, and that an outside counsel was hired to review
Datatec's valuation of its long-term contracts. IBM Credit has
since refused to waive Datatec's non-compliance with financial
covenants.
For more details, contact William B. Federman by Mail: FEDERMAN
& SHERWOOD, 120 N. Robinson, Suite 2720, Oklahoma City, OK 73102
by Phone: (405) 235-1560 by Fax: (405) 239-2112 or by E-mail:
wfederman@aol.com
DATATEC SYSTEMS: Wechsler Harwood Launches Securities Suit in NJ
----------------------------------------------------------------
Wechsler Harwood LLP initiated a securities fraud class action
lawsuit in federal court for the District of New Jersey
(Newark), on behalf of purchasers of the securities of Datatec
Systems, Inc. between June 26, 2003 and December 16, 2003,
inclusive.
The complaint alleges violations of Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934. While CEO Isaac Gaon told
investors that Datatec was on track to earn $0.14 to $0.16 per
share for fiscal 2004, Datatec hid its true financial condition
so that it could obtain continued financing from IBM Credit, an
important company lender.
On December 5, 2003, Datatec surprised investors with the news
that CEO Gaon had been fired. On December 17, 2003, Datatec told
investors it would suffer a $10 million loss for the fiscal
quarter ended October 31, 2003, and that Datatec's Audit
Committee had hired outside counsel to review Datatec's
valuation of its long-term contracts. IBM Credit has since
refused to waive Datatec's non-compliance with financial
covenants. Datatec's stock price fell substantially on large
volume.
For more information, contact Wechsler Harwood LLP, by Mail: 488
Madison Avenue, 8th Floor, New York, New York 10022, by Phone:
(877) 935-7400 (toll free), or by E-mail: dleifer@whesq.com.
EL PASO: Fruchter & Twersky Launches Securities Lawsuit in TX
--------------------------------------------------------------
Fruchter & Twersky, LLP initiated a Class Action lawsuit in the
United States District Court for the Southern District of Texas,
on behalf of a class of all persons who purchased or acquired
securities of El Paso Corp. between February 22, 2000 and
February 17, 2004 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 during the Class Period thereby
artificially inflating the price of El Paso securities. More
specifically, the Complaint alleges that during the Class Period
defendants caused El Paso to report in its public filings, press
releases and other public statements favorable financial results
by, among other things, artificially inflating the Company's
reported reserves as it relates to oil and natural gas.
The Complaint alleges, among other things, that defendants
failed to disclose that the Company's estimates were based on
improperly manipulated reported reserve estimates that deviated
from industry standards and resulted in a knowingly false high
estimate of reported reserves.
On February 17, 2004, El Paso announced, that the Company had
overstated its reported reserves by 41% or 1.8 trillion cubic
feet and warned of a $1 billion pretax charge triggered by the
revision. On this news, El Paso shares fell 18% and traded as
low as $7.26 per share.
For more information, contact Jack Fruchter, by Mail: One
Pennsylvania Plaza, Suite 1910, New York, NY 10119, by Phone:
(212) 279-5050 or (800) 440-8986, Fax: (212) 279-3655, or by E-
mail: JFruchter@FruchterTwersky.com.
INTERPOOL INC.: Cauley Geller Lodges Securities Fraud Suit in NJ
----------------------------------------------------------------
Cauley Geller Bowman & Rudman, LLP initiated a class action
lawsuit in the United States District Court for the District of
New Jersey, on behalf of purchasers of Interpool, Inc. publicly
traded securities during the period between May 8, 2000 and
December 26, 2003, inclusive, against Interpool, and:
(1) Raoul Witteveen,
(2) Martin Tuchman,
(3) William Geoghan, and
(4) Mitchell I. Gordon
The lawsuit alleges violations of Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder. During the Class Period, the defendants issued a
series of material misrepresentations to the market concerning
the Company's financial results.
More specifically, the defendants' statements during the Class
Period were materially false and misleading because they failed
to disclose and/or misrepresented the following adverse facts,
among others:
(i) that Interpool had materially overstated its net income
and earnings per share;
(ii) that Interpool improperly accounted for finance leases
by recognizing them as revenue rather than as a
reduction of the net investment of the lease;
(iii) that Interpool improperly classified its computer
leasing segment as a discontinued operation when the
Company knew or recklessly disregarded that this
segment did meet the requirements for a discontinued
operation;
(iv) that Interpool's financial results were in violation of
Generally Accepted Accounting Principles;
(v) that Interpool lacked adequate internal controls and
was therefore unable to ascertain the true financial
condition of the Company; and
(vi) that as a result, the value of Interpool's net income
and financial results were materially overstated at all
relevant times.
On March 6, 2003, Interpool shocked the investing community when
it announced that it would delay the release of its 2002 year-
end financial statements and would restate its 2001 and 2000
financial statements and its quarterly results for the first
three fiscal quarters of 2002.
On July 18, 2003, Interpool announced it would further delay the
release of its audited financial statements for 2002 and its
restated financial statements for 2001 and 2000 while special
outside counsel engaged by Interpool's audit committee conducted
an inquiry into the causes of the incorrect accounting treatment
that required the restatement of past financial results.
On October 10, 2003, Interpool announced that after a
preliminary report by an independent outside law firm appointed
by the Audit Committee of the Board of Directors to investigate
accounting issues, the Board had accepted the resignation of
defendant Witteveen. News of this shocked the market. Shares of
Interpool fell 13.4%, or $2.22 per share, to close at $14.35 per
share.
Interpool further shocked the market on December 29, 2003 when
it announced that it anticipated an additional delay in the
completion of its restated 2000 and 2001 financial statements
and 2002 financial statements and the filing of its Annual
Report on Form 10-K for 2002 with the Securities and Exchange
Commission ("SEC"). On this news shares of Interpool fell
37.69%, or $7.26 per share, to close at $12.00 per share. On
January 6, 2004, Interpool announced that the SEC had notified
the company that its informal investigation into its accounting
had become a formal SEC inquiry.
For more information, contact Samuel H. Rudman or David A.
Rosenfeld, Client Relations Department: Jackie Addison, Heather
Gann or Chandra West, by Mail: P.O. Box 25438, Little Rock, AR
72221-5438, by Phone: 1-888-551-9944 (toll free), Fax:
1-501-312-8505, or by E-mail: info@cauleygeller.com.
INTERPOOL: Schiffrin & Barroway Files Securities Lawsuit in NJ
--------------------------------------------------------------
Schiffrin & Barroway, LLP initiated a class action lawsuit in
the United States District Court for the District of New Jersey,
on behalf of all purchasers of the publicly traded securities of
Interpool, Inc. between May 8, 2000 and December 26, 2003,
inclusive, against Interpool, and:
(1) Raoul Witteveen,
(2) Martin Tuchman,
(3) William Geoghan, and
(4) Mitchell I. Gordon
The lawsuit alleges violations of Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder. During the Class Period, the defendants issued a
series of material misrepresentations to the market concerning
the Company's financial results.
More specifically, the defendants' statements during the Class
Period were materially false and misleading because they failed
to disclose and/or misrepresented the following adverse facts,
among others:
(i) that Interpool had materially overstated its net income
and earnings per share;
(ii) that Interpool improperly accounted for finance leases
by recognizing them as revenue rather than as a
reduction of the net investment of the lease;
(iii) that Interpool improperly classified its computer
leasing segment as a discontinued operation when the
Company knew or recklessly disregarded that this
segment did meet the requirements for a discontinued
operation;
(iv) that Interpool's financial results were in violation of
Generally Accepted Accounting Principles;
(v) that Interpool lacked adequate internal controls and
was therefore unable to ascertain the true financial
condition of the Company; and
(vi) that as a result, the value of Interpool's net income
and financial results were materially overstated at all
relevant times.
On March 6, 2003, Interpool shocked the investing community when
it announced that it would delay the release of its 2002 year-
end financial statements and would restate its 2001 and 2000
financial statements and its quarterly results for the first
three fiscal quarters of 2002. On July 18, 2003, Interpool
announced it would further delay the release of its audited
financial statements for 2002 and its restated financial
statements for 2001 and 2000 while special outside counsel
engaged by Interpool's audit committee conducted an inquiry into
the causes of the incorrect accounting treatment that required
the restatement of past financial results. On October 10, 2003,
Interpool announced that after a preliminary report by an
independent outside law firm appointed by the Audit Committee of
the Board of Directors to investigate accounting issues, the
Board had accepted the resignation of defendant Witteveen. News
of this shocked the market. Shares of Interpool fell 13.4%, or
$2.22 per share, to close at $14.35 per share.
Interpool further shocked the market on December 29, 2003 when
it announced that it anticipated an additional delay in the
completion of its restated 2000 and 2001 financial statements
and 2002 financial statements and the filing of its Annual
Report on Form 10-K for 2002 with the Securities and Exchange
Commission ("SEC"). On this news shares of Interpool fell
37.69%, or $7.26 per share, to close at $12.00 per share. On
January 6, 2004, Interpool announced that the SEC had notified
the company that its informal investigation into its accounting
had become a formal SEC inquiry.
For more information, contact Marc A. Topaz or Stuart L. Berman,
by Mail: Three Bala Plaza East, Suite 400, Bala Cynwyd, PA
19004, by Phone: 1-888-299-7706 (toll free) or 1-610-667-7706,
or by E-mail: info@sbclasslaw.com.
MEDICAL STAFFING: Brian Felgoise Files Securities Lawsuit in FL
---------------------------------------------------------------
The Law Offices of Brian M. Felgoise, P.C. initiated a
securities class action in the United States District Court for
the Southern District of Florida, on behalf of shareholders who
acquired Medical Staffing Network Holdings, Inc. common stock
traceable to Medical Staffing's Registration
Statement/Prospectus used in connection with its April 17, 2002
Initial Public Offering, against the company and certain key
officers and directors.
The action charges that defendants violated the federal
securities laws by issuing a series of materially false and
misleading statements to the market throughout the Class Period
which statements had the effect of artificially inflating the
market price of the Company's securities.
For more information, contact Brian M. Felgoise, by Mail: 261
Old York Road, Suite 423, Jenkintown, Pennsylvania, 19046, by
Phone: (215) 886-1900, or by E-mail: FelgoiseLaw@aol.com.
MEDICAL STAFFING: Charles Piven Files Securities Suit in S.D. FL
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The Law Offices Of Charles J. Piven, P.A. initiated a securities
class action in the United States District Court for the
Southern District of Florida, on behalf of shareholders who
purchased the common stock of Medical Staffing Network Holdings,
Inc. traceable to Medical Staffing's
Registration/Statement/Prospectus used in connection with its
April 17, 2002 Initial Public Offering, against defendant
Medical Staffing and certain of its officers and directors.
The action charges that defendants violated federal securities
laws by issuing a series of materially false and misleading
statements to the market throughout the Class Period which
statements had the effect of artificially inflating the market
price of the Company's securities.
For more information, contact Charles J. Piven, P.A., by Mail:
The World Trade Center-Baltimore, 401 East Pratt Street, Suite
2525, Baltimore, Maryland 21202, by Phone: 410/986-0036, or by
E-mail: hoffman@pivenlaw.com.
MICROMUSE INC.: Wechsler Harwood Files Securities Lawsuit in CA
---------------------------------------------------------------
Wechsler Harwood LLP initiated a Federal Securities fraud class
action in the United States District Court for the Northern
District of California, on behalf of persons or entities who
purchased or otherwise acquired the securities of Micromuse,
Inc. between October 24, 2000 and December 30, 2003, inclusive,
against defendants Micromuse, and:
(1) Lloyd Carney,
(2) Michael Luetkemeyer,
(3) Stephen A. Allott,
(4) Gregory Q. Brown, and
(5) David A. Wise
The Complaint charges the defendants with violations of federal
securities laws. Among other things, plaintiffs claim that
defendants' dissemination of materially false and misleading
statements concerning Micromuse's financial performance caused
the Company's stock price to become artificially inflated,
inflicting damages on investors. Micromuse develops, markets and
supports a family of scalable software solutions that enable the
effective monitoring of the status of multiple devices and
elements underlying an information technology service delivery
infrastructure.
The complaint alleges that during the Class Period defendants
caused Micromuse to report in its public filings, press releases
and other public statements favorable financial results by
misrepresenting the Company's financial performance. Plaintiffs
claim these statements were materially false and misleading
because they failed to disclose and/or misrepresented the
following adverse facts, among others:
(i) that the Company had improperly accounted for the
timing of certain accrued expenses and the recognition
of certain other expenses;
(ii) that the Company lacked adequate internal controls and
was therefore unable to ascertain the true financial
condition of the Company; and
(iii) that as a result, the values of the Company's net
income and financial results were materially overstated
at all relevant times.
For more information, contact David Leifer, Wechsler Harwood
Shareholder Relations Department, by Mail: 488 Madison Avenue,
8th Floor, New York, New York 10022, by Phone: (877) 935-7400
(toll free), or by E-mail: dleifer@whesq.com.
PROGRESS ENERGY: Charles Piven Lodges Securities Suit in S.D. NY
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The Law Offices Of Charles J. Piven, P.A. initiated a securities
class action lawsuit in the United States District Court for the
Southern District of New York, on behalf of those who obtained
Contingent Value Obligations in exchange for their Florida
Progress common stock pursuant to the closing of the merger of
CP&L Energy and Florida Progress Corporation and those who
purchased the CVOs in the period between November 30, 2000 and
February 12, 2002, inclusive, against defendant Progress Energy,
Inc. and William Cavanaugh, III.
The action charges that defendants violated federal securities
laws by issuing a series of materially false and misleading
statements to the market throughout the Class Period which
statements had the effect of artificially inflating the market
price of the subject securities.
For more information, contact Charles J. Piven, P.A., by Mail:
The World Trade Center-Baltimore, 401 East Pratt Street, Suite
2525, Baltimore, Maryland 21202, by Phone: 410/986-0036, or by
E-mail: hoffman@pivenlaw.com.
WALT DISNEY CO: Squitieri Fearon Launches Securities Suit in CA
---------------------------------------------------------------
The law firm of Squitieri & Fearon, LLP initiated a class action
in the United States District Court for the Central District of
California, on behalf of investors who sold securities of The
Walt Disney Company during the period from February 9, 2004
through February 10, 2004.
The Complaint charges The Walt Disney Company and Michael Eisner
(Disney's President and Chief Executive Officer) with violating
the federal securities laws by failing to disclose that Comcast
Corp.'s CEO had approached Disney with an offer to merge Disney
and Comcast. The Complaint charges that each defendant violated
Section 10(b) of the Securities Exchange Act of 1934 and SEC
Rule 10b-5 by omitting to disclose the offer from Comcast and
charges Michael Eisner with violating Section 20(a) of the
Exchange Act.
After the public learned about the Comcast merger proposal on
February 11, 2004, the price of Disney's common stock increased
significantly.
The Class Action seeks to recover damages on behalf of all
sellers of Disney's securities during the Class Period. Excluded
from the Class are the defendants and members of their immediate
families, any entity in which a defendant has a controlling
interest and the heirs of any such excluded party.
For more information, contact Stephen Fearon, by Phone:
(212) 575-2092, or by E-mail: stephen@sfclasslaw.com.
WAVE SYSTEMS: Wechsler Harwood Launches Securities Lawsuit in MA
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Wechsler Harwood LLP initiated a securities fraud class action
in the United States District Court for the District of
Massachusetts, on behalf of persons or entities who purchased or
otherwise acquired the securities of Wave Systems Corporation
between July 31, 2003 through February 2, 2004, inclusive,
against defendants Wave Systems Corporation, and:
(1) Steven Sprague (CEO), and
(2) Gerard T. Feeney (COO)
The complaint charges that defendants violated federal
securities laws by issuing a series of materially false and
misleading statements to the market throughout the Class Period
which statements had the effect of artificially inflating the
market price of the Company's securities.
In particular, it is alleged that, during the Class Period,
defendants issued materially false and misleading statements to
the investing public to inflate the Company's shares by
associating the Company "publicly" with two of the World's
biggest technology companies -- Intel and IBM. With the
"appearance" of two new separate revenue streams, defendants
sought to, and did, raise monies via a private placement for the
Company, and certain of the Company's officers and directors
pocketed over $1.5 million in insider trading proceeds.
On December 18, 2003, the Company issued a press release in
which it announced that the SEC was investigating certain public
statements made by Wave in August 2003, as well as certain
insider selling that occurred around the same time. Defendants'
public statements during the Class Period failed to disclose
that
(i) the Company's IBM announcement dated August 4, 2003
would result in no direct revenue to the Company;
(ii) the Company's Intel announcement dated July 31, 2003
was actually immaterial and would not generate any
revenue to the Company until 2004, if ever;
(iii) the so-called Intel contract did not require Intel to
purchase even one piece of software; and
(iv) the number of Trusted Platform Module-enabled
motherboards shipped over the course of 2003 and 2004
would be insignificant.
The complaint further alleges that, as a result of the
defendants' false statements, Wave stock traded at inflated
levels during the Class Period, increasing to as high as $4.53
per share on August 5, 2003, whereby the Company and the
Company's top officers and directors sold more than $8.6 million
worth of their own shares.
For more information, contact David Leifer, Shareholder
Relations, by Mail: 488 Madison Avenue, 8th Floor, New York, NY
10022, by Phone: (877) 935-7400, or by E-mail:
dleifer@whesq.com.
WHITEHALL JEWELLERS: Zimmerman Levi Files Securities Suit in IL
---------------------------------------------------------------
The law firm of Zimmerman, Levi & Korsinsky, LLP initiated a
class action lawsuit in the United States District Court for the
Northern District of Illinois, on behalf of purchasers of
Whitehall Jewellers, Inc. common stock during the period between
November 19, 2001 and December 10, 2003, inclusive, against
defendants Whitehall, and:
(1) Hugh M. Patinkin,
(2) Manny A. Brown,
(3) Matthew M. Patinkin,
(4) Jon H. Browne, and
(5) John R. Desjardins
The lawsuit alleges the defendants violated the federal
securities laws during the Class Period. Specifically, the
complaint alleges that defendants issued statements concerning
the Company's financial results, which failed to disclose and/or
misrepresented the following adverse facts, among others:
(i) that defendants had improperly and untimely recognized
revenue on certain of the Company's customer
transactions;
(ii) that the Company's inventory was materially overstated;
(iii) that defendants violated Generally Accepted Accounting
Principles and the Company's own internal policies
regarding the timing of revenue recognition; and
(iv) as a result of the foregoing, the Company's revenues,
net income and earnings per share published during the
Class Period were materially false and misleading.
On November 6, 2003, Whitehall announced that it had received a
subpoena from the SEC as part of an investigation into a
complaint that Whitehall helped a former supplier perpetrate an
accounting fraud. In December 2003, Whitehall announced that it
had fired its CFO, would delay reporting results for its fiscal
third quarter, and would be restating its financial statements
for fiscal years 2000 through the first two quarters of fiscal
2003.
For more information, contact Eduard Korsinsky, by Mail: 39
Broadway, Suite 1440, New York, N.Y. 10006, by Phone:
(212) 363-7500 or (800) 835-4950 (toll free), or by E-mail:
ek@zlklaw.com.
WHITEHALL JEWELLERS: Berman DeValerio Launches Stock Suit in IL
---------------------------------------------------------------
Berman DeValerio Pease Tabacco Burt & Pucillo, LLP initiated a
securities class action in the U.S. District Court for the
Northern District of Illinois, on behalf of all investors who
bought Whitehall Jewellers common stock from November 19, 2001
through and including December 10, 2003, against Whitehall
Jewellers, and:
(1) Hugh M. Patinkin,
(2) Jon H. Browne,
(3) Matthew M. Patinkin, and
(4) John R. Desjardins
The lawsuit claims that the defendants violated Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934 and the rules
and regulations promulgated thereunder, including U.S.
Securities and Exchange Commission (SEC) Rule 10b-5.
According to the complaint, the defendants materially
misrepresented Whitehall's financial results by:
(i) materially misstating the company's inventory and
accounts payable;
(ii) understating expenses because the company failed to
write down inventory to its present fair market value
and;
(iii) improperly accounting for vendor allowances.
The lawsuit contends that these false financial results caused
Whitehall's stock to trade at artificially high prices during
the Class Period.
On November 6, 2003, the company received a subpoena from the
SEC as part of a formal investigation into a complaint that
Whitehall and 13 other jewelry retailers helped a former
supplier commit accounting fraud. Whitehall also announced it
was the subject of a criminal investigation by the U.S. Attorney
for the Eastern District of New York.
The company announced December 11, 2003 that it had fired its
chief financial officer, Jon Browne, based on an internal
investigation tied to the SEC probe. Whitehall also delayed the
release of its third quarter financial results for the quarter
ended October 31, 2003. As a result, Whitehall's shares fell
7.6%, or $0.75, to close at $9.04 on December 11, 2003.
Then, on December 22, 2003, Whitehall announced that it would
restate its financial results for fiscal 2000, 2001, 2002 and
the first two quarters ended July 31, 2003. The restatement
decreased Whitehall's earnings per diluted share by $0.01 for
fiscal 2000; $0.03 for fiscal 2001; $0.02 for fiscal 2002; and
decreased the loss by $0.01 for the six months period ended July
31, 2003, according to the complaint.
For more information, contact N. Nancy Ghabai, Michael T.
Matraia, or Jeffrey C. Block, by Mail: One Liberty Square
Boston, MA 02109, by Phone: (800) 516-9926, or by E-mail:
law@bermanesq.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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Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland
USA. Roberto Amor, Aurora Fatima Antonio and Lyndsey Resnick,
Editors.
Copyright 2004. All rights reserved. ISSN 1525-2272.
This material is copyrighted and any commercial use, resale or
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