/raid1/www/Hosts/bankrupt/CAR_Public/040421.mbx
C L A S S A C T I O N R E P O R T E R
Wednesday, April 21, 2004, Vol. 6, No. 78
Headlines
ABBOTT LABORATORIES: Faces Consumer Antitrust Lawsuit in N.D. CA
ALLSTATE INSURANCE: Plaintiffs Ask Judge To Review Suit Ruling
BEARINGPOINT INC.: VA Court Grants Approval To Suit Settlement
CANADA: British Columbia Sued Over Failure to Test For Dyslexia
CANADA: Hamilton Health Services, OB-Gyn Faces Patient Lawsuit
CONNS INC.: Consumers Commence State Law Violations Suit in TX
ELI LILLY: JPMDL Orders Consolidation, Transfer of Zyprexa Suits
EMEX CORPORATION: SEC Files Securities Suit V. Founder, Officers
EPHEDRINE SUPPLEMENTS: FDA To Enforce Final Rule on Supplements
FLORIDA: Hospitals Face Antitrust Suit Filed by IN Health Plan
HEYMAN INTERNATIONAL: SEC Issues Injunction For Securities Fraud
INFONET SERVICES: Reaches Settlement For Securities Suit in CA
KINROSS GOLD: Asks NV Court To Dismiss Amended Shareholder Suit
MEDTRONIC INC.: Recalls Two Models of ICD For Production Defect
MICHIGAN: State To Receive $271 Million in Tobacco Settlement
MICROSOFT CORPORATION: MN Consumers Reach Antitrust Settlement
MOUNTAIN CENTER: Employees File Overtime Wage Violations Suits
MYLAN LABORATORIES: Settles Claims Against Akzo Nobel, Organon
NDCHEALTH CORPORATION: Charles Piven Files Stock Suit in N.D. GA
NOVASTAR FINANCIAL: SEC To Lodge Inquiry into Business Practices
OREX GOLD: SEC Lodges, Settles Lawsuit Over Pump-And-Dump Scheme
PHIL AND KATHY'S: Reaches Pact Over Unapproved Drugs Violations
R.J. REYNOLDS: NC Judge Urges Parties To Settle Antitrust Suit
SPEAR & JACKSON: SEC Lodges Complaint, Gets TRO V. Firm and CEO
TOBACCO LITIGATION: Key Litigation To Affect Industry Ratings
ULTIMATE ELECTRONICS: Asks CO Court To Dismiss Securities Suit
Meetings, Conferences & Seminars
* Scheduled Events for Class Action Professionals
* Online Teleconferences
New Securities Fraud Cases
AMERICAN EXPRESS: Girard Gibbs Lodges Securities Suit in S.D. NY
ASCONI CORPORATION: Shalov Stone Lodges Stock Lawsuit in M.D. FL
ITT EDUCATIONAL: Bernstein Liebhard Lodges Stock Lawsuit in IN
NOVASTAR FINANCIAL: Milberg Weiss Lodges Securities Suit in MO
NOVASTAR FINANCIAL: Squitieri & Fearon Lodges Stock Suit in MO
NOVASTAR FINANCIAL: Berman DeValerio Lodges MO Securities Suit
NOVASTAR FINANCIAL: Brodsky & Smith Lodges Stock Suit in W.D. MO
QUOVADX INC.: Goodkind Labaton Files Securities Fraud Suit in CO
SIEBEL SYSTEMS: Schatz & Nobel Lodges Securities Suit in N.D. CA
SUPERCONDUCTOR TECHNOLOGIES: Federman & Sherwood Files CA Suit
VASO ACTIVE: Schatz & Nobel Lodges Securities Suit in MA Court
VERDISYS INC.: Schatz & Nobel Lodges Securities Suit in S.D. TX
*********
ABBOTT LABORATORIES: Faces Consumer Antitrust Lawsuit in N.D. CA
----------------------------------------------------------------
Abbott Laboratories (NYSE: ABT) took advantage of a monopoly of
an essential anti-HIV drug to illegally overcharge tens of
thousands of AIDS patients, according to a federal antitrust
lawsuit filed in the United States District Court for the
Northern District of California.
Two AIDS patients brought the class action on behalf of all U.S.
consumers who bought the drug, Norvir, since Abbott quintupled
its price in December 2003. Norvir is the only drug that can
safely boost the efficacy of a powerful class of anti-AIDS drugs
called protease inhibitors. By raising the price of Norvir,
Abbott added thousands of dollars a year to the cost of its
competitors' protease inhibitor regimens. At the same time,
Abbott maintained the same price for its own Norvir-boosted
treatment, in an attempt to price its competitors out of the
marketplace.
The law firm of Berman DeValerio Pease Tabacco Burt & Pucillo
filed the complaint, which seeks damages and an injunction
against Abbott for unlawfully leveraging its monopoly in the
market for boosters of protease inhibitors.
"It's one thing for a pharmaceutical company to make money, but
Abbott's unjustified price increase has taken unfair advantage
of the very people it should be trying to help," said Joseph J.
Tabacco, Jr., the attorney overseeing the lawsuit for Berman
DeValerio.
"What makes this particularly outrageous is that Abbott depended
on U.S. government grants to develop Norvir. Even without the
price hike, the company was on track to generate total sales of
more than $3 billion on the drug - 180 times its original
investment," Mr. Tabacco said.
Protease inhibitors are the most powerful weapons to date
against HIV. They work by blocking the action of protease, an
enzyme needed for HIV to reproduce and infect other cells. But
they have major side effects and cannot be used for long periods
of time. For those reasons, doctors who want to boost the
benefits of protease inhibitors while minimizing their
potentially dangerous side effects include Norvir in the
regimens of patients on these drugs. All but one of the eight
protease inhibitors mentioned in the lawsuit depend on Norvir as
a booster.
On December 3, 2003, Abbott raised the wholesale price of Norvir
from $205.74 to $1,028.71 for 120 100 mg capsules - an increase
of some 478 percent. At the same time, Abbott did not raise the
price of its own Norvir-boosted protease inhibitor, Kaletra.
Abbott's staggering price hike drastically raised the cost of
competitors' Norvir-dependent drug regimens, the lawsuit says.
For example, the cost of Lexiva, which requires twice-daily
doses of Norvir, increased $6,258 per year. For Tipranovir, a
protease inhibitor currently in development by Boehringer-
Ingleheim, the cost of the optimal Norvir booster dose would
increase by more than $12,000 per year. Because Abbott did not
raise the price of the Norvir used with its own protease
inhibitor, Kaletra became the least expensive boosted protease
inhibitor regimen on the market.
The two plaintiffs named in the complaint seek to represent a
nationwide class of consumers and end payers who have been
forced to pay for Norvir since the price hike. To obtain a copy
of the filed complaint, you may contact the firm's San Francisco
office at (415) 433-3200.
ALLSTATE INSURANCE: Plaintiffs Ask Judge To Review Suit Ruling
--------------------------------------------------------------
Attorneys for former Allstate agents have asked a federal judge
to reconsider his ruling that agents seeking to void their
waiver agreements with the company would have to pay back any
benefits they were paid.
The motion, filed with Judge John P. Fullam in U.S. District
Court for the Eastern District of Pennsylvania, is not an appeal
of Fullam's April 2 decision that Allstate did not practice age
discrimination when it terminated roughly 6,400 agents in June
2000. The motion deals only with whether employees seeking to
rescind releases they signed when the company reorganized should
be made to "tender back" benefits before they could subsequently
file a new class-action lawsuit against the personal lines
insurer.
On April 2, Fullam ordered that any employee who signed a
release may void it within 90 days of his order, provided he or
she notify Allstate (NYSE:ALL) in writing and return "any and
all benefits received by the signer in exchange for signing the
release" (BestWire, April 4, 2004).
Allstate gave agents the option of continuing as an independent
contractor, selling their book of business to a buyer approved
by Allstate, or accepting one year's earnings as severance.
Agents who refused to sign were to be discharged, but only 0.3%
of the agents exercised that option.
Fullam ruled that releases the company asked employees to sign
between November 1999 and June 2000 may have violated the Older
Workers' Benefit Protection Act and constituted retaliation
against employees to prevent them from exercising their rights
under the U.S. Equal Employment Opportunity Commission code.
In their filing, the agents argued that the requirement could
"unjustly enrich the employer" and in many cases would "force
agents to tender back money they no longer have or drop out of
the lawsuit."
If the motion fails, the agents also seek "additional guidance
as to what should be placed in the form of notice to be sent to
prospective class members."
Allstate representatives could not be immediately reached for
comment.
Originally filed in August 2001, the lawsuit alleged the insurer
breached the federal Employee Retirement Income Security Act and
the Age Discrimination in Employment Act, as well as its
contractual and fiduciary duties, and that its plan to convert
its agency force to independent contractors was an attempt to
get rid of about 6,000 agents over the age of 40.
The EEOC joined the lawsuit in December 2001, alleging that
Allstate's plan to convert the remainder of its 15,200-member
agent force from full-time employees with benefits to
independent contractors included improper "pre-emptive"
retaliatory measures in violation of federal law.
The commission also weighed in on the "tender back" issue with a
memorandum in support of the motion for reconsideration.
"The court found the release to be voidable because it violated
the OWBPA by forbidding employee-agents who signed the release
from filing charges with the EEOC," the commission wrote, citing
a similar case which found tender back requirements incompatible
with the ADEA.
BEARINGPOINT INC.: VA Court Grants Approval To Suit Settlement
--------------------------------------------------------------
The United States District Court for the Eastern District of
Virginia granted preliminary approval to the settlement of the
consolidated securities class action filed against BearingPoint,
Inc. and certain of its officers.
The suit alleges that the defendants violated Section 10(b) of
the Securities Exchange Act of 1934, Rule 10b-5 promulgated
thereunder, and Section 20(a) of the Exchange Act. The
complaints contain varying allegations, including that the
Company made materially misleading statements with respect to
its financial results for the first three quarters of fiscal
year 2003 in its SEC filings and press releases.
Defendants' Motion to Dismiss was filed on February 10, 2004.
On March 31, 2004, the parties filed a stipulation requesting
that the Court approve a settlement of this matter for $1.7
million, all of which is to be paid by the Company's insurer.
On April 2, 2004, the Court considered and gave preliminary
approval to the proposed settlement agreement. The Company
anticipates that notice of the settlement agreement will be sent
to the purported class of shareholders in early May 2004.
CANADA: British Columbia Sued Over Failure to Test For Dyslexia
---------------------------------------------------------------
The Government of British Columbia faces a class action,
alleging that a consistent failure to test for dyslexia or, when
diagnosed, to provide remedial attention, violates both the
province's School Act and the Canadian Charter of Rights and
Freedoms.
The suit was filed March 30, 2004, by the law firm of Poyner
Baxter of North Vancouver, which works predominantly in the
field of class actions, and it parallels an action in progress
in the Province of Quebec. Indications are that similar
litigation may follow soon in Ontario.
While the B.C. action specifies one dyslexic student and his
mother, and details their frustrating and unsuccessful history
attempting to get proper attention in B.C. schools, it has been
brought under the "Class Proceedings Act" on behalf of all
members of the class: "all students for whom, while resident in
the Province of British Columbia, the Defendant has failed to
provide proper testing and remedial education for their dyslexic
condition."
Research indicates that 5-10% of the entire school population
suffers from dyslexia, despite having an otherwise normal
intellect and potential. It is by far the most common of the so-
called "learning disabilities." When proper testing is not done,
these students frequently become branded as slow learners and
discipline problems, subjected to humiliation by both their
peers and the system itself. Often they opt-out and follow a
rapidly deteriorating life path. When a proper diagnosis is
made, there are proven remedial education approaches to reroute
these young people into a normal, rewarding life, the law firm
press release states.
The suit quotes two excerpts from the preamble to the province's
School Act to demonstrate the absolute obligation to these
students: "it is the goal of a democratic society to ensure that
all its members receive an education that enables them to become
personally fulfilled and publicly useful, thereby increasing the
strength and contributions to the health and stability of that
society... and, ...the purpose of the British Columbia school
system is to enable all learners to develop their individual
potential and to acquire the knowledge, skills and attitudes
needed to contribute to a healthy, democratic and pluralistic
society and a prosperous and sustainable economy."
Of equal importance in this action is the Canadian Charter of
Rights and Freedoms, which guarantees the right to be treated
equally with all other individuals before and under the law and
to be afforded equal protection and equal benefit of the law
without discrimination.
"The discrimination against dyslexic students is systemic,"
lawyer Jim Poyner said in a press release. "Some school
districts and schools do better than others, but the general
performance of the education system is appalling, and the human
damage is incalculable. The principle of fair play as guaranteed
by the Charter is demonstrated by the massive investment made to
more adequately serve handicapped persons, retrofitting schools
and providing support services, or for special needs such as ESL
(English as a second language) programs. We plan to ensure that
those afflicted with dyslexia are no longer ignored."
The work of recognized authorities such as the Canadian Dyslexia
Association, the International Dyslexia Association and the
British Dyslexia Association was cited in the claim. Tests for
the detection of dyslexia, which are effective and feasible are
readily available for use and implementation by all
organizations whose responsibility it is to detect and
accommodate dyslexia in young people.
Poyner's partner Ken Baxter expressed gratitude for the help of
Dr. Linda Siegel, a noted expert in the field of childhood
learning disabilities and a Professor in the Department of
Educational & Counseling Psychology and Special Education,
Faculty of Education, University of British Columbia. Dr. Siegel
tested the specific student cited in the lawsuit and proved
beyond doubt dyslexia that could have and should have been
diagnosed in Vancouver schools years earlier.
"From a legal point of view, this action automatically covers
every individual and family that is dealing with dyslexia, past,
present and future," Mr. Baxter said. "But we would urge
parents who suspect the problem to be insistent at school, and
to seek information from the excellent organizations that are
out there."
The class action suit seeks to direct the government to properly
test for dyslexia and to provide accepted remedial programs, as
well as damages to recover the costs to families for alternate
education and treatment, as well as punitive damages for
behavior which is "callous, arrogant and offends the ordinary
community standards of moral and decent conduct."
CANADA: Hamilton Health Services, OB-Gyn Faces Patient Lawsuit
--------------------------------------------------------------
The Hamilton Health Sciences Corporation (HHS) and Dr. Salim
Daya, an obstetrician-gynecologist who specializes in treating
infertility and recurrent pregnancy loss, faces a class action
alleging that between 1998 and 2003, Dr. Daya performed an
obsolete surgical procedure called a Tompkins metroplasty on at
least 93 women.
Tompkins metroplasty involves cutting and reshaping the uterus,
and was replaced twenty years ago by a less invasive form of
metroplasty involving a scope. The Tompkins metroplasty exposes
patients to increased risks and complications, including
permanent scarring of the uterus, a higher incidence of
miscarriage, the inability to have a vaginal delivery and
permanent infertility.
The lawsuit follows the March 3, 2004 announcement by HHS that
it had conducted an audit of Dr. Daya's use of the Tompkins
metroplasty after a colleague noticed that the outmoded
procedure was frequently on the surgical list at HHS. Several
fertility experts were called in to review Dr. Daya's patient
records, and the experts agreed that Dr. Daya's use of the
Tompkins metroplasty was inappropriate and fell below the
accepted standard of care. They estimated 93 of Dr. Daya's
patients had had the inappropriate procedure. The experts
further concluded that in the case of at least 35 of the 93
women involved, no irregularity in the uterus was apparent at
all. HHS subsequently refused to renew Dr. Daya's privileges.
The lawsuit has been filed by two of Dr. Daya's patients in
Windsor, Ontario on behalf of all 93 women. The plaintiffs'
husbands are also named as proposed representative plaintiffs
for the family class members. The plaintiffs allege that both
HHS and Dr. Daya were negligent in their care and treatment of
the 93 women. They seek damages in the amount of $27,000,000
plus punitive damages in the sum of $2,000,000.
The plaintiffs are represented by Sutts, Strosberg LLP, a
Windsor, Ontario based law firm specializing in class action
lawsuits. "It is unfortunate that these 93 women, who came to
Dr. Daya based on his reputation as an expert in his field, now
have to face unnecessary risks and complications because this
doctor chose to perform a surgical procedure his peers agree is
antiquated," said Harvey Strosberg, lead counsel on the case, in
a press release. "My clients, like the other patients involved,
have already endured much emotional and physical pain in their
respective journeys to conceive a child. Now they have been told
the pain they suffered during and after this metroplasty was
completely unnecessary. It is extremely unfortunate."
A copy of the statement of claim, which sets out the particulars
of the allegations in the action, may be obtained by contacting
Sutts, Strosberg LLP.
CONNS INC.: Consumers Commence State Law Violations Suit in TX
--------------------------------------------------------------
Conns, Inc. faces a class action filed in the state district
court in Jefferson County, Texas, that alleges claims for breach
of contract and violations of state and federal consumer
protection laws arising from the terms of the Company's service
maintenance agreements.
The lawsuit alleges an inappropriate overlap in the warranty
periods provided by the manufacturers of the Company's products
and the periods covered by the service maintenance agreements
that the Company sells. The lawsuit seeks unspecified actual
damages as well as an injunction against the Company's current
practices and extension of affected service contracts.
The Company said in a disclosure to the Securities and Exchange
Commission that it believes that the warranty periods provided
by its service maintenance agreements are consistent with
industry practice. The Company believes that it is premature to
predict whether class action status will be granted or, if it is
granted, the outcome of this litigation.
ELI LILLY: JPMDL Orders Consolidation, Transfer of Zyprexa Suits
----------------------------------------------------------------
The Judicial Panel on Multidistrict Litigation agreed to
consolidate and transfer all pending Zyprexa cases against
pharmaceutical firm Eli Lilly & Co. to the United States
District Court for the Eastern District of New York.
Plaintiff rights law firm Hersh & Hersh successfully argued
before the JPMDL, who issued its court order, docket number
1596, on Thursday, April 15, 2004. It precedes a class action
complaint, CV 14 1587, which was filed Friday afternoon, April
16, 2004 in the Eastern District of New York.
In the wake of a letter issued by Eli Lilly & Co. to the medical
community in March 2004 describing the increased risk of
hyperglycemia and diabetes in Zyprexa patients, Hersh & Hersh
and co-counsel Michael London of New York, NY, successfully
argued against the drug maker's petition to move all outstanding
Zyprexa cases to Indianapolis, Indiana, the location of its
headquarters. A copy of the class action complaint is available
through the eastern district court of New York.
"Since filing our first case in January 2003 we have received at
least a thousand inquiries from alarmed family members about
loved ones who've suffered horrendous side effects after taking
Zyprexa, as well as referrals from other law firms throughout
the country," said Nancy Hersh of Hersh & Hersh. "The highest
number of cases that have been filed are from the state of New
York so it made sense to coordinate these cases under one
federal court in New York, and not Eli Lilly's home state.
Moreover, the multidistrict litigation drove our decision to
petition a nationwide class action suit against Eli Lilly."
All federal Zyprexa case files by Hersh & Hersh and Mr. London
will be transferred to eastern New York federal court, and case
management conferences will begin immediately. All pre-trial
matters involving documents, motions, discovery, depositions,
expert witnesses and admissibility of evidence will be reviewed
by the Honorable Jack B. Weinstein, who is well known for ruling
on many high-profile mass tort cases.
For more details, visit the firm's Website:
http://www.hershlaw.com
EMEX CORPORATION: SEC Files Securities Suit V. Founder, Officers
----------------------------------------------------------------
The Securities and Exchange Commission filed a civil action in
federal court against Vincent P. Iannazzo and Milton E. Stanson
(Defendants), founders and former directors of Emex Corporation
(Emex), alleging that they engaged in a fraudulent scheme to
artificially inflate Emex's stock price from at least October
2000 through April 2001.
As alleged in the complaint, Defendants caused Emex, in press
releases and in its annual report, to make false or materially
misleading statements about its technology and a related
financing agreement. Among other things, Defendants caused Emex
to announce that it possessed a commercially viable proprietary
technology, and that the company was ready to build a commercial
plant utilizing that technology with a $100 million financing
proposal it had obtained through the efforts of Credit Suisse
First Boston.
In fact, Emex's technology only was at the developmental stage
and never had been proven to be commercially viable.
Furthermore, Emex's financing agreement was with Fieldstone,
Inc., a small investment bank whose name Emex intentionally
omitted from its public statements on the subject. In addition,
Emex had little prospect of raising any money under its
financing agreement with Fieldstone. Therefore, despite Emex's
representations to the contrary, the company had neither the
technology nor the money to build a commercial plant.
The Commission's complaint alleges that Iannazzo and Stanson
violated Section 10(b) of the Securities Exchange Act of 1934
(Exchange Act) and Rule 10b-5 thereunder, and aided and abetted
the violation of Sections 10(b) and 13(a) of the Exchange Act
and Rules 10b-5, 12b-20 and 13a-1 thereunder. The Commission
is seeking to enjoin Iannazzo and Stanson from committing future
violations of these provisions, to compel them to pay monetary
penalties, and to bar Iannazzo and Stanson from serving as
officers or directors of a public company. The Commission also
is seeking to compel Mr. Stanson to pay disgorgement, with
prejudgment interest thereon.
The suit is styled "SEC v. Vincent P. Iannazzo and Milton E.
Stanson, Civil Action No. 04 CIV 02 989 (MBM)."
EPHEDRINE SUPPLEMENTS: FDA To Enforce Final Rule on Supplements
---------------------------------------------------------------
The Food and Drug Administration (FDA) announced that the final
rule on dietary supplements containing ephedrine alkaloids is
effective immediately. The rule, which was published on
February 11, 2004 in the Federal Register, declares dietary
supplements containing ephedrine alkaloids (ephedra) adulterated
because these supplements present an unreasonable risk of
illness or injury.
Two manufacturers had asked the United States District Court in
New Jersey to enter a temporary injunction to prohibit FDA from
enforcing the rule. However, the court ruled today that it
would not immediately stay the rule. The court ordered the
parties to submit additional briefs so that it may decide
whether to permanently stay the rule.
"We will take appropriate enforcement actions if needed to stop
manufacturers from illegally selling and distributing dietary
supplements containing ephedra alkaloids," Health and Human
Services Secretary Tommy G. Thompson said in a press release.
"These products pose unacceptable health risks, and any
consumers who are still using them should stop immediately."
On December 30, 2003, FDA issued over 60 letters to
manufacturers notifying them of our intent to publish the rule
as well as a consumer alert warning the public of the dangers of
ephedra and asking that they stop taking these products
immediately.
"Dietary supplements containing ephedrine alkaloids have been
shown to pose a real risk to health," said Dr. Lester M.
Crawford, Acting FDA Commissioner. "The court's decision today
makes clear that these dietary supplements may not be lawfully
marketed while the matter remains under review by the Court."
FDA plans to step up Internet surveillance to determine whether
anyone, including the original 60 + targeted firms, is
continuing to actively promote and sell these products. FDA has
already seen progress in its regulatory efforts, as a majority
of the manufacturers to whom letters were sent have ceased
selling dietary supplements containing ephedrine alkaloids, the
press release stated.
FLORIDA: Hospitals Face Antitrust Suit Filed by IN Health Plan
--------------------------------------------------------------
An Indianapolis-based health plan that offers medical savings
accounts has filed an antitrust lawsuit against a group of
Florida hospitals over how much the providers charge for medical
care. The providers said their charges are in line with other
hospitals, BestWire reports.
Medical Savings Insurance filed the antitrust suit March 17 in
U.S. District Court for the Middle District of Florida, after
Lee Memorial Health System filed a class action against the
insurer, alleging the providers weren't paid in full for medical
care. The class action was dismissed by the court, said Alan
Nisberg, a partner at Butler Pappas in Tampa, Fla., who
represents Medical Savings.
The court gave Lee Memorial an opportunity to file an amended
complaint but prohibited the health system from including any
class allegations, he said. Lee Memorial voluntarily dismissed
the lawsuit but anticipates refiling, said Jim Thomison, partner
with Walters Levine Brown Klingensmith & Thomison, P.A., who's
representing Lee Memorial.
Mr. Thomison said in the statement, "We believe it's meritless
and that we'll be able to successfully defend the lawsuit."
The lawsuit has two primary allegations. "We have evidence that
the hospitals named in the complaint have coordinated their
efforts to inflate prices in Florida," Mr. Nisberg said. The
lawsuits' defendants represent 50 Florida hospitals, including
Lee Memorial, that Nisberg claimed used the Florida Hospital
Association to exchange pricing information that led to inflated
prices.
Medical Savings alleges that the hospitals' prices are about
300% above cost, which is close to the rate paid for Medicare.
"We believe that 20% to 30% over cost would be reasonable," Mr.
Nisberg said. Medical Savings has been paying about 30% over
cost, he said.
Also, the lawsuit alleges that the hospitals coordinated a group
boycott of Medical Savings to try to pressure the company to pay
the inflated prices, or to force Medical Savings out of the
market entirely, he said. Some hospitals refused to recognize
Medical Savings when its members used the hospitals and treated
the patients as uninsured or self-pay patients. Other hospitals
don't entirely reject Medical Savings insurance but make it
difficult for patients by requiring large deposits before
medical procedures.
Mr. Thomison "categorically denied" that the hospitals inflate
prices. In fact, he said, Lee Memorial is a lower-priced not-
for-profit facility compared to other hospitals.
Medical Savings has about 15,000 members in Florida, and about
40,000 nationwide, Mr. Nisberg said. The company offers medical
savings accounts, which typically require a large deductible
followed by unlimited coverage for hospital bills.
The defendants are required to respond to the complaint by May
17.
"I think that hopefully the parties will be able to reach a
resolution, but we feel strongly that in the end Lee Memorial
will be vindicated and recover what's rightfully owed," Mr.
Thomison said.
HEYMAN INTERNATIONAL: SEC Issues Injunction For Securities Fraud
----------------------------------------------------------------
The Securities and Exchange Commission obtained an Order of
Preliminary Injunction and Other Relief from the U.S. District
Court for the Northern District of Alabama preliminarily
enjoining Timothy R. Heyman and Heyman International, Inc.
(Heyman International), pursuant to their consent, from
violating the antifraud and registration provisions of the
federal securities laws in connection with a $10 million Ponzi
scheme.
The Order also continues the asset freeze and other ancillary
relief previously ordered by the Court on April 5, upon granting
the Commission's Ex Parte Motion for a Temporary Restraining
Order and Other Emergency Relief. The Commission's complaint
that it filed in this action alleged that from at least 2001 to
the present, Heyman raised at least $10 million from
approximately 150 investors through the unregistered offer and
sale of securities issued by Heyman International. Heyman
represents to investors that as a result of investments that he
makes, investors will earn a minimum of 10% per month on their
fully refundable principal investment.
The Commission's complaint alleges that, in reality, Heyman is
operating a Ponzi scheme by using investor funds to pay previous
investors their monthly returns and to pay his personal
expenses. The Commission's complaint alleges that Heyman has
used at least $1.3 million of investor funds to pay personal
expenses, including several luxury cars and lavish trips. The
complaint also alleges that Heyman invested at most a de minimus
amount of investor funds and that Heyman International does not
have sufficient funds in its bank accounts to repay investors as
represented in the Depository Agreement.
The Order preliminarily restrains and enjoins Heyman and Heyman
International from violating Sections 5(a), 5(c) and 17(a) of
the Securities Act of 1933 and Section 10(b) of the Securities
Exchange Act of 1934 and Rule 10b-5 thereunder. The Order also,
among other things, continues the freeze of Heyman's and Heyman
International's assets and the freeze of Heyman International
investor funds wherever located. The Commission acknowledges
the continued assistance and cooperation of the Federal Bureau
of Investigation, the Internal Revenue Service and the State of
Alabama Securities Commission. All of the agencies'
investigations are continuing.
The suit is styled "SEC v. Timothy R. Heyman and Heyman
International, Inc., Civil Action No. CV-04-CO-0686-S."
INFONET SERVICES: Reaches Settlement For Securities Suit in CA
--------------------------------------------------------------
Infonet Services Corporation (NYSE:IN) signed a settlement
agreement in "In re Infonet Services Corporation Securities
Litigation," a securities class action pending in the United
States District Court for the Central District of California.
The settlement does not reflect any admission of wrongdoing by
Infonet or the other defendants.
The settlement resolves all claims made in nine class action
lawsuits filed against Infonet and certain of its current and
former officers and directors beginning in 2001 and which were
later consolidated into a single complaint filed in July 2002.
The settlement is subject to final court approval after notice
and an opportunity to object is given to members of the
settlement class. The court will be asked to certify a
settlement class including persons who purchased Infonet common
stock between December 16, 1999 through August 7, 2001, except
for defendants and certain other related persons.
Under the settlement, all claims will be dismissed, defendants
will obtain releases of liability, and the litigation will be
terminated in exchange for a cash payment of $18 million by the
defendants. As previously announced, Infonet recorded a special
charge of approximately $5 million for the period ended December
31, 2003, which reflects its contribution to the settlement net
of insurance. The plaintiffs' attorneys will notify class
members about the terms of the settlement and claims
administration process.
"We are very pleased to achieve this resolution," stated Jose A.
Collazo, Infonet's Chief Executive Officer. "We can now put the
expense and distraction of this litigation behind us."
For more details, contact Morgan Molthrop of Infonet Services
Corporation by Phone: 1-310-335-2606 or by E-mail:
morgan_molthrop@infonet.com
KINROSS GOLD: Asks NV Court To Dismiss Amended Shareholder Suit
---------------------------------------------------------------
Kinross Gold Corporation asked the United States District Court
for the District of Nevada to dismiss the amended class action,
styled "Robert A. Brown, et al. v. Kinross Gold U.S.A., Inc., et
al., Case No. CV-S-02-0605-KJD-RJJ," filed against it and:
(1) Kinross Gold U.S.A., Inc.,
(2) Kinam, and
(3) Robert M. Buchan, President and C.E.O. of the Company
The complaint is brought on behalf of two potential classes,
those who tendered their Kinam preferred stock into the tender
offer for the Kinam $3.75 Series B Preferred Stock made by the
Kinross Gold U.S.A. and those who did not. Plaintiffs argue,
among other things, that:
(i) amounts historically advanced by the Company to Kinam
should be treated as capital contributions rather than
loans,
(ii) the purchase of Kinam preferred stock from
institutional investors in July 2001 was a constructive
redemption of the preferred stock, an impermissible
amendment to the conversion rights of the preferred
stock, or constituted the commencement of a tender
offer,
(iii) the Company and its subsidiaries have intentionally
taken actions for the purpose of minimizing the value
of the Kinam preferred stock, and that the amount
offered in the tender offer of $16.00 per share was not
a fair valuation of the Kinam preferred stock.
The complaint alleges breach of contract based on the governing
provisions of the Kinam preferred stock, breach of fiduciary
duties, violations of the "best price" rule under Section 13(e)
of the Securities Exchange Act of 1934, as amended, and the New
York Stock Exchange rules, violations of Section 10(b) and 14(e)
of the Securities Exchange Act of 1934, as amended, and Rules
10b-5 and 14c-6(a) hereunder, common law fraud based on the acts
taken and information provided in connection with the tender
offer, violation of Nevada's anti-racketeering law, and control
person liability under Section 20A of the Securities Exchange
Act of 1934, as amended.
A second action seeking certification as a class action and
based on the same allegations was also filed in the United
States District Court for the District of Nevada on May 22,
2002. It names the same parties as defendants. This action has
been consolidated into the Brown case and the Brown plaintiffs
have been designated as lead plaintiffs. The plaintiffs seek
damages ranging from $9.80 per share, plus accrued dividends,
to $39.25 per share of Kinam preferred stock or, in the
alternative, the issuance of 26.875 to 80.625 shares of the
Company for each Kinam preferred share. They also seek triple
damages under Nevada statutes.
The Company brought a motion for judgment on the pleadings with
respect to the federal securities claims based on fraud.
Discovery was stayed pending the resolution of this matter. On
September 29, 2003, the Court ruled that plaintiffs had failed
to adequately state a federal securities fraud claim. The
plaintiffs were given an opportunity to amend the complaint to
try and state a claim that would meet the pleading standards
established by the Court but, if they are unable to do so, these
claims will be dismissed. The plaintiffs have filed an amended
complaint with the Court in an effort to eliminate the
deficiencies in their original complaint. The Company believes
the amended complaint is without merit and has filed a motion
for judgment on the pleadings seeking dismissal of the
securities fraud claims without prejudice.
MEDTRONIC INC.: Recalls Two Models of ICD For Production Defect
---------------------------------------------------------------
Medtronic, Inc. is voluntarily recalling two older models of
implantable cardioverter-defibrillators (ICDs). The Class I
recall involves a small subset of Micro Jewelr II Model 7223Cx
and GEMr DR Model 7271 ICDs that may take a longer than normal
time to charge before delivering therapy. Most of these
devices, implanted in 1997 and 1998, are close to the normal
replacement time. No other Medtronic devices are involved in
this action.
The Micro Jewel II device is no longer sold, and the GEM DR
device has limited distribution. Physicians are being notified
that they should verify the charge time and battery voltage of
each affected device. If any devices exhibit unsatisfactory
charge times, Medtronic recommends scheduling ICD replacement.
The final decision whether to replace the device is based on the
physician's medical judgment and specific patient needs.
Implantable cardioverter-defibrillators are medical devices used
to shock the heart into normal rhythm after patients suffer
ventricular tachycardia or fibrillation, which are rapid, life-
threatening arrhythmias originating in the lower chambers of the
heart. The devices are surgically implanted in the chest in a
minor procedure lasting less than one hour.
When a cardiac arrhythmia requiring cardioversion or
defibrillation shock occurs, the capacitor is normally charged,
and the device delivers the appropriate shock. With the
cardioverter-defibrillators in this recall, the capacitors may
take longer than normal to charge near the end of the battery
service life and could cause a delay in delivery or a non-
delivery of shock therapy. Such a delay or non-delivery could
result in patient injury or death because patients are not
receiving the appropriate therapy in time. Medtronic no longer
uses this capacitor technology.
Recently, Medtronic became aware of one serious injury and four
deaths that may be related to the failure of the capacitor in a
small subset of Micro Jewel II devices.
A total of 6,268 of the affected ICDs were manufactured, of
which about 1,800 are thought to be still implanted in patients
worldwide. Medtronic is working with the U.S. Food and Drug
Administration (FDA) to ensure that all physicians and their
patients with these devices are notified of the issue. Medtronic
began notifying physicians on April 5.
The FDA defines a Class I recall as a situation in which there
is a reasonable probability that the use of the product will
cause serious adverse health consequences or death. Medtronic,
Inc., headquartered in Minneapolis, is the world's leading
medical technology company, providing lifelong solutions for
people with chronic disease.
MICHIGAN: State To Receive $271 Million in Tobacco Settlement
-------------------------------------------------------------
After a flurry of contentious litigation to enforce its rights,
the state of Michigan is expected to receive $271,201,292.71 in
tobacco settlement money, Attorney General Mike Cox announced in
a press release.
"My office will work diligently to ensure that Michigan's share
of the tobacco settlement is secure," AG Cox stated. "Companies
that try to avoid their obligations under the tobacco settlement
will not succeed. We will not allow those companies to
shortchange our states."
Despite the landmark settlement between major tobacco product
manufacturers and states, new litigation emerges every year.
Often complex legal questions are posed that, depending on how
they are decided in court, have a positive or negative effect on
a state's share of the settlement, the press release stated.
This year, 13 disputes were filed by tobacco manufacturers who
are parties to the settlement. In addition, a Canadian tribal
tobacco manufacturer that is not a party to the tobacco
settlement filed an international arbitration proceeding,
challenging the national settlement and Michigan tobacco-control
laws. Another manufacturer filed a lawsuit against Michigan in
federal court in Kentucky, asking the court to find that
Michigan tobacco escrow laws violated anti-trust laws.
Michigan has collected nearly $1.7 billion from tobacco
companies since the original settlement agreement was reached in
1998. During 2003, the Attorney General's Consumer Protection
Division collected more than $326.6 million for the state.
During the first 90 days of 2004, the Consumer Protection
Division has helped more than 350 consumers resolve complaints
with approximately $300,000 refunded or forgiven. During
2003, over $1.6 million was refunded or forgiven for consumers,
the AG said in the press release.
MICROSOFT CORPORATION: MN Consumers Reach Antitrust Settlement
--------------------------------------------------------------
Zelle Hoffman Voelbel Mason & Gette LLP and Kirby McInerney &
Squire LLP, counsel for the Minnesota settlement class, and
Microsoft Corporation (Nasdaq:MSFT) jointly announced today that
a settlement has been reached in a class action alleging that
the Company violated Minnesota's antitrust laws.
The parties have reached an agreement to resolve all claims in
this litigation. The settlement will be presented to the Court
for preliminary approval in early summer, 2004. The terms of the
settlement are in the process of being finalized and will be
made public at that time.
For more details, contact Dan Hume, Esq. by Mail: Kirby
McInerney & Squire LLP, 830 Third Avenue, 10th Floor, New York,
NY 10022 by Phone: Telephone: (212) 317-2300 Or Toll-Free
(888) 529-4787 by Fax: (212) 751 2540 or by E-mail:
dhume@kmslaw.com
MOUNTAIN CENTER: Employees File Overtime Wage Violations Suits
--------------------------------------------------------------
Mountain Center, Inc. faces three class actions filed in
California State Court by and on behalf of certain of its
employees. The lawsuits allege a number of employment-related
breaches including:
(1) failure to pay hourly, overtime and waiting time wages;
(2) failure to provide rest and meal breaks;
(3) failure to reimburse expenses;
(4) record-keeping violations; and
(5) unlawful business practices
The plaintiffs have requested that the court treat the lawsuits
as class actions and are seeking, in addition to certain other
matters, both injunctive relief and damages. The lawsuits are
each at an early stage and, as such, the Company is not yet able
at this time to assess its potential liability with respect to
these claims. Nevertheless, the Corporation believes that it
has meritorious defenses to such claims, believes that class
treatment of such claims is not appropriate and intends to
defend these claims vigorously, the Company said in a disclosure
to the Canadian Securities and Exchange Commission.
MYLAN LABORATORIES: Settles Claims Against Akzo Nobel, Organon
--------------------------------------------------------------
Mylan Laboratories Inc. (NYSE:MYL) settled its claims against
Akzo Nobel NV (Akzo) and Organon USA Inc. (Organon) relating to
Organon's anticompetitive actions in delaying the availability
of a generic version of Remeronr (mirtazapine).
In 2001, Organon sued Mylan alleging infringement of a patent
that Mylan contended never should have been listed in the Food
and Drug Administration's Orange Book. Mylan won the
infringement case on summary judgment in December 2002 and
counterclaimed against Organon and Akzo. The counterclaims
alleged that Organon and Akzo violated federal and state
antitrust laws by improperly delaying the availability of
generic mirtazapine in the United States. Teva and Alphapharm
also filed similar claims against Organon and Akzo, and private
class action suits and government investigations have also been
launched.
In March 2004, Mylan agreed to settle its claims against Akzo
and Organon in exchange for $15 million. The payment, which has
been paid and received by Mylan, was in part for payment of
legal fees. Mylan will recognize the settlement proceeds in its
fourth quarter fiscal 2004 results.
For more information, visit the firm's Website:
http://www.mylan.com.
NDCHEALTH CORPORATION: Charles Piven Files Stock Suit in N.D. GA
----------------------------------------------------------------
The Law Offices Of Charles J. Piven, P.A. initiated a securities
class action on behalf of shareholders who purchased, converted,
exchanged or otherwise acquired the common stock of NDCHealth
Corporation (NYSE:NDC) between October 1, 2003 and March 31,
2004, inclusive. The case is pending in the United States
District Court for the Northern District of Georgia, Atlanta
Division, against the Company, Walter M. Hoff and Randolph L. M.
Hutto.
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 details, 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
NOVASTAR FINANCIAL: SEC To Lodge Inquiry into Business Practices
----------------------------------------------------------------
NovaStar Financial Inc. (NFI) faces an informal inquiry into
certain of its business practices by the Securities and Exchange
Commission, Dow Jones Newswires reports.
Several securities class actions were filed against the Company
after an April 12 Wall Street Journal article questioning the
legitimacy of the Company's lending operations in several
states. The suits allege that the Company made false and
misleading statements about its financial condition.
In a press release, the real estate investment trust said it
will cooperate with the inquiry, which it received Friday.
NovaStar engaged a law firm last week to conduct an outside
review to confirm that the company is in compliance with all
relevant state mortgage licensing requirements.
"Receiving this notice was not surprising in the aftermath of a
widely circulated newspaper story," outside counsel Lanny Davis
said, told Dow Jones Newswires reports. NovaStar said in
Monday's release that to its knowledge, it is approved and
authorized to do business in every state in which it operates.
OREX GOLD: SEC Lodges, Settles Lawsuit Over Pump-And-Dump Scheme
----------------------------------------------------------------
The Securities and Exchange Commission filed a complaint in the
U.S. District Court for the Southern District of Florida against
defendants John Surgent, Barry Abrams, Warren Hemedinger, Scott
Piccininni, Paul Tahan, Robert Vitale, Mark Chavez, Sal Puccio,
and Victor A. Lessinger in connection with a fraudulent pump-
and-dump manipulation of the stock of Orex Gold Mines
Corporation (Orex) between March and July 1999.
The Commission's complaint alleges that between March and July
1999, the defendants used false promotional materials and
classic "boiler-room" tactics to sell approximately $6 million
of Surgent's unregistered Orex securities. According to the
complaint, defendants Surgent, Abrams, and Hemedinger were all
associated at the time with Orex, which claimed to be in the
business of extracting gold from iron ore by means of an
environmentally safe process. The complaint further alleges
that Surgent, a recidivist securities law violator and disbarred
attorney, controlled the majority of Orex stock and -- together
with Abrams and Hemedinger -- created and distributed
promotional materials that falsely portrayed Orex as an active,
established mining company with mines and a revolutionary gold
extraction process.
In truth, the complaint alleges, Orex neither owned any mines
nor possessed any mining equipment. Moreover, the gold
extraction process that formed the cornerstone of the Orex
promotional campaign had never been tested or implemented on a
commercial basis.
The complaint further alleges that defendants Piccininni, Tahan,
Chavez, Puccio, and Vitale (Preferred brokers), operated a
brokerage "boiler room" from the Pompano Beach, Florida office
of Preferred Securities Group, Inc., a broker-dealer registered
with the Commission. The complaint alleges that the Preferred
brokers agreed to sell Surgent's Orex stock to unsuspecting
investors through Preferred, in exchange for a share of the
Surgent's profits. According to the complaint, the Preferred
brokers employed abusive sales practices and fraudulent
misrepresentations to pressure customers to purchase Orex.
The complaint alleges that defendant Lessinger, Preferred's
president, opened the Pompano Beach branch office, authorized
the Preferred brokers to solicit transactions in Orex, and
personally approved numerous transactions in Orex securities.
According to the complaint, the Preferred brokers also routinely
failed to provide customers with the disclosures and documents
required by the penny stock disclosure rules of the Securities
Exchange Act of 1934 (Exchange Act). Preferred brokers
ultimately sold approximately $3 million in unregistered Orex
securities - and transactions in Orex stock grew to account for
at least 50% of the business of the entire Pompano Beach branch
office.
The complaint alleges that the defendants' scheme drove the
price of Orex stock from $1.50 per share to more than $7.50 per
share over the course of three months, after which the price
abruptly collapsed to just pennies a share. Between the
Preferred boiler room and other means, the complaint alleges,
Surgent sold over 1 million Orex shares for a total gross profit
of approximately $6 million.
The Commission's complaint alleges that by engaging in the
foregoing conduct:
(1) defendants Surgent and Abrams violated Sections 5 and
17(a) of the Securities Act of 1933 (Securities Act),
Section 10(b) of the Exchange Act and Exchange Act Rule
10b-5;
(2) defendant Hemedinger violated Section 17(a) of the
Securities Act, Section 10(b) of the Exchange Act and
Exchange Act Rule 10b-5;
(3) defendants Piccininni, Tahan, Chavez, Puccio, and
Vitale violated Sections 5 and 17(a) of the Securities
Act, and Section 10(b) of the Exchange Act and Exchange
Act Rule 10b-5, and aided and abetted violations of
Section 15(g) of the Exchange Act and Exchange Act
Rules 15g-2, 15g-4 and 15g-5; and
(4) Lessinger, as a control person (pursuant to Section
20(a) of the Exchange Act) violated Sections 10(b) and
15(g) of the Exchange Act, and Exchange Act Rules 10b-
5, 15g-2, 15g-4 and 15g-5, as well as NASD Conduct Rule
3010 (the NASD's Failure to Supervise rule).
The Commission seeks final judgments against the defendants that
permanently enjoin them from further violations of the federal
securities laws, bar them from participating in any penny stock
offerings, and require them to pay to civil penalties and
disgorgement (with prejudgment interest thereon). In addition,
the Commission seeks officer and director bars against Surgent,
Abrams, and Hemedinger.
Without admitting or denying the allegations in the Commission's
complaint, Piccininni and Tahan have consented to entry of final
judgments against them that permanently enjoin them from
violating Sections 5 and 17(a) of the Securities Act, Section
10(b) of the Exchange Act and Exchange Act Rule 10b-5 - and also
enjoin them from aiding and abetting violations of Section 15(g)
of the Exchange Act and Exchange Act Rules 15g-2, 15g-4 and 15g-
5. If approved by the Court, the Final Judgments against
Piccininni and Tahan will also permanently bar them from
participating in any penny stock offerings.
In addition, without admitting or denying the SEC's findings,
defendants Piccininni and Tahan have agreed to Commission
administrative orders that permanently bar them from association
with any registered broker or dealer, based on the federal
district court's anticipated entry of injunctions against them.
Piccininni and Tahan were previously convicted in a related
criminal proceeding, in part from their conduct at Preferred,
sentenced to terms of incarceration, and ordered to pay $5
million and $4,040,000, respectively, in restitution. In light
of the criminal sanction and restitution order previously
imposed against defendants Piccininni and Tahan, the Commission
did not seek to impose disgorgement or civil penalties against
them.
Finally, without admitting or denying the allegations in the
Commission's complaint, defendant Abrams consented to entry of a
final judgment against him that would permanently enjoin him
from violations of Sections 5 and 17(a) of the Securities Act,
Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5,
permanently bar him from participating in any penny stock
offering, and permanently bar him from acting as an officer or
director of any public company. The proposed Final Judgment
also orders Abrams to pay disgorgement of $50,000, plus
prejudgment interest thereon, but waives payment of those
amounts based on his demonstrated inability to pay.
The suit is styled, "SEC v. John W. Surgent, et al., Civil
Action No. 04-60493 -CIV SDFL (JIC)."
PHIL AND KATHY'S: Reaches Pact Over Unapproved Drugs Violations
---------------------------------------------------------------
The Food and Drug Administration (FDA) reached a settlement of a
court case against an Illinois firm involved last year in FDA's
seizure of thousands of imported unapproved drugs, including
those that were labeled in foreign languages and/or labeled as
repacked, it announced in a press release.
The firm, Phil and Kathy's, Inc., a corporation doing business
as Local Repack, Alliance Wholesale Distributor, and Local
Pharmacy, signed on April 8 a consent decree in the United
States District Court for the Northern District of Illinois
agreeing to operate in full compliance with FDA's regulations.
The signatories included Phillip R. Giannino, the president of
Phil and Kathy's, and Frank Weaver, the firm's head of
repackaging operations.
"FDA protects the health of Americans by enforcing laws designed
to ensure the safety, effectiveness and quality of all
medications on the U.S. market," said Dr. Lester M. Crawford,
Acting FDA Commissioner. "Products that are illegally
distributed outside this protective system pose a serious threat
to patients."
FDA's inspections in 2003 revealed that Phil and Kathy's was
importing and repacking drug products that were labeled in
Spanish and Portuguese and not in accordance with FDA's
approvals. In addition, the firm has repeatedly failed to comply
with FDA's current good manufacturing practice (cGMP)
requirements, which serve to ensure that every marketed drug is
safe, effective and properly manufactured.
Under the consent decree, Phil and Kathy's is prohibited from
manufacturing, labeling and distributing any article of drug
until it meets certain conditions, the most important of which
is the FDA's determination that the firm's repackaging
operations comply with cGMP. In addition, Phil and Kathy's
agrees not to repackage any foreign-labeled drugs or drugs that
are in any manner inconsistent with FDA's standards for
approval. In case the firm purchases, distributes, or imports
any such products, the consent decree gives the government
additional authority to seek monetary damages.
The consent decree does not deal with the charges against
Genendo Pharmaceutical, N.V., the importer of several drugs to
Phil and Kathy's, which are still pending.
R.J. REYNOLDS: NC Judge Urges Parties To Settle Antitrust Suit
--------------------------------------------------------------
United States District Court for the District of North Carolina
Judge William Osteen urged parties in the antitrust class action
filed against R.J. Reynolds Tobacco Co. to try and settle the
suit, the Winston-Salem Journal reports.
Tobacco growers and quota holders filed the suit against the
Company and other major cigarette makers, alleging that they
fixed prices at tobacco auctions. Every company except Reynolds
Tobacco settled the case last year for a total $200 million.
Attorneys for the two sides negotiated at the federal courthouse
after U.S. District Court Judge William Osteen asked them to see
if they could reach a deal. However late yesterday, there was
no word on the status of the negotiations. The case is
scheduled to go to trial Thursday in Greensboro, the Salem-
Journal states.
The Company denies it conspired with the other companies to fix
prices or that it engaged in any other conduct that violated
antitrust laws.
SPEAR & JACKSON: SEC Lodges Complaint, Gets TRO V. Firm and CEO
---------------------------------------------------------------
The Securities and Exchange Commission filed a complaint and
obtained a temporary restraining order (TRO) and other emergency
relief against Spear & Jackson, Inc., an OTC Bulletin Board
company headquartered in Boca Raton, Florida, and its CEO Dennis
P. Crowley.
The SEC's complaint charges that for the last two years, Mr.
Crowley has been secretly selling Spear & Jackson stock through
brokerage accounts in the name of nominee companies based in the
British Virgin Islands. To date, Mr. Crowley's illegal sales of
Spear & Jackson stock total more than $3 million. At the
Commission's request, Judge Donald P. Middlebrooks of the
United States District Court for the Southern District of
Florida also issued an Order temporarily barring Mr. Crowley
from serving as an officer or director of any public company,
and appointing a Corporate Monitor to oversee Spear & Jackson's
affairs.
According to the Commission's complaint, Spear & Jackson is a
household tool manufacturer and distributor with over 750
employees and operations around the world. For its fiscal year
ended Sept. 30, 2003, Spear & Jackson had revenues of more than
$90 million, with a majority of those revenues coming from the
United Kingdom and other European countries.
The Commission's complaint alleges that over the past two years,
Mr. Crowley has orchestrated a pump-and-dump scheme to
manipulate the share price of Spear & Jackson stock. Starting
in 2002, Mr. Crowley, along with an Orlando, Florida-based stock
promoter, defendant International Media Solutions (IMS), and
IMS' two principals, defendants Yolanda Velazquez and Kermit
Silva, used false information to tout Spear & Jackson stock to
registered representatives and broker-dealers around the
country. Between January 2002 and July 2003, Spear & Jackson's
stock price increased from $2 to $16 per share.
Mr. Crowley profited from that increase in Spear & Jackson's
stock price by selling stock that he secretly held in the names
of nominee companies. According to the Commission's complaint,
Crowley used nominee companies based in the British Virgin
Islands illegally to obtain over 1.2 million shares of Spear &
Jackson stock during 2002, some of which he obtained through the
filing of a fraudulent Form S-8 registration statement. The
Commission's complaint alleges that during the time that Mr.
Crowley and IMS promoted Spear & Jackson shares, Mr. Crowley
sold almost 650,000 of these shares, realizing over $3 million
in profits. Mr. Crowley also transferred some of the illegally
obtained Spear & Jackson shares to IMS, which sold them for
approximately $1.6 million.
The Commission's complaint also alleges that Mr. Crowley has
committed at least one similar scheme in the past. In 2001, the
Commission's complaint alleges, Mr. Crowley secretly gained
control of another public company. According to the
Commission's complaint, that company issued over 1.4 million
shares of its stock to the offshore nominee companies that
Crowley controlled, which were sold for over $450,000 in
profits.
In addition to the temporary officer and director bar and order
appointing a Corporate Monitor for Spear & Jackson, the Court
issued an order, among other things:
(1) temporarily enjoining the defendants from violating the
antifraud and other provisions of the federal
securities laws;
(2) freezing the assets of all of the defendants (except
Spear & Jackson) and of the offshore nominee companies
and certain other companies that Mr. Crowley controls;
(3) requiring the defendants (except Spear & Jackson) to
repatriate assets held abroad; and
(4) requiring Mr. Crowley, Ms. Velazquez, and Mr. Silva to
surrender their passports and prohibiting them from
traveling outside the United States.
The complaint charges violations of Sections 5(a), 5(c), 17(a)
and 17(b) of the Securities Act, Sections 10(b), 13(a), 13(d),
16(a), and 15(a) of the Exchange Act and Rules 10b-5, 12b-20,
13a-1, 13a-14, and 16a-3 thereunder. As final relief, the
Commission seeks permanent injunctions, disgorgement of all ill-
gotten gains plus prejudgment interest; civil penalties, and
against Mr. Crowley a penny stock and officer and director bar
and against Ms. Velazquez and Mr. Silva, a penny stock bar.
TOBACCO LITIGATION: Key Litigation To Affect Industry Ratings
-------------------------------------------------------------
Several key litigation-related events are expected to impact the
U.S. tobacco sector during the remainder of 2004 and the first
half of 2005, according to a new report by Fitch Ratings.
The $145 billion Engle judgment against the industry was
reversed by the Florida Third District Court of Appeals in May
2003, and in September 2003 the Florida appeals court rejected
the plaintiffs' request that the court reconsider its ruling.
Now the Florida Supreme Court must decide whether to hear the
plaintiffs' request for review of the Third District's decision.
The remaining motions in the Department of Justice (DoJ) case,
including the disgorgement claim, should be ruled on by June
2004. The trial, set to begin Sept. 13, 2004, could last into
the beginning of 2005, with a ruling coming about a year from
now. Fitch believes the incentive for the industry to reach a
settlement increases if the disgorgement claims are not
dismissed before trial.
Fitch's current ratings incorporate favorable rulings for the
major U.S. tobacco companies - Philip Morris U.S.A. (PM USA, a
wholly owned subsidiary of Altria Group Inc.), R.J. Reynolds
Tobacco Company (RJRT, a wholly-owned subsidiary of R.J.
Reynolds Tobacco Holdings), Lorillard Tobacco Co. (Lorillard, a
wholly-owned subsidiary of Loews Corp.), and Brown & Williamson
(B&W, a wholly-owned subsidiary of British American Tobacco) in
the Engle and DoJ cases.
Another significant case is the Price 'light' cigarettes class
action, where the Illinois Supreme Court has granted an
expedited review of the $10.1 billion judgment against PM USA
awarded in March 2003. Briefings should be completed by June
2004, argument is expected this fall and a decision may occur by
the first half of 2005. Fitch believes that there is a high
likelihood that the Price judgment will be substantially
reduced, if it is not reversed. If the judgment is upheld, Fitch
assumes PM USA will continue the appeal process, up to the U.S.
Supreme Court if necessary. The Price case remains the only
'lights' class action to go to trial, so the ultimate outcome of
the Price case will set precedent for the future viability of
this type of class action.
The Price case exemplified that in states without bond caps,
financial hardship can arise. The recent increase in state bond
cap legislation is beneficial to the major tobacco companies
because bond caps allow them to proceed through the appeal
process when damage awards are burdensome without contemplating
bankruptcy to finance the necessary bond. 'The ability to
complete the appeals process has proven to be critical for
tobacco companies, since very few of their fully litigated cases
ultimately result in payouts, none of which have been material
to their credit profiles,' said Wesley Moultrie, Senior
Director, Fitch Ratings.
The market share of small tobacco manufacturers has clearly
grown since the Master Settlement Agreement (MSA) was signed in
1998. Fitch estimates that the small manufacturers' share
(excluding PM USA, RJRT, B&W and Lorillard) exceeds 10%. These
small manufacturers have an inherent cost advantage since they
do not have significant litigation, advertising or promotional
costs. Small manufacturers must either make payments required by
the MSA or set aside similar funds in escrow. However, there are
a plethora of tiny manufacturers and importers that have evaded
compliance with these laws. Non-Participating Manufacturer (NPM)
escrow enforcement legislation implemented at the state level
forces these non-compliant manufacturers to escrow funds and
leads them to raise prices to cover their higher costs. This
narrowing of the price gap with the major manufacturers has
slowed the small manufacturers' growth and has allowed the major
manufacturers to stabilize their promotional spending. However,
along with the ramp up of legislation enforcement, the number of
NPMs challenging the legality of NPM legislation has increased.
For the most part these challenges have not been successful. One
case to look out for is Freedom Holdings v. Spitzer, where New
York State's request for a full panel review of a Sherman
Antitrust claim is pending. Any restrictions on the states'
ability to enforce escrow collection could result in renewed
market share growth for the NPMs and possibly renewed price wars
among the major manufacturers in order to grow or maintain their
share.
A pending mega-merger within the domestic tobacco sector may
alter the competitive atmosphere as RJRT and B&W await
regulatory approval to join forces to form Reynolds American
(RA) in the next few months. If approved, these former rivals
would become a stronger No. 2 to market leader PM USA. 'More
importantly, efficiency gains through production and selling,
general and administrative expenses will result in a stronger
credit profile for the combined firm,' said Moultrie. However,
Fitch would like to see sequential quarterly improvement in
operating earnings and stabilization of volume declines before
considering a ratings upgrade.
'U.S. Tobacco Industry: DoJ, Engle, Price - What to Look for in
2004' is available on the Fitch Ratings website:
http://www.fitchratings.com.
ULTIMATE ELECTRONICS: Asks CO Court To Dismiss Securities Suit
--------------------------------------------------------------
Ultimate Electronics, Inc. asked the United States District
Court for the District of Colorado to dismiss the consolidated
amended securities class action filed against it and three of
its officers and directors in the United States District Court
for the District of Colorado.
The complaint is a purported class action lawsuit on behalf of
purchasers of the company's common stock during the period
between March 13, 2002 and August 8, 2002. As initially filed,
the complaint sought damages for alleged violations of Section
11 of the Securities Act of 1933, as amended, Section 10(b) of
the Securities Exchange Act of 1934, as amended, Rule 10b-5
promulgated under the Exchange Act, and Section 20(a) of the
Exchange Act.
On May 30, 2003, the company moved to dismiss all claims
asserted in the complaint. The Alaska Electrical Pension Fund
(AEPF), which had been appointed as the lead plaintiff to
represent the putative plaintiff class, responded to the
company's Motion to Dismiss by filing an amended complaint on
August 11, 2003. In the amended complaint, AEPF asserts claims
against the company and all of the company's directors during
the relevant period for alleged violations of Sections 11,
12(a)(2) and 15 of the Securities Act. AEPF asserts that the
prospectus, dated April 30, 2002, for the company's 2002 public
offering of common stock failed to disclose material facts that
were required to be disclosed and contained false and misleading
statements. The amended complaint seeks to recover unspecified
monetary damages, an award of rescission or rescissory damages
and an award of attorneys' fees, costs and prejudgment and post-
judgment interest.
Meetings, Conferences & Seminars
* Scheduled Events for Class Action Professionals
-------------------------------------------------
April 22-24, 2004
LITIGATING MEDICAL MALPRACTICE CLAIMS
ALI-ABA
New Orleans
Contact: 215-243-1614; 800-CLE-NEWS x1614
April 26-27, 2004
MOLD 101 CONFERENCE
Mealey Publications
The Fairmont Hotel, New Orleans
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
May 6-7, 2004
FEN-PHEN LITIGATION CONFERENCE
Mealey Publications
The Westin Hotel, Philadelphia
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
May 6-7, 2004
CONSUMER FINANCIAL SERVICES LITIGATION 2004
Practicing Law Institute
San Francisco
Contact: 800-260-4pli; info@pli.edu
May 6-7, 2004
CONFERENCE ON LIFE AND HEALTH INSURANCE LITIGATION
ALI-ABA
Washington, D.C. Tuition $995
Contact: 215-243-1614; 800-CLE-NEWS x1614
May 10-11, 2004
THE ROLE OF PARALEGALS IN MASS TORT LITIGATION
Mealey Publications
The San Diego Marina Marriott, San Diego
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
May 11, 2004
EPHEDRA LITIGATION CONFERENCE
Mealey Publications
The San Diego Marina Marriott, San Diego
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
May 20-21, 2004
ACCOUNTANTS' LIABILITY
ALI-ABA
Chicago
Contact: 215-243-1614; 800-CLE-NEWS x1614
May 24-25, 2004
ADDITIONAL INSURED CONFERENCE
Mealey Publications
The Ritz-Carlton Boston Common, Boston
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
May 25, 2004
D&O INSURANCE CONFERENCE
Mealey Publications
The Ritz-Carlton Boston Common, Boston
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
June 7-8, 2004
ASBESTOS BANKRUPTCY CONFERENCE
Mealey Publications
The Four Seasons Hotel, Chicago
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
June 10-11, 2004
SECURITIES, DRUGS & ENVIRONMENTAL LITIGATION
MassTortsMadePerfect.Com
Atlantis, Paradise Island, Bahamas
Contact: 1-800-320-2227; register@masstortsmadeperfect.com
June 10-11, 2004
LITIGATING DISABILITY INSURANCE CLAIMS
American Conferences
Boston
Contact: http://www.americanconference.com
June 16, 2004
BUSINESS INTERRUPTION INSURANCE CONFERENCE
Mealey Publications
The Ritz-Carlton Hotel, Pentagon City
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
June 17, 2004
E-DISCOVERY CONFERENCE
Mealey Publications
The Ritz-Carlton Hotel, Pentagon City
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
June 17-18, 2004
LITIGATING BRAIN AND SPINAL CORD INSURANCE CLAIMS
American Conferences
Chicago
Contact: http://www.americanconference.com
June 21-22, 2004
REINSURANCE CLAIMS AND COLLECTION
American Conferences
New York
Contact: http://www.americanconference.com
June 22-23, 2004
NATIONAL MOLD LITIGATION CONFERENCE
Mealey Publications
The Ritz-Carlton Grande Lakes Resort, Orlando, FL
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
June 22-23, 2004
ASBESTOS 101 CONFERENCE
Mealey Publications
The Westin Chicago River North, Chicago
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
July 16, 2004
PRODUCTS LIABILITY
ALI-ABA
Chicago
Contact: 215-243-1614; 800-CLE-NEWS x1614
September 20-21, 2004
REINSURANCE SUMMIT
Mealey Publications
The Ritz-Carlton Boston Common, Boston
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
September 20-21, 2004
NATIONAL ASBESTOS LITIGATION CONFERENCE
Mealey Publications
The Westin Hotel, Philadelphia
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
September 21, 2004
E-DISCOVERY CONFERENCE
Mealey Publications
The Westin Hotel, Philadelphia
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
September 27-28, 2004
BAD FAITH CONFERENCE
Mealey Publications
The Ritz-Carlton Hotel, Philadelphia
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
October 4-5, 2004
INSURANCE COVERAGE DISPUTES CONCERNING CONSTRUCTION DEFECTS
CONFERENCE
Mealey Publications
The Westin Chicago River North, Chicago
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
October 25-26, 2004
SILICA LITIGATION CONFERENCE
Mealey Publications
The Ritz-Carlton Hotel, New Orleans
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
October 26, 2004
PVC LITIGATION CONFERENCE
Mealey Publications
The Ritz-Carlton Hotel, New Orleans
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
November 8-9, 2004
CALIFORNIA SECTION 17200 CONFERENCE
Mealey Publications
The Ritz-Carlton Hotel Huntington Hotel & Spa, Pasadena, CA
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
November 9, 2004
ANTI-SLAPP CONFERENCE
Mealey Publications
The Ritz-Carlton Hotel Huntington Hotel & Spa, Pasadena, CA
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
November 11-12, 2004
ASBESTOS LITIGATION IN THE 21ST CENTURY
ALI-ABA
New Orleans
Contact: 215-243-1614; 800-CLE-NEWS x1614
December 9-10, 2004
ASBESTOS PREMISES LIABILITY CONFERENCE
Mealey Publications
The Ritz-Carlton Hotel Huntington Hotel & Spa, Pasadena, CA
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
December 9-10, 2004
CONSTRUCTION DEFECT & MOLD LITIGATION CONFERENCE
Mealey Publications
The Ritz-Carlton Lake Las Vegas, Las Vegas
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
TBA
FAIR LABOR STANDARDS CONFERENCE
Mealey Publications
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
TBA
AIRLINE BANKRUPTCY LITIGATION CONFERENCE
Mealey Publications
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
TBA
FASTFOOD INDUSTRY LIABILITY CONFERENCE
Mealey Publications
Contact: 1-800-MEALEYS; 610-768-7800;
mealeyseminars@lexisnexis.com
* Online Teleconferences
------------------------
April 05-30, 2004
DAMAGES IN TEXAS INSURANCE LITIGATION:
EVALUATING, PLEADING, AND PROVING
CLEOnline.Com
Contact: 512-778-5665; info@cleonline.com
April 05-30, 2004
NBI PRESENTS "EMERGING ISSUES IN CALIFORNIA
INDOOR AIR QUALITY AND TOXIC MOLD LITIGATION
CLEOnline.Com
Contact: 512-778-5665; info@cleonline.com
April 05-30, 2004
NBI PRESENTS "LITIGATING THE CLASS ACTION LAWSUIT IN FLORIDA
CLEOnline.Com
Contact: 512-778-5665; info@cleonline.com
May 6-7, 2004
CONSUMER FINANCIAL SERVICES LITIGATION 2004
Practicing Law Institute
Contact: 800-260-4pli; info@pli.edu
ADVERSARIAL PROCEEDINGS IN ASBESTOS BANKRUPTCIES
LawCommerce.Com/Mealey's
Online Streaming Video
Contact: customerservice@lawcommerce.com
ASBESTOS BANKRUPTCY - PANEL OF CREDITORS COMMITTEE MEMBERS
LawCommerce.Com/Mealey's
Online Streaming Video
Contact: customerservice@lawcommerce.com
EXPERT WITNESS ADMISSIBILITY IN MOLD CASES
LawCommerce.Com/Mealey's
Online Streaming Video
Contact: customerservice@lawcommerce.com
INTRODUCTION TO CLASS ACTIONS AND LARGE RECOVERIES
Big Class Action
Contact: seminars@bigclassaction.com
NON-TRADITIONAL DEFENDANTS IN ASBESTOS LITIGATION
Online Streaming Video
LawCommerce.Com/Mealey's
Contact: customerservice@lawcommerce.com
PAXIL LITIGATION
Online Streaming Video
LawCommerce.Com/Mealey's
Contact: customerservice@lawcommerce.com
RECENT DEVELOPMENTS INVOLVING BAYCOL
Online Streaming Video
LawCommerce.Com/Mealey's
Contact: customerservice@lawcommerce.com
RECOVERIES
Big Class Action
Contact: seminars@bigclassaction.com
SELECTION OF MOLD LITIGATION EXPERTS: WHO YOU NEED ON YOUR TEAM
Online Streaming Video
LawCommerce.Com/Mealey's
Contact: customerservice@lawcommerce.com
SHOULD I FILE A CLASS ACTION?
LawCommerce.Com / Law Education Institute
Contact: customerservice@lawcommerce.com
THE EFFECTS OF ASBESTOS ON THE PULMONARY SYSTEM
Online Streaming Video
LawCommerce.Com/Mealey's
Contact: customerservice@lawcommerce.com
THE STATE OF ASBESTOS LITIGATION: JUDICIAL PANEL DISCUSSION
Online Streaming Video
LawCommerce.Com/Mealey's
Contact: customerservice@lawcommerce.com
TRYING AN ASBESTOS CASE
LawCommerce.Com
Contact: customerservice@lawcommerce.com
THE IMPACT OF LORILLAR ON STATE AND LOCAL REGULATION OF TOBACCO
SALES
AND ADVERSTISING
American Bar Association
Contact: 800-285-2221; abacle@abanet.org
________________________________________________________________
The Meetings, Conferences and Seminars column appears in the
Class Action Reporter each Wednesday. Submissions via e-mail to
carconf@beard.com are encouraged.
New Securities Fraud Cases
AMERICAN EXPRESS: Girard Gibbs Lodges Securities Suit in S.D. NY
----------------------------------------------------------------
Girard Gibbs & De Bartolomeo LLP filed a securities class action
on behalf of clients of American Express Financial Advisors,
Inc. (AEFA) who purchased mutual funds in the American Express
family of mutual funds between March 10, 1999 and February 9,
2004 (the "Class Period"). The class action asserts claims
against the American Express Company (NYSE:AXP) ("AEC"),
American Express Financial Corporation ("AEFC") and AEFA under
the Securities Exchange Act of 1934, the Investment Advisers Act
of 1940 and common law.
The class action is pending in the United States District Court
for the Southern District of New York under docket number 04-cv-
02959. The class action is brought on behalf of AEFA clients who
purchased units of AEC mutual funds during the Class Period.
According to the complaint, defendants breached their fiduciary
duties to class members in violation of the Investment Advisers
Act of 1940 and common law, and violated sections 10(b) and
20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder by the Securities and Exchange
Commission, by issuing a series of material misrepresentations
to AEFA clients during the Class Period.
In particular, the complaint alleges that AEFA, through its
financial advisors, purported to provide objective financial
advisory services and investment advice based on each client's
individual needs. In fact, AEFA had an undisclosed interest in
steering clients into AEC Funds and certain other preferred
funds, including, but not limited to, AIM Mutual Funds, Putnam
Mutual Funds, Strong Mutual Funds and Van Kampen Mutual Funds,
which were among the poorest performing mutual funds on the
market.
The complaint further alleges that class members paid AEFA
substantial fees and believed they were receiving objective
advice when, in fact, AEFA financial advisors advised their
clients to purchase AEC Funds and certain other preferred funds
solely to obtain lucrative management fees and "revenue sharing"
fees. According to the complaint, as a result of defendants'
fraudulent and manipulative conduct, AEFA violated its clients'
trust and prevented its clients from making fully informed
investment decisions.
For more details, contact Daniel Girard, Jonathan Levine or
Aaron Sheanin by Mail: 601 California Street, Suite 1400
San Francisco, CA 94108 by Phone: (866) 981-4800 by E-mail:
mail@girardgibbs.com or visit the firm's Website:
http://www.girardgibbs.com/aefa.html
ASCONI CORPORATION: Shalov Stone Lodges Stock Lawsuit in M.D. FL
----------------------------------------------------------------
Shalov Stone & Bonner LLP initiated a securities class action on
behalf of all persons who purchased the securities of Asconi
Corporation (AMEX: ACD) in the period from May 15, 2003 to March
23, 2004.
The complaint alleges that the defendants made material
misrepresentations and omissions of material facts concerning
the company's business performance during the relevant time.
According to the complaint, throughout the relevant time period,
defendants misrepresented the financial condition of the Asconi
and failed to disclose certain related party transactions,
thereby overstating the financial condition of Asconi.
The company has delayed the filing of its annual Report on Form
10-K with the SEC, its stock price has collapsed and the stock
has ceased trading. The lawsuit was filed in the United States
District Court for the Middle District of Florida.
For more details, contact Tom Ciarlone by Mail: Shalov Stone &
Bonner LLP, 485 Seventh Avenue, Suite 1000, New York, New York
10018, by Phone: (212) 239-4340 or by E-mail:
tciarlone@lawssb.com.
ITT EDUCATIONAL: Bernstein Liebhard Lodges Stock Lawsuit in IN
--------------------------------------------------------------
Bernstein Liebhard & Lifshitz LLP initiated a securities class
action on behalf of all persons who acquired securities of ITT
Educational Services, Inc. (NYSE: ESI) between April 17, 2003
and February 24, 2004, inclusive. The case is pending in the
United States District Court for the District of Indiana,
Indianapolis Division, against the Company and:
(1) Rene R. Champagne,
(2) Omer E. Waddles, and
(3) Kevin M. Modany.
The Complaint charges that ITT Educational and certain officers
and directors 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 ITT Educational securities.
Specifically, defendants failed to disclose and/or
misrepresented the following adverse facts, among others:
(i) that the Company systematically falsified records
relating to enrollment, graduation and job placement
rates;
(ii) a material portion of the Company's reported revenues
were derived through fraudulent business practices;
(iii) the Company's reported results did not accurately
portray the Company's operations because a material
portion of those results were attributable to
prohibited practices; and
(iv) that the Company's results were not prepared and
reported in accordance with GAAP and did not fairly
present its actual financial results or condition.
The truth was revealed on February 25, 2004, when the Company
issued a press release announcing that it had been served with a
search warrant and related grand jury subpoenas at its corporate
headquarters and several of its schools. In reaction to this
announcement, the price of ITT Educational common stock fell
33%, or $18.90 per share, on extremely heavy trading volume.
For more details, contact the Shareholder Relations Department
by Mail: Bernstein Liebhard & Lifshitz, LLP, 10 East 40th
Street, New York, New York 10016 by Phone: (800) 217-1522 or
(212) 779-1414 or by E-mail: ESI@bernlieb.com.
NOVASTAR FINANCIAL: Milberg Weiss Lodges Securities Suit in MO
--------------------------------------------------------------
Milberg Weiss Bershad Hynes & Lerach LLP initiated a securities
class action on April 15, 2004, on behalf of purchasers of the
securities of NovaStar Financial, Inc. (NYSE:NFI) between
October 29, 2003 and April 11, 2004, inclusive, seeking to
pursue remedies under the Securities Exchange Act of 1934. The
action, numbered 04-0334-CV-W-DW, is pending in the United
States District Court for the Western District of Missouri,
Western Division, against the Company and:
(1) Scott F. Hartman (CEO, Chairman),
(2) W. Lance Anderson (President, COO) and
(3) Rodney E. Schwatken (Principal Accounting Officer)
According to the complaint, defendants violated sections 10(b)
and 20(a) of the Exchange Act, and Rule 10b-5, by issuing a
series of material misrepresentations to the market during the
Class Period.
The complaint alleges that throughout the Class Period, NovaStar
issued press releases, and filed financial reports with the SEC,
reporting record growth on the strength of its core business.
Unbeknownst to investors, the complaint charges, the Company's
growth had outpaced its ability to maintain compliance with
applicable regulations governing its business, thereby
subjecting the Company to fines, regulatory action(s) and the
serious, but undisclosed, risk that such non-compliance could
materially and negatively impact the Company's ability to
conduct business. Instead of disclosing these serious risks,
and the fact that the Company had already been fined for
noncompliance in two states, the Company continued to tout its
operational accomplishments to artificially inflate its stock
price because it was planning two follow-on equity offerings to
raise capital.
The Company's compliance problems were exposed by The Wall
Street Journal, in an April 12, 2004 article headlined "Moving
the Market -- Tracking the Numbers / Outside Audit: NovaStar's
Rise Has Ring of Deja Vu -- Lender's Licensing Woes In Nevada,
Other States May Flag Larger Concerns." In response to the
announcement, the price of NovaStar common stock plummeted
precipitously, closing at $37.50 per share on April 12, 2004,
down from $54.18 per share on April 8, 2004 (the last trading
day before the disclosure) -- a one day drop of 30.7% on
unusually high trading volume.
For more details, contact Steven G. Schulman, Peter E. Seidman,
Andrei V. Rado by Mail: One Pennsylvania Plaza, 49th fl., New
York, NY, 10119-0165 by Phone: (800) 320-5081 by E-mail:
sfeerick@milberg.com or visit the firm's Website:
http://www.milberg.com
NOVASTAR FINANCIAL: Squitieri & Fearon Lodges Stock Suit in MO
--------------------------------------------------------------
Squitieri & Fearon, LLP initiated a securities class action in
the United States District Court for the Western District of
Missouri on behalf of purchasers of NovaStar Financial Inc.
(NYSE:NFI) common stock during the period November 3, 2003
through April 12, 2004.
The Complaint charges NovaStar and certain of its officers and
directors with violating the federal securities laws by
misrepresenting and omitting facts about the Company, its
operations and its business practices.
For more details, contact Stephen J. Fearon, Jr. of Squitieri &
Fearon, LLP by Phone: (212) 575-2092 or by E-mail:
Stephen@sfclasslaw.com.
NOVASTAR FINANCIAL: Berman DeValerio Lodges MO Securities Suit
--------------------------------------------------------------
Berman DeValerio Pease Tabacco Burt & Pucillo initiated a class
action against NovaStar Financial Inc. (NYSE:NFI), claiming the
mortgage lender and four top officers misled the public about
the company's business operations. The suit is pending in the
U.S. District Court for the Western District of Missouri. The
lawsuit seeks damages for violations of federal securities laws
on behalf of all investors who bought NovaStar common stock from
October 29, 2003, through and including April 12, 2004.
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. The
complaint names as defendants the company and:
(1) Lance W. Anderson, who served as president and chief
operating officer;
(2) Michael L. Bamburg, who served as senior vice president
and chief investment officer;
(3) Scott Hartman, who served as chairman of the board and
chief executive officer; and
(4) Rodney E. Schwatken, who served as vice president,
secretary, treasurer, and controller.
According to the complaint, NovaStar fostered an aggressive-
growth culture throughout the Class Period. NovaStar touted its
rapid growth in earnings, production, and its securities
portfolio and highlighted the increasing number of NovaStar-
affiliated branch offices. In 2003, the company reported that it
had doubled the number of branch offices in operation and that
its earnings had more than doubled in 2003 to $112 million.
Significantly, NovaStar's stock price has nearly quadrupled in
the past year, rising from $18.35 per share on April 11, 2003,
to a Class Period high of $70.32 on March 23, 2004.
In reality, the complaint says, NovaStar falsely inflated the
number of offices it operates. Moreover, the company grew so
large, so quickly, that it failed to maintain regulatory
compliance with its operations. In fact, many of NovaStar's
branch offices were operating illegally during the Class Period.
On April 12, 2004, The Wall Street Journal published an article
highlighting the risks of owning the company's stock and
faulting NovaStar for failing to comply with state licensing
rules. The article revealed to the investing public for the
first time that the company had falsely inflated the number of
branch offices in operation and that many of those branch
offices were operating illegally.
On the heels of this news, the stock price plummeted on
extremely high volume, closing at $37.50 per share, down $16.68
per share or 31% from the previous day's close.
For more details, contact Deborah Gale Evans, Esq. or Michael T.
Matraia, Esq. by Mail: One Liberty Square, Boston, MA 02109 by
Phone: (800) 516-9926 or by E-mail: law@bermanesq.com
NOVASTAR FINANCIAL: Brodsky & Smith Lodges Stock Suit in W.D. MO
----------------------------------------------------------------
Law offices of Brodsky & Smith, LLC initiated a securities class
action on behalf of shareholders who purchased the common stock
and other securities of Novastar Financial Inc. (NYSE:NFI),
between October 29, 2003 and April 9, 2004, inclusive. The
class action lawsuit was filed in the United States District
Court for the Western District of Missouri.
The Complaint alleges that defendants violated federal
securities laws by issuing a series of material
misrepresentations to the market during the Class Period,
thereby artificially inflating the price of Novastar securities.
For more details, contact Marc L. Ackerman, Esquire or Evan J.
Smith, Esquire by Mail: Brodsky & Smith, LLC, Two Bala Plaza,
Suite 602, Bala Cynwyd, PA 19004, by Phone: 877-LEGAL-90 or by
E-mail: clients@brodsky-smith.com.
QUOVADX INC.: Goodkind Labaton Files Securities Fraud Suit in CO
----------------------------------------------------------------
Goodkind Labaton Rudoff & Sucharow LLP filed a securities class
action in the United States District Court for the District of
Colorado, on behalf of persons who purchased or otherwise
acquired publicly traded securities of Quovadx Inc.
(NASDAQ:QVDX) between October 22, 2003 and March 15, 2004,
inclusive. The lawsuit was filed against Quovadx and certain
officers and directors.
The complaint alleges that Defendants violated Sections 19(b)
and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder. Specifically, the Complaint alleges that
Defendants issued numerous false and misleading statements
concerning the Company's financial results.
These statements failed to disclose that the Company had
materially overstated its net income and earnings per share,
that Defendants prematurely recognized revenue from contracts
with Infotech Network Group, and that the Company lacked
adequate internal controls to determine its true financial
condition.
On March 15, 2004, Quovadx announced that it would delay the
filing of its annual report, form 10-K for the year ended
December 31, 2003 to restate its third quarter 2003 financial
results and revise its previously announced fourth quarter and
full year financial results. The Company had determined that
revenue on prior shipments of software to Infotech Network Group
would be recognized only when cash was received from the client.
In response to this announcement, Quovadx shares fell $1.45 per
share, losing approximately 28.8% of its value.
Post the end of the Class Period, the Securities and Exchange
Commission has opened a formal investigation into the
restatement as well as other issues and the Company's CEO and
CFO have resigned.
For more details, contact Christopher Keller by Phone:
800-321-0476 or by E-mail: investorrelations@glrslaw.com.
SIEBEL SYSTEMS: Schatz & Nobel Lodges Securities Suit in N.D. CA
----------------------------------------------------------------
Schatz & Nobel, P.C. initiated a securities class action in the
United States District Court for the Northern District of
California on behalf of all persons who purchased the publicly
traded securities of Siebel Systems, Inc. (NASDAQ: SEBL) from
October 1, 2001 through July 17, 2002 inclusive.
The Complaint alleges that Siebel, a Company that develops and
sells web applications, and certain of its officers and
directors issued materially false statements. Specifically,
Siebel overstated customer satisfaction for its new product
offerings, including Siebel 7 CRM internet-based software, and
failed to disclose that "independent" customer surveys which
concluded that customer demand for Siebel products in the future
would be strong were in fact conducted by an affiliated Company.
For more details, contact Schatz & Nobel by Phone:
(800) 797-5499, by E-mail: sn06106@aol.com or visit the firm's
Website: http://www.snlaw.net.
SUPERCONDUCTOR TECHNOLOGIES: Federman & Sherwood Files CA Suit
--------------------------------------------------------------
Federman & Sherwood initiated the first securities class action
lawsuit against Superconductor Technologies, Inc. (Nasdaq: SCON)
and certain of its officers and directors. The action was filed
in the United States District Court for the Western District of
California on behalf of all purchasers of the common stock of
Superconductor Technologies, Inc. between January 9, 2004 and
March 1, 2004, inclusive.
The action is pursuing remedies under the Securities Exchange
Act of 1934. The complaint charges the Company and certain of
its officers and directors for violations of the federal
securities laws. During the Class Period, it is alleged that the
Company projected first quarter 2004 revenues to be in the range
of 10 to 13 million dollars. However, in actuality, first
quarter revenues were later announced to be closer to 4 million
dollars, due to changes in demand made by two (2) of the
Company's customers.
The complaint further alleges that the Company and its officers
and directors knew of this decreased demand for its product well
in advance of this previous allegedly inflated revenue
projection.
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
VASO ACTIVE: Schatz & Nobel Lodges Securities Suit in MA Court
--------------------------------------------------------------
Schatz & Nobel, P.C., initiated a securities class action in the
United States District Court for the District of Massachusetts
on behalf of all persons who purchased the publicly traded
securities of Vaso Active Pharmaceuticals (OTC: VAPH) (formerly
NASDAQ: VAPH) from December 11, 2003 through March 31, 2004
inclusive.
The Complaint alleges that Vaso, a Company that develops,
manufactures and markets pharmaceutical products, and certain of
its officers and directors issued materially false statements
concerning Vaso's business condition. Specifically, defendants
made misrepresentations pertaining to the clinical trial of its
antifungal product deFEET.
On April 1, 2004 the SEC suspended trading of Vaso because of
questions regarding the accuracy of statements made by
defendants concerning FDA approval of key products and the
regulatory consequences of the future application of its primary
product. It is alleged that as a result of defendants' fraud,
shares of Vaso were artificially inflated throughout the Class
Period.
For more details, contact Schatz & Nobel by Phone:
(800) 797-5499, by E-mail: sn06106@aol.com or visit the firm's
Website: http://www.snlaw.net.
VERDISYS INC.: Schatz & Nobel Lodges Securities Suit in S.D. TX
---------------------------------------------------------------
Schatz & Nobel, P.C. initiated a securities class action in the
United States District Court for the Southern District of Texas
on behalf of all persons who purchased the publicly traded
securities of Verdisys, Inc. (OTC: VDYS) (formerly NASDAQ: VDYS)
from August 20, 2003 through March 9, 2004 inclusive.
The Complaint alleges that Verdisys, a provider of drilling and
satellite communications services to the oil and gas industry,
and certain of its officers and directors issued materially
false statements. Specifically, Verdisys materially overstated
its net income and earnings.
It is also alleged that defendants prematurely recognized
revenue on contracts with Edge Capital Group, Inc. and Energy
2000. On March 10, 2004, the U.S. Securities and Exchange
Commission temporarily suspended trading of Verdisys due to
questions which had been raised about the accuracy and adequacy
of publicly disseminated information.
For more information about the case, its claims, and your
rights, please contact Schatz & Nobel by Phone: (800) 797-5499,
by E-mail: sn06106@aol.com or visit the firm's Website:
http://www.snlaw.net.
*********
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Copyright 2004. All rights reserved. ISSN 1525-2272.
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