/raid1/www/Hosts/bankrupt/CAR_Public/040802.mbx
C L A S S A C T I O N R E P O R T E R
Monday, August 2, 2004, Vol. 6, No. 151
Headlines
ALEX GRINSHPON: SEC Sanctions Trader Guilty of Securities Fraud
ARMENIAN GENOCIDE: Lawsuit Settlement Hearing Set July 30, 2004
BOEING CO.: Faces Several Lawsuits For Employment Discrimination
CARDINAL HEALTH: Wechsler Harwood Investigates ERISA Violations
CHARTER ONE: Settles Shareholder Lawsuit Over Citizens Merger
CITIGROUP GLOBAL: SEC Sanctions Ex-Employee For Fraud Violations
DFG LLC: SEC Lodges Securities Lawsuit V. Three Former Officers
DOMINIQUE ALVIERI: SEC Institutes Administrative Proceedings
G&K SERVICES: Reaches $1.25M Settlement in CA Wage, Hour Dispute
HAMILTON COUNTY: OH Judge Denies Motion To Dismiss Photo Lawsuit
MACKARL ENTERPRISES: Recalls 4,600 Helmets Due To Injury Hazard
MEXICO: SEC Lodges Civil Suit V. Ex-JP Morgan Investment Banker
NORTH CAROLINA: Consumer Groups Lodge Lawsuit V. Payday Lenders
PARMALAT FINANZIARIA: SEC Files, Simultaneously Settles NY Suit
PHILIP GRATZ: FL Court Enters Permanent Injunction, Other Relief
QWEST COMMUNICATIONS: SEC Files Subpoena Action V. Drake Tempest
RAMBUS INC.: CA Court Affirms Dismissal of Consumer Fraud Suit
RICART PROPERTIES: Battles DaimlerChrysler Over Settlement Costs
SCHERING-PLOUGH: Reaches Pact Over Claritin Fraudulent Pricing
SCHOLASTIC CORPORATION: SEC Obtains Verdict V. FL Estate Agents
SONUS NETWORKS: MA Stock Suit Moves To Certification, Discovery
SONUS NETWORKS: MA Court Consolidates Securities Fraud Lawsuits
TUT SYSTEMS: Stipulation of Suit Settlement Filed With NY Court
TUT SYSTEMS: CA Securities Fraud Lawsuit Settlement Deemed Final
VENTAS INC.: Appeals Court Upholds Dismissal of KY RICO Lawsuit
WARREN WARE: FL Court Enters Permanent Injunction, Other Relief
W.E. BASSETT: Recalls 220T Eyelash Curlers Due To Injury Hazard
WORLD CLASS: FL Court Enters Final Judgment, Imposes Penalties
New Securities Fraud Cases
BAXTER INTERNATIONAL: Schatz & Nobel Files Securities Suit in IL
BENNETT ENVIRONMENTAL: Shalov Stone Lodges Securities Suit in NY
FERRO CORPORATION: Schatz & Nobel Files Securities Lawsuit in OH
FERRO CORPORATION: Schiffrin & Barroway Files OH Securities Suit
FOCAL COMMUNICATIONS: Kaplan Fox Lodges Securities Lawsuit in NY
NASSDA CORPORATION: Brian M. Felgoise Lodges CA Securities Suit
NASSDA CORPORATION: Lerach Coughlin Lodges Securities Suit in CA
NASSDA CORPORATION: Schiffrin & Barroway Files CA Stock Lawsuit
RED HAT: Kaplan Fox Lodges Securities Fraud Lawsuit in E.D. NC
SALESFORCE.COM INC: Schiffrin & Barroway Files NC Stock Lawsuit
SYNOVIS LIFE: Wolf Haldenstein Files Securities Fraud Suit in MN
WHITE ELECTRONIC: Schiffrin & Barroway Lodges AZ Securities Suit
*********
ALEX GRINSHPON: SEC Sanctions Trader Guilty of Securities Fraud
---------------------------------------------------------------
The Securities and Exchange Commission barred Alex Grinshpon
from association with any broker or dealer. Administrative
proceedings had previously been instituted against Grinshpon on
June 2, 2004 based upon the entry of a permanent injunction
against Grinshpon in SEC v. Leonard Alexander Ruge, et al., 97
Civ. 9306 (DAB) (SEC v. Ruge), and Grinshpon's conviction in
related criminal proceedings. Grinshpon consented to the entry
of the bar without admitting or denying the allegations in the
Commission's order instituting proceedings against him.
The Commission's complaint in SEC v. Ruge, alleged that, from
June 1995 through February 1996, Grinshpon and the other
defendants engaged in a fraudulent scheme to manipulate the
public trading market for the securities of International
Investment Group Ltd. (IIGR) through the payment of bribes to
various registered representatives and other individuals who
sold IIGR stock to retail investors without disclosing the
receipt of the bribes. The Commission's complaint charged
Grinshpon and the other defendants with violations of Section
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
court entered a permanent injunction against Grinshpon on June
26, 2003, and also barred Grinshpon from participating in any
offering of a penny stock. The injunction and penny stock bar
were entered against Grinshpon by default. Grinshpon was also
convicted in a parallel criminal action based on the same
conduct underlying the Commission's complaint.
ARMENIAN GENOCIDE: Lawsuit Settlement Hearing Set July 30, 2004
---------------------------------------------------------------
A hearing for the final approval of the New York Life/Armenian
Genocide-era beneficiaries' settlement will finally conclude
what is being touted as one of the longest running class action
suit in U.S. history.
The settlement hearing, which will be held on July 30, 2004,
9:30 a.m., before United States Judge Christina A. Snyder,
Courtroom 5, United States District Court, 312 N. Spring Street,
Los Angeles, California, is expected to give final approval to a
$20 million settlement in Martin Marootian, et al., v. New York
Life Insurance Company, Defendant, Case No. C99-12073 CAS (MCx).
Prior to 1915, New York Life sold life insurance policies to
thousands of Armenians living in the Ottoman Empire. New York
Life policyholders were among the 1.5 million Armenians
massacred during the Genocide. Many of the policy heirs were
unable or unaware that they may be entitled to insurance
benefits. While New York Life was able to find and pay many
beneficiaries, the insurance company acknowledged its records
indicated an estimated 2,300 policies sold to Armenians prior to
the Genocide remained unpaid.
"This is the first time a court anywhere in the U.S. or possibly
the world has formally recognized the Armenian Genocide and the
trauma and turmoil that resulted," says Brian S. Kabateck, one
of the attorneys representing the plaintiffs who is himself of
Armenian decent and lost family in the Genocide. "All of us are
crusaders, especially the three Armenian lawyers who took on the
case. While this settlement is not reparation for the Genocide,
as lawyers, we can help bring recognition to the Genocide
through claims for unpaid insurance benefits and stolen property
that date back to 1915."
Other attorneys for the plaintiffs are Vartkes Yeghiayan, Mark
J. Geragos and William Shernoff. "By making these claims, heirs
will receive the benefits due them," says Kabateck, "but more
importantly, it's a significant step that further recognizes the
Armenian Genocide, something that the United States and Turkey
still refuse to do."
The court had given preliminary approval to the settlement in
January. A three-member Settlement Fund Board, with members
appointed by California Insurance Commissioner John Garamendi,
will approve claims. The board will also be responsible for
distributing $3 million of the settlement to nine Armenian
charitable organizations. The class includes Armenians living in
the United States and abroad.
Notification of the final settlement will be advertised in
newspapers in the United States, France, Argentina, Russia,
Lebanon and Armenia. Information will also be available at:
www.armenianinsurancesettlement.com. Beneficiaries will have six
months to file a notice of claim. The board will then contact
beneficiaries with instructions for completing the appropriate
claim forms.
The following Armenian organizations will share equally in the
$3 million fund. If heirs do not come forward for policy
benefits, more money will be distributed to additional
charities:
(1) Armenian Church of North America Eastern Diocese of New
York, New York
(2) Prelacy of the Armenian Apostolic Church Eastern US and
Canada of New York, New York
(3) Armenian Church of North America Western Diocese of
Burbank, California
(4) Western Prelacy of the Armenian Apostolic Church
Los Angeles, California
(5) Armenian Apostolic Catholic Exarchate For Armenian
Catholics in the US & Canada of New York, New York
(6) Armenian Missionary Association of America, Inc. of
Paramus, New Jersey
(7) Armenian Relief Society, United States Chapter of
Watertown, Massachusetts
(8) Armenian General Benevolent Union of New York, New York
(9) Armenian Educational Foundation Glendale, California
For more detail, contact Diane Rumbaugh of RUMBAUGH PUBLIC
RELATIONS by Phone: 805-493-2877 or visit their Web site:
http://www.armenianinsurancesettlement.com/
BOEING CO.: Faces Several Lawsuits For Employment Discrimination
----------------------------------------------------------------
Boeing Co. faces eight employment discrimination matters filed
during the period of June 1998 through June 2004, in which class
certification is sought or has been granted.
Three matters are pending in the federal court for the Western
District of Washington in Seattle; one case is pending in the
federal court for the Central District of California in Los
Angeles; one case is pending in state court in California; one
case is pending in the federal court in St. Louis, Missouri; one
case is pending in the federal court in Tulsa, Oklahoma; and the
final case is pending in the federal court in Wichita, Kansas.
The lawsuits seek various forms of relief including front and
back pay, overtime, injunctive relief and punitive damages. The
lawsuits are in varying stages of litigation. One case in
Seattle alleging discrimination based on national origin (Asian)
resulted in a verdict for the Company following trial. One case
in Seattle alleging discrimination based on gender has been
settled. Three cases - one in Los Angeles, one in Missouri, and
one in Kansas, all alleging gender discrimination - have
resulted in denials of class certification. The case in
Oklahoma, also alleging gender discrimination, resulted in the
granting of class action status. The other two cases are in
earlier stages of litigation.
CARDINAL HEALTH: Wechsler Harwood Investigates ERISA Violations
---------------------------------------------------------------
The law firm of Wechsler Harwood LLP commenced an investigation
against Cardinal Health, Inc. ("Cardinal" or the "Company")
(NYSE:CAH) for violations of the Employee Retirement Income
Security Act of 1974 ("ERISA") in relation to its handling of
investments in the Company's employee retirement benefit plan
(the "Plan").
In particular, the investigation focuses on whether the Company
and certain Plan administrators breached their fiduciary duties
by:
(1) negligently misrepresenting and negligently failing to
disclose material facts to the Plan and the Plan
participants in connection with the management of the
Plan's assets and
(2) negligently permitting the Plan to purchase and hold
Cardinal stock when it was imprudent to do so.
The material facts being investigated include, but are not
limited to the allegations that, Cardinal failed to record, on a
timely basis, litigation claims it owed, causing its earnings
and assets to be artificially inflated. The Company also
allegedly misclassified non-operating revenues as operating,
giving a misleading picture of the Company to investors, and
improperly accounted for the $22 million recovered from vitamin
makers accused of overcharging Cardinal by booking such
recoveries as revenue when the antitrust cases had not been
resolved. Finally, it is alleged that defendants made
misleading, materially incomplete statements about its
transition to a fee-for-service model of drug distribution. On
June 21, 2004, Cardinal received a subpoena from the U.S.
Securities and Exchange Commission in connection with a formal
investigation announced on May 14, 2004. Cardinal is also under
investigation by the Department of Justice.
Cardinal's Chief Financial Officer, Richard J. Miller, abruptly
resigned his post yesterday after certain financial reporting
practices and judgments that occurred during his tenure had come
under increasing scrutiny in ongoing investigations. The Company
named J. Michael Losh in his place. It was also confirmed that
Cardinal Treasurer Donna Brandin left the Company. Following
this announcement, the stock closed at $44 per share after
trading as high as $76 per share in May.
In June, a number of class actions were filed in the United
States District Court for the Southern District of Ohio against
the Company as well as Robert Walter and Richard Miller alleging
violations Sections 10(b) and 20(a) of the Securities Exchange
Act of 1934 and Rule 10b-5 promulgated thereunder.
For more details, contact Jeffrey M. Norton, Esq. of Wechsler
Harwood LLP by Mail: 488 Madison Avenue, 8th Floor, New York, NY
10022 by Phone: (877) 935-7400 (ext. 286) or by E-mail:
jmn@whesq.com
CHARTER ONE: Settles Shareholder Lawsuit Over Citizens Merger
-------------------------------------------------------------
Charter One Financial Inc. (CF) agreed to settle shareholders'
purported class-action lawsuits that had sought to block
Citizens Financial Inc.'s planned acquisition of Charter One,
the Dow Jones Business News reports.
According to an SEC filing, the settlement is still subject to
court approval and would ultimately require the plaintiffs to
drop all claims related to the merger.
Furthermore the filling called for Citizens Financial, a unit of
Royal Bank of Scotland Group PLC (RBS.LN), to waive its rights
to any termination fees in excess of $375 million under the
merger agreement. Aside from the termination fee, no other terms
of the Charter One-Citizens Financial merger are affected by the
legal settlement.
The Cleveland-based holding company also told the Dow Jones
Business News that once the settlement agreement gets court
approval, the plaintiffs' attorneys are expected to try to get
the defendants to pay for their legal fees and expenses.
The merger itself is expected to close in the fourth quarter
without any more impediments.
CITIGROUP GLOBAL: SEC Sanctions Ex-Employee For Fraud Violations
----------------------------------------------------------------
The Securities and Exchange Commission issued an Order
Instituting Administrative Proceedings Pursuant to Section 15(b)
of the Securities Exchange Act of 1934 and Section 203(f) of the
Investment Advisers Act of 1940, Making Findings and Imposing
Remedial Sanctions (Order) against Irving P. David (David). The
Order bars David from association with any broker, dealer, or
investment adviser. David consented to the issuance of the
Order without admitting or denying the findings in the Order.
The Order finds that David was at all relevant times an employee
of and associated with Citigroup Global Markets (f/k/a Salomon
Smith Barney, Inc.), a broker-dealer and investment adviser that
was registered with the Commission in both capacities. While
employed by Citigroup Global Markets, David served as treasurer
of the Consulting Group Capital Markets Funds (Consulting Group
Fund) and controller of Smith Barney World Funds Inc. (Smith
Barney International Fund), two open-end investment companies
that were registered with the Commission.
The Order further finds that on Oct. 9, 2003, David was
permanently enjoined by consent from future violations of
Sections 34(b) and 37 of the Investment Company Act and from
serving as an officer, director, member of any advisory board,
investment adviser, or depositor of any registered investment
company, or as principal underwriter of any open-end registered
investment company pursuant to Section 36(a) of the Investment
Company Act, and from aiding and abetting violations of Section
15(d) of the Securities Exchange Act of 1934, in the civil
action entitled Securities and Exchange Commission v. Irving
Paul David, 03 Civ. No. 6305 (S.D.N.Y.) (KMW). David consented
to the entry of the injunction without admitting or denying the
allegations in the Commission's complaint.
The Commission's complaint alleged that while serving as
treasurer of the Consulting Group Fund and controller of the
Smith Barney International Fund, David stole a total of
approximately $47,529 from these two registered investment
companies, thereby violating Section 37 of the Investment
Company Act and breaching his fiduciary duty to the shareholders
of these two investment companies within the meaning of Section
36(a) of the Investment Company Act. The Commission's complaint
further alleged that in his capacity as the certifying officer
for the Consulting Group Fund and several other investment
companies managed by Citigroup Global Markets and its
affiliates, pursuant to Rule 30a-2 promulgated under the
Investment Company Act pursuant to the Sarbanes-Oxley Act of
2002, David falsely certified on the Consulting Group Fund's
Form N-SAR for the six month period ended Aug. 31, 2002, that he
had disclosed to the investment company's auditors and audit
committee any fraud, whether material or not, involving
management. He did so at the very time that he was stealing
money from these investment companies, a fraud he knew he had
not disclosed, thereby violating Section 34(b) of the Investment
Company Act, and aiding and abetting the Consulting Group Fund's
violations of Section 15(d) of the Securities Exchange Act of
1934.
The Order further finds that on April 7, 2004, David pleaded
guilty to one count of embezzlement from a registered investment
company in violation of Sections 37 and 49 of the Investment
Company Act, and one count of mail fraud, in United States v.
Irving David, 03 Crim. 1016 (S.D.N.Y.). The indictment to which
David pleaded guilty was based upon the same conduct underlying
the Commission's complaint.
DFG LLC: SEC Lodges Securities Lawsuit V. Three Former Officers
---------------------------------------------------------------
The Securities and Exchange Commission filed a complaint seeking
injunctive and other relief against Andrew J. Zahn, Philip J.
Sexauer, and Cynthia K. Berryman, all of whom reside in the
Chicago area. Each of these individuals is a former officer of
DFG, L.L.C. (DFG), a Chicago-based company that was a subsidiary
of a subsidiary of IBP, Inc. (IBP). At the time of the relevant
conduct, IBP was a public company based in Dakota Dunes, South
Dakota, and was one of the nation's largest producers of fresh
beef and pork.
The Commission alleges that Zahn (DFG's former president),
Sexauer (DFG's chief financial officer in 1999), and Berryman
(DFG's controller in 1999 and chief financial officer in 2000)
engaged in an array of accounting improprieties to inflate DFG's
earnings. These misstatements caused IBP to materially misstate
its own financial results for the fourth quarter of 1999 and the
first three quarters of 2000. Specifically, the Commission
alleges that Zahn, Sexauer, and Berryman directed that DFG not
charge certain expense items in the period they were incurred,
but instead improperly included these amounts in inventory,
prepaid expense, and accounts receivable asset accounts to
overstate DFG's earnings. The Commission alleges that each of
the defendants was motivated by personal compensation tied to
DFG's financial performance.
In its complaint, the Commission claims that, through these
actions, each of the defendants violated Section 13(b)(5) of the
Securities Exchange Act of 1934 (Exchange Act) and Rule 13b2-1
thereunder, and aided and abetted IBP's violations of Sections
13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and
Rules 12b-20 and 13a-1 thereunder. It further claims that Zahn
and Berryman violated Section 10(b) of the Exchange Act and
Rules 10b-5 and 13a-13 thereunder. The Commission seeks a final
judgment enjoining all of the defendants from future violations
of the federal securities laws, ordering the defendants to
disgorge ill-gotten gains, and imposing civil monetary
penalties. The Commission also seeks an order barring Zahn and
Berryman from serving as an officer or director of a public
company.
Simultaneously with the filing of the complaint, Sexauer
consented to the entry of an injunction against him prohibiting
him from future violations of all of the provisions the
Commission claims he violated. Sexauer also agreed to pay full
disgorgement of his ill-gotten gains, prejudgment interest, and
a civil penalty of $35,000. The action is titled, SEC v. Zahn,
et al., Civil Action No. 04C4948, N.D. Ill. (LR-18809; AAE Rel.
2066).
DOMINIQUE ALVIERI: SEC Institutes Administrative Proceedings
------------------------------------------------------------
The Securities and Exchange Commission issued an Order
Instituting Public Administrative Proceedings Pursuant to
Section 203(f) of the Investment Advisers Act of 1940 (Order)
against Dominique S. Alvieri (Alvieri), formerly a resident of
Little Ferry, New Jersey, and Toronto, Ontario, Canada. In the
Order, the Division of Enforcement alleges that Alvieri has been
convicted of investment advisory and mail fraud before the
United States District Court for the Southern District of New
York for using fraudulent misrepresentations and omissions of
material fact to induce three advisory clients to give him a
total of at least $660,804 to invest on their behalf when, in
fact, Alvieri misappropriated and diverted for his personal use
a substantial portion of the funds that he received from these
advisory clients.
The Commission instituted this administrative proceeding after
the District Court entered a final judgment on June 4, 2004, in
U.S. v. Dominique S. Alvieri, 02 Cr. 084 (S.D.N.Y.) (GEL),
sentencing Alvieri to 42 months in prison followed by three
years of supervised release and ordering him to pay $621,804.04
in restitution. This sentence followed Alvieri's guilty plea to
three felony counts of investment advisory fraud and one count
of mail fraud for his conduct described above.
A hearing will be scheduled before an administrative law judge
to determine whether the allegations contained in the Order are
true, to provide Alvieri an opportunity to dispute these
allegations, and to determine what, if any, remedial sanctions
against Alvieri are appropriate and in the public interest
pursuant to Section 203(f) of the Investment Advisers Act. The
Commission directed that an administrative law judge issue an
initial decision in this matter within 210 days from the date of
service of the Order Instituting Proceedings.
G&K SERVICES: Reaches $1.25M Settlement in CA Wage, Hour Dispute
----------------------------------------------------------------
G&K Services, Inc. (Nasdaq:GKSRA), successfully reached a
tentative resolution of a California wage and hour class action
dispute through a mediation process. The case, brought on behalf
of G&K's California-based route sales representatives, largely
involved past pay practices. The case is tentatively settled,
without findings of liability, for approximately $1.25 million.
The settlement is subject to court approval.
"We are pleased to have reached an amicable tentative settlement
in this case," said Richard Marcantonio, president and chief
executive officer. "This case was brought under statutes
specific to the State of California, and has affected the
California operations of many other companies in addition to
G&K. We expect now to have put this matter behind us."
Due to the uncertainties in this case prior to the mediation
process, any potential outcome of this case had not been
previously reflected in the company's guidance for the fourth
quarter and full fiscal year. Having now reached greater
certainty, the tentative settlement will result in a one-time
charge of approximately $0.04 per share for the fourth quarter
and fiscal year 2004.
HAMILTON COUNTY: OH Judge Denies Motion To Dismiss Photo Lawsuit
----------------------------------------------------------------
The ruling by U.S. District Judge S. Arthur Spiegel of Ohio,
which rejected Hamilton County's request to throw out a lawsuit
filed against them by families of relatives' bodies that were
photographed at the morgue without their permission, paves the
way for a jury trial in January, the Associated Press reports.
The families' class action lawsuit claims the county owes them
damages because photographer Thomas Condon took posed photos of
their relatives in the morgue between August 2000 and January
2001.
In his 36-page decision the federal judge stated that county
officials share some responsibility because their policies
contributed the environment in which Condon's actions took
place.
Mr. Condon, who was later convicted of gross abuse of a corpse
and sentenced to 18 months in prison for the photos he took,
claimed that he had permission to be in the morgue, but Coroner
Carl Parrott and other officials have said that he was
authorized only to do research for a training video. Mr. Condon
though was recently released from prison during an appeal of his
conviction.
County lawyers told the Associated Press that they might appeal
the decision, which allows officials to be sued as individuals
as well as in their official capacities.
MACKARL ENTERPRISES: Recalls 4,600 Helmets Due To Injury Hazard
---------------------------------------------------------------
The Mackarl Enterprises Inc., of City of Industry, California,
and KHS Bicycles Inc., of Rancho Dominguez, California is
cooperating with the United States Consumer Product Safety
Commission by voluntarily recalling about 4,600 units of DBX
Engage (VT-3), DBX Ravage (FX-2), and Geartec ESPY bicycle
helmets.
The helmets may not meet CPSC safety regulations for helmets,
which pose a risk of a rider sustaining a serious head injury if
he/she falls from a bicycle. The firms have not received any
reports of incidents. This recall is being conducted to prevent
the possibility of injuries.
The recalled Geartec ESPY and FX-2 (DBX Ravage) model helmets
come in carbon yellow, silver, or blue and have a carbon fiber
graphic on the front to middle part of the helmet. The helmets
have 15 vent holes, a removable visor, and the logo ("Geartec"
or "DBX") printed on both sides of helmet. The recalled VT-3
(DBX Engage) model helmets come in blue/silver/black,
red/yellow/black, or silver and black. The helmets also have 15
vent holes, a removable visor, and the "DBX" logo printed on
both sides of helmet.
Manufactured in China, the DBX Engage (VT-3) and Ravage (FX-2)
model helmets were sold by Dick's Sporting Goods stores
nationwide from June 2003 through June 2004 for between $40 and
$60. KHS Bicycles stores sold the Geartec ESPY model helmets
between May 2003 and June 2003 for about $40.
Consumers should stop using these helmets immediately and return
them to the place of purchase for a full refund or replacement.
For more details, contact Mackarl Enterprises Inc. by Phone:
(866) 432-7832 Ext. 195 between 8 a.m. and 5 p.m. PT Monday
through Friday.
MEXICO: SEC Lodges Civil Suit V. Ex-JP Morgan Investment Banker
---------------------------------------------------------------
The Securities and Exchange Commission filed a civil injunctive
action against Kenneth F. Kryzda, a former managing director of
JP Morgan Chase Bank (JP Morgan), and a citizen of the United
States and Mexico and a resident of Mexico City, Mexico. In its
complaint, the Commission alleges that Kryzda engaged in illegal
insider trading in connection with his purchases of the common
stock of Panamerican Beverages, Inc. (Panamerican) prior to the
Dec. 23, 2002, announcement that Panamerican would be acquired
by Coca-Cola FEMSA S.A. de C.V.
According to the complaint, Kryzda learned of the proposed
acquisition in the course of his employment as an investment
banker in the Mexico City office of JP Morgan. The complaint
alleges that Kryzda misappropriated this and other material,
nonpublic information concerning a possible acquisition of
Panamerican from JP Morgan and then purchased shares of
Panamerican stock prior to the merger announcement. According to
the complaint, on November 20 and 21, and December 19 and 20,
2002, Kryzda purchased a total of 7,100 Panamerican shares. The
merger was made public on Dec. 23, 2002, and on that day,
Panamerican shares closed at $20.59, an approximately 100%
increase from the prior day's close. On Dec. 30, 2002, seven
days after the merger announcement, Kryzda sold all his
Panamerican shares. He made profits of $78,944.
Kryzda, without admitting or denying the allegations in the
Commission's complaint, has consented to the entry of a Final
Judgment permanently enjoining him from violating Section 10(b)
of the Securities Exchange Act of 1934 (Exchange Act), and
Exchange Act Rule 10b-5. Kryzda also has agreed to pay a total
of $202,701.16, representing disgorgement of his illegal insider
trading profits, prejudgment interest, and a civil penalty of
one and a half times his trading profits. The Commission's
investigation is continuing. The action is titled, SEC v.
Kenneth F. Kryzda, Civil Action No. 04 CV 5853 (RO), SDNY (LR-
18806).
NORTH CAROLINA: Consumer Groups Lodge Lawsuit V. Payday Lenders
---------------------------------------------------------------
Consumer advocates initiated a class action lawsuit against
North Carolina's biggest payday lenders, accusing them of hiding
behind out-of-state banks to impose ruthless rates on poor
families, The News & Observer reports.
According to F. Paul Bland Jr., an attorney with Trial Lawyers
for Public Justice in Washington, payday lenders charge at an
annual rate of 500 percent or more for loans trapping borrowers
in a cycle of debt. But lobbyists for the lenders countered that
the companies abide by all regulations and presents an essential
role in providing short-term loans that banks aren't very eager
to make.
The class action suits were filed in New Hanover County Superior
Court and seek to close a legal loophole that plaintiffs say the
lenders are exploiting, and to win refunds for borrowers they
say were overcharged. Named as defendants in the suit are:
Advance America, based in Spartanburg, S.C.; Check into Cash,
based in Cleveland, Tenn.; and Check 'n Go, based in Mason,
Ohio. The companies operate several hundred payday-lending
branches in North Carolina.
In their suit, the consumer advocates, including the N.C.
Justice Center in Raleigh and the Financial Protection Law
Center in Wilmington alleged that lenders make loans until
payday to customers who must write a check for the amount
borrowed, which the lender holds it until payday for a fee. When
borrowers must extend the loans, the fees add up and can amount
to "exorbitant" annual interest rates.
According to Rob Schofield of the N.C. Justice Center, North
Carolina laws cap interest on small, short-term loans at 36
percent.
Recently Attorney General Roy Cooper has taken the position that
payday lenders cannot use affiliation with out-of-state banks to
skirt N.C. laws against exorbitant rates. But the state Banking
Commission has no jurisdiction over out-of-state banks that team
up with payday lenders to make the loans.
PARMALAT FINANZIARIA: SEC Files, Simultaneously Settles NY Suit
---------------------------------------------------------------
The Securities and Exchange Commission filed an amended
complaint in its lawsuit against Parmalat Finanziaria S.p.A.
(Parmalat Finanziaria) in U.S. District Court in the Southern
District of New York. The amended complaint alleges that the
company engaged in one of the largest financial frauds in
history and defrauded U.S. institutional investors when it sold
them more than $1 billion in debt securities in a series of
private placements between 1997 and 2002. Simultaneously with
the filing of the amended complaint, Parmalat Finanziaria
consented to the entry of a final judgment settling the
Commission's action against it. The settlement is subject to the
court's entry of the proposed judgment.
In its consent, Parmalat Finanziaria has agreed, without
admitting or denying the allegations of the amended complaint,
to be permanently enjoined from violating Section 10(b) of the
Securities Exchange Act of 1934 and Exchange Act Rule 10b-5, as
well as Section 17(a) of the Securities Act of 1993. In
addition, Parmalat Finanziaria has agreed to adopt changes to
its corporate governance to promote future compliance with the
federal securities laws, including adopting by-laws providing
for governance by a shareholder-elected board of directors, the
majority of whom will be independent and serve finite terms;
specifically delineating in the by-laws the duties of the board
of directors; adopting a Code of Conduct governing the duties
and activities of the board of directors; adopting an Insider
Dealing Code of Conduct; and adopting a Code of Ethics. The by-
laws will also require that the positions of chairman of the
board of directors and managing director be held by two separate
individuals. Parmalat Finanziaria's consent also provides for
the continuing jurisdiction of the U.S. District Court to
enforce its provisions. The action is titiled, SEC v. Parmalat
Finanziaria, S.p.A., Case No. 03 CV 10266 (PKC) SDNY.
PHILIP GRATZ: FL Court Enters Permanent Injunction, Other Relief
----------------------------------------------------------------
The Securities and Exchange Commission through the U.S. District
Court for the Southern District of Florida obtained a Final
Judgment of Permanent Injunction and Other Relief (Final
Judgment) against Defendant Philip R. Gratz (Gratz). The Final
Judgment, entered with Gratz's consent, without admitting or
denying the allegations of the SEC's Complaint, enjoins him from
violations of Sections 15(a) and 15(b) of the Securities
Exchange Act of 1934 and Section 203(f) of the Investment
Advisers Act of 1940. In addition to injunctive relief, the
Final Judgment orders Gratz to pay a civil penalty in the amount
of $120,000. The action is titled, SEC v. Philip R. Gratz, Case
No. 03-20889-CIV-JORDAN/BANDSTRA (S.D. Fla.) (LR-18808).
The Commission's complaint, filed on April 15, 2003 with the
U.S. District Court for the Southern District of Florida against
Philip R. Gratz (Gratz), a New Jersey resident and former stock
broker, charging with him violating an SEC administrative bar
previously imposed against him by consent and for violating the
broker dealer registration provisions of the federal securities
laws. According to the SEC's complaint, from at least November
1998 until March 20, 2003, Gratz, doing business as Phoenix
World Wide Enterprises, Inc. raised more than $8.9 million from
investors by, among other things, falsely promising that he
would invest their funds in the stock market. The SEC's
complaint alleges that, contrary to Gratz's promises, $3.02
million in investor funds were misappropriated for his personal
use.
The complaint also alleges that in connection with his
fraudulent misconduct, Gratz received transaction related
compensation for providing investment advice and for inducing
the purchase or sales of securities while not registered with
the SEC as a broker or dealer. Accordingly, the SEC's complaint
provides that Gratz violated a 1992 SEC Order prohibiting him
from association with any broker, dealer or investment adviser
as well as the broker-dealer registration provisions.
The SEC's complaint seeks to restrain and permanently enjoin
Gratz from violating Sections 15(a)(1) and 15(b)(6)(B) and of
the Securities Exchange Act of 1934, Section 203(f) of the
Investment Advisers Act of 1940, and the 1992 SEC Order. The
complaint also requests, among other things, that Gratz be
ordered to pay civil penalties for his violations of the federal
securities laws.
QWEST COMMUNICATIONS: SEC Files Subpoena Action V. Drake Tempest
----------------------------------------------------------------
The Securities and Exchange Commission filed a subpoena
enforcement action in the U.S. District Court for the District
of Colorado against Drake Tempest, the former General Counsel of
Qwest Communications International, Inc. (Qwest). Pursuant to a
subpoena issued on Nov. 12, 2003, Tempest was initially
obligated to appear for testimony before the Commission on Dec.
16-18, 2003. The Commission agreed to postpone the testimony.
The Commission rescheduled Tempest's
testimony for June 22-24, 2004. Through counsel, Tempest
objected to having to comply with the subpoena to provide
testimony and, after informing the Commission of his intention,
failed to appear to testify. Accordingly, the Commission filed
its Application For An Order To Show Cause And For An Order To
Enforce Administrative Subpoena, along with a supporting
Memorandum and Declaration.
In its Application and supporting filings, the Commission
alleges that on April 3, 2002, the Commission issued its Order
Directing Private Investigation and Designating Officers to Take
Testimony (Formal Order) in the Qwest investigation. The Formal
Order authorizes members of the staff to investigate whether
antifraud and/or reporting provisions of the federal securities
laws have been or are being violated by any persons or entities
in connection with the offer, sale and/or purchase of securities
of Qwest. Pursuant to its Application, the Commission is seeking
an order, directing Tempest to show cause why the Court should
not enter an order requiring him to appear for testimony. A
hearing on the Commission's application has not yet been
scheduled. The action is titled, SEC v. Drake Tempest, Civil
Action No.04-B-1547 (OES), USDC District of Colorado] (LR-
18804).
RAMBUS INC.: CA Court Affirms Dismissal of Consumer Fraud Suit
--------------------------------------------------------------
The California Court of Appeals affirmed the dismissal of a
class action filed against Rambus, Inc., styled "Holiday
Matinee, Inc. v. Rambus Inc., No. CV 806325," in California
Superior Court, Santa Clara County.
The complaint in that case purported to be on behalf of an
alleged class of "indirect purchasers" of memory from January
2000 to March 2002. Plaintiff alleges that those purchasers
paid higher prices for various types of DRAM due to Rambus's
involvement in JEDEC and its alleged unlawful use of market
power in the various DRAM markets to coerce vendors of equipment
using that technology to enter into supposed agreements in
restraint of trade.
The Company filed a demurrer to an amended version of the
Holiday Matinee complaint and a hearing was held on this
demurrer on December 10, 2002. The court granted the Company's
demurrer and gave plaintiff leave to further amend its
complaint. After plaintiff filed its second amended complaint,
the Company demurred successfully again and plaintiff moved to
dismiss its complaint with prejudice, reserving however,
their rights of appeal from the decisions against them. That
motion was granted on April 17, 2003 when the complaint was
dismissed with prejudice. On May 27, 2004, the California Court
of Appeal affirmed the trial court's dismissal. No further
appeal has been taken to the California Supreme Court and,
plaintiffs' time to file to an appeal has expired.
RICART PROPERTIES: Battles DaimlerChrysler Over Settlement Costs
----------------------------------------------------------------
Lawyers for Ricart Properties and DaimlerChrysler Insurance Co.
are locked in a heated battle over who will be paying for the
costs and legal fees connected with a $21.8 million class-action
settlement relating to Ricart dealerships, The Columbus Dispatch
reports.
Ricart attorney Larry H. James told Columbus Dispatch that the
dealership would pay customers who are entitled to settlement
claims and then seek reimbursement from DaimlerChrysler in
court, even if it takes more than a year to settled the dispute.
The settlement concluded a lawsuit that accused Ricart of
misleading customers into buying vehicle-window etchings as a
theft deterrent. Though denying any wrongdoing the dealership
agreed pay its 86,097 customers about $3.5 million. They also
agreed to pay $18.4 million to 36,768 customers of its used-car
affiliate, Pay Days, which has been closed.
In the past months Ricart and DaimlerChrysler have filed claims
and counterclaims in U.S. District Court over the $21.8 million
settlements. In its court filings, Ricart argues that
DaimlerChrysler should up the ante, since it provided several
liability policies of between $1 million and $25 million for
Ricart Automotive and Pay Days, which is used to cover consumer
complaints.
DaimlerChrysler countered the dealership's claims and argues
that coverage is excluded if the loss results from "dishonest,
malicious, fraudulent, criminal or intentional act or omission."
DaimlerChrysler declined to comment.
According to Geoffrey J. Moul, attorney for customers the
settlement will be paid in installments. Pay Days customers with
valid claims were mailed checks by July 14 worth $348 each, on
the other hand Ricart customers will be sent checks by Aug. 14
worth between $40 and $200. With the May 1 deadline fast
approaching, Mr. Moul estimates that around 32,000 of the
123,000 customers who were eligible have filed for claims.
According to Ricart's attorney, the insurance dispute began when
DaimlerChrysler sued Ricart for repayment of attorney fees,
since it had paid a portion of Ricart's fees but stopped when
they exceeded $200,000, since then Ricart has counter sued for
breach of contract.
SCHERING-PLOUGH: Reaches Pact Over Claritin Fraudulent Pricing
--------------------------------------------------------------
Texas and other states reached a settlement with pharmaceutical
giant Schering-Plough Inc. that will return more than $9 million
to the Texas Medicaid program for the company's fraudulent
reporting of prices for the antihistamine drug Claritin,
Attorney General Greg Abbott announced in a statement. The
total payout to 49 states and the District of Columbia is $140.7
million.
"We will continue to aggressively recover money that rightfully
belongs to the Texas Medicaid program from companies that
attempt to defraud the system that was established to help the
neediest of patients," said Attorney General Abbott.
The settlement relates to Schering-Plough's under-reporting to
Medicaid of drug rebates given to HMOs from 1996-98. The
federal rebate program requires drug makers that participate in
the Medicaid program to give accurate information about its
"best price" available for a product, in this case, Claritin.
The manufacturers report the best price, encompassing discounts
or other incentives, to the Centers for Medicare and Medicaid
Services, which uses this information to calculate rebates for
the states? Medicaid programs. In this case, Schering-Plough
negotiated with HMOs to keep Claritin on a formulary list of
drugs instead of a competitor's product. However, the company
did not notify the government of discounts it provided when it
reported its best price. As a result, Medicaid programs
received millions less in rebates from the company than would
have been paid had the best price amount been reported
accurately.
Affecting the best price scheme was the company's concessions to
remain on the Medicaid formulary list. To accomplish this, the
company paid a $2.5 million "data processing fee" to CIGNA for
utilization reports this HMO was already obligated to provide
Schering-Plough; the company's prepayment of rebates, which were
the equivalent of interest-free loans to both CIGNA and
Pacificare; and Schering-Plough's agreement to pay Pacificare's
antihistamine costs if those costs reached more than 25 percent
over the previous year.
In addition to this settlement, the company entered a plead
guilty plea with the U.S. Attorney's Office in Philadelphia, PA,
to federal anti-kickback charges, paying a fine of $52.5
million.
SCHOLASTIC CORPORATION: SEC Obtains Verdict V. FL Estate Agents
---------------------------------------------------------------
The Securities and Exchange Commission obtained a jury verdict
against two Orlando-area real estate agents, Donna Yun of
Longwood, Florida, and Jerry Burch of Heathrow, Florida, finding
them liable for illegal insider trading in options on the stock
of Scholastic Corporation. The jury returned its verdict after a
three-day retrial presided over by U.S. District Judge Anne C.
Conway.
In its complaint, filed on Feb. 3, 1999, the Commission alleged
that on or before Tuesday, Feb. 18, 1997, Yun's husband, then an
officer of Scholastic, told Yun in confidence that Scholastic
would announce that it expected a loss for the quarter ending
Feb. 28, 1997, and that the price of Scholastic common stock
would likely decline as a result. Yun breached her duty of
confidence and disclosed the inside information at a cocktail
party that Tuesday evening to her friend and colleague of six
years, Jerry Burch. During the following two days, Burch
purchased 130 Scholastic put option contracts, including 10
February contracts that expired within 48 hours, that would rise
in value if Scholastic's stock price went down. After Scholastic
released its negative earnings announcement on Feb. 20, 1997,
Scholastic's common stock price dropped approximately 40
percent, from $61.50 to $36.75. On February 21, Burch exercised
his options for a net profit of approximately $269,000 - a 1300
percent return on his two-day investment.
The case had previously been tried in December 2000. In the
first trial, the jury also found both Yun and Burch liable for
insider trading. However, on appeal, the United States Court of
Appeals for the Eleventh Circuit vacated the district court's
judgment based on prejudicial error in the district court's jury
instructions. The appeals court remanded the case for a second
trial.
At the second trial, the jury determined that Yun and Burch had
violated Section 10(b) of the Securities Exchange Act of 1934
and Rule 10b-5 thereunder. At a later date, Judge Conway will
determine the appropriate relief against Yun and Burch, which
may include permanent injunctions, disgorgement of the ill-
gotten gains, and civil penalties. The action is titled, SEC v.
Donna Yun and Jerry Burch, Case No. 6:99-cv-117-ORL-22KRS USDC,
MD FL, Orlando Division (LR-18805).
SONUS NETWORKS: MA Stock Suit Moves To Certification, Discovery
---------------------------------------------------------------
The consolidated securities class action filed against Sonus
Networks, Inc. is proceeding to class certification and
discovery in the United States District Court for the District
of Massachusetts.
Beginning in July 2002, several purchasers of the Company's
common stock filed complaints against the Company, certain
officers and directors and a former officer under Sections 10(b)
and 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934.
The purchasers seek to represent a class of persons who
purchased Sonus' common stock between December 11, 2000 and
January 16, 2002, and seek unspecified monetary damages. The
suits were essentially identical and alleged that Sonus made
false and misleading statements about its products and business.
On March 3, 2003, the plaintiffs filed a Consolidated Amended
Complaint. On April 22, 2003, Sonus filed a motion to dismiss
the Consolidated Amended Complaint on various grounds. On May
11, 2004, the court held oral argument on the motion, at the
conclusion of which the court denied Sonus' motion to dismiss.
SONUS NETWORKS: MA Court Consolidates Securities Fraud Lawsuits
---------------------------------------------------------------
The United States District Court for the District of
Massachusetts consolidated the securities class actions filed
against Sonus Networks, Inc. and certain of its current officers
and directors.
The complaints assert claims under the federal securities laws,
specifically Sections 10(b) and 20(a) of the Securities Exchange
Act of 1934, relating to Sonus' announcement that it had
identified issues, practices and actions of certain employees
relating to both the timing of revenue recognized from certain
customer transactions and other financial statement accounts,
which could affect its 2003 financial statement accounts and
possibly financial statements for prior periods.
Specifically, these actions allege that Sonus issued a series of
false or misleading statements to the market during the class
period that failed to disclose that:
(1) Sonus had materially overstated its revenue by
improperly recognizing revenue on certain customer
contracts;
(2) Sonus lacked adequate internal controls and was
therefore unable to ascertain its true financial
condition; and
(3) as a result of the foregoing, Sonus' financial
statements issued during the class period were
materially false and misleading.
Plaintiffs contend that such statements caused Sonus' stock
price to be artificially inflated. The complaints seek
unspecified damages on behalf of a purported class of purchasers
of Sonus' common stock during the period from April 9, 2003,
June 3, 2003 or June 5, 2003 through February 11, 2004.
TUT SYSTEMS: Stipulation of Suit Settlement Filed With NY Court
---------------------------------------------------------------
Parties in the consolidated securities class action filed
against Tut Systems, Inc. and certain of its current and former
officers and directors submitted a stipulation of settlement to
the United States District Court for the Southern District of
New York.
On October 30, 2001, the Company and certain of its current and
former officers and directors were named as defendants in
"Whalen v. Tut Systems, Inc. et al., Case No. 01-CV-9563," a
purported securities class action. An amended complaint was
filed on December 5, 2001. A consolidated amended complaint was
filed on April 19, 2002.
The consolidated amended complaint asserts that the prospectuses
from the Company's January 29, 1999 initial public offering and
its March 23, 2000 secondary offering failed to disclose certain
alleged actions by the underwriters for the offerings. The
complaint alleges claims against the Company and certain of its
current and former officers and directors under Section 11 of
the Securities Act of 1933, as amended, and under Section 10(b)
and Rule 10b-5 of the Securities Exchange Act of 1934, as
amended, and alleges claims against certain of its current and
former officers and directors under Sections 15 and 20(a) of the
Securities Act. The complaint also names as defendants the
underwriters for the Company's initial public offering and
secondary offering.
Similar suits were filed in the Southern District of New York
challenging over 300 other initial public offerings and
secondary offerings conducted in 1999 and 2000. Therefore,
for pretrial purposes, the Whalen action is being coordinated
with the approximately 300 other suits before United States
District Court Judge Shira Scheindlin of the Southern District
of New York under the matter "In Re Initial Public Offering
Securities Litigation."
The individual defendants in the Whalen action, namely, Nelson
Caldwell, Salvatore D'Auria and Matthew Taylor, were dismissed
without prejudice by an October 9, 2002 Order of the Court,
approving the parties' October 1, 2002 Stipulation of Dismissal.
On February 19, 2003, the Court issued an Opinion and Order
denying the Company's motion to dismiss.
A stipulation of settlement for the claims against the issuer-
defendants, including the Company, was submitted to the Court on
June 14, 2004 in the "In Re Initial Public Offering Securities
Litigation." The settlement is subject to a number of
conditions, most of which are outside of the Company's control,
including approval by the Court. Underwriters named as
defendants in the "In Re Initial Public Offering Securities
Litigation," including the underwriters named in the Whalen
suit, are not parties to the stipulation of settlement.
The stipulation of settlement provides that, in exchange for a
release of claims against the settling issuer-defendants, the
insurers of all of the settling issuer-defendants will provide a
surety undertaking to guarantee plaintiffs a $1 billion recovery
from the non-settling defendants, including the underwriter-
defendants. The ultimate amount, if any, that may be paid on
behalf of the Company will therefore depend on the final terms
of the settlement, including the number of issuer-defendants
that ultimately participate in the final settlement, and the
amounts, if any, recovered by the plaintiffs from the
underwriter-defendants and other non-settling defendants.
TUT SYSTEMS: CA Securities Fraud Lawsuit Settlement Deemed Final
----------------------------------------------------------------
The settlement of the securities class action filed against Tut
Systems, Inc. and certain of its current and former officers and
directors has been declared final, after no appeals were filed
against it.
The suit, styled "In re Tut Systems, Inc. Securities Litigation,
Civil Action No. C-01-2659-JCS," was filed in the United States
District Court for the Northern District of California on behalf
of a purported class of investors who purchased the Company's
stock during the period between July 20, 2000 and January 31,
2001, seeking unspecified damages.
The complaints allege that the Company and certain of its
current and former officers and directors made false and
misleading statements about the Company's business during the
putative class period. Specifically, the complaints allege
violations of Section 10(b) and 20(a) of the Securities Exchange
Act of 1934, as amended. The complaints were consolidated under
the name "In re Tut Systems, Inc. Securities Litigation, Master
File No. C-01-2659-CW."
Lead plaintiffs and lead counsel for plaintiffs were appointed.
Plaintiffs filed a consolidated class action complaint on
February 4, 2002. Defendants filed a Motion to Dismiss on March
29, 2002. On August 15, 2002, the Court granted in part and
denied in part the Motion to Dismiss. On September 23, 2002,
plaintiffs filed an amended complaint. Defendants filed a
Motion to Dismiss the amended complaint, and on August 6, 2003
the Court granted in part that Motion. On September 24, 2003,
defendants answered the remaining allegations of the amended
complaint.
Defendants reached a settlement of the Securities Litigation
Action in December 2003. Subject to preliminary and final
approval by the Court, the Company's insurance carriers agreed
to pay $10 million, on behalf of the Company, to settle the
suit. The settlement includes a release of all defendants. The
insurance carriers paid the settlement amount to plaintiffs'
escrow agent in January 2004. The Court preliminarily approved
the settlement on February 24, 2004 and finally approved the
settlement on May 14, 2004. The settlement became final on June
15, 2004, the date when the appeals period ended. Therefore, in
the second quarter of 2004, the $10 million was removed from the
insurance settlement receivable and the legal settlement
liability.
VENTAS INC.: Appeals Court Upholds Dismissal of KY RICO Lawsuit
---------------------------------------------------------------
The United States Sixth Circuit Court of Appeals upheld a lower
court's dismissal of the class action filed against Ventas,
Inc., styled "Sally Pratt, et al. v. Ventas, Inc. et al., Civil
Action No. 3-01CV-317-H."
The putative class action, filed in the United States District
Court of the Western District of Kentucky, alleges that the
Company and certain current and former officers and employees of
the Company engaged in a fraudulent scheme to conceal the true
nature and substance of the Company's spin-off from Kindred
Healthcare in 1998 resulting in:
(1) a violation of the Racketeer Influenced and Corrupt
Organizations Act (RICO),
(2) bankruptcy fraud,
(3) common law fraud, and
(4) a deprivation of plaintiffs' civil rights
The plaintiffs allege that the defendants failed to act
affirmatively to explain and disclose the fact that the Company
was the entity that had been known as Vencor, Inc. prior to the
1998 Spin Off and that a new separate and distinct legal entity
assumed the name of Vencor, Inc. after the 1998 Spin Off. The
plaintiffs contend that the defendants filed misleading
documents in the plaintiffs' state court lawsuits that were
pending at the time of the 1998 Spin Off and that the defendants
deceptively used the Delaware bankruptcy proceedings of Vencor,
Inc. (now Kindred) to stay lawsuits against the Company.
As a result of these actions, the plaintiffs maintain that they
and similarly situated individuals suffered and will continue to
suffer severe financial harm. The suit seeks compensatory
damages (trebled with interest), actual and punitive damages,
reasonable attorneys' fees, costs and expenses, declaratory and
injunctive and any and all other relief to which the plaintiffs
may be entitled.
Before any class of plaintiffs was certified, this action was
dismissed in its entirety on February 4, 2002 because it was
deemed to be an impermissible collateral attack on the Delaware
Bankruptcy Court's confirmation order. The plaintiffs
thereafter filed an appeal of the District Court's dismissal to
the United States Court of Appeals for the Sixth Circuit.
However, on plaintiffs' motion, the appeal was stayed after the
plaintiffs separately filed a motion with the Delaware
Bankruptcy Court seeking, among other things, to have the
Delaware Bankruptcy Court set aside portions of the releases of
the Company contained in the Final Plan, as such releases might
apply to the plaintiffs.
On September 19, 2002, the Delaware Bankruptcy Court denied the
plaintiffs' motion. On February 28, 2003, the plaintiffs
resumed their Sixth Circuit appeal.
WARREN WARE: FL Court Enters Permanent Injunction, Other Relief
---------------------------------------------------------------
The Securities and Exchange Commission through the U.S. District
Court for the Middle District of Florida obtained a Judgment of
Permanent Injunction and Other Relief (Judgment) against
Defendant Warren L. Ware (Ware). The Judgment, entered with
Ware's consent, without admitting or denying the allegations of
the SEC's complaint, enjoins him from violations of Sections
5(a), 5(c) and 17(a) of the Securities Act of 1933, Section
10(b) of the Securities Exchange Act of 1934 and Rule 10b-5
thereunder, and Sections 206(1) and 206(2) of the Investment
Advisers Act of 1940. In addition to injunctive relief, the
Judgment provides for disgorgement and the imposition of a civil
penalty in amounts to be reached by agreement of the parties
and/or by the Court upon the SEC's motion. The action is titled,
SEC v. W.L. Ware Enterprises, Inc., et al. and Warren L. Ware,
Case No. 6:04-CV-112 ORL-18-JGG (M.D. Fla.)] (LR-18813)
The SEC's Complaint, filed in January 27, 2004 alleges that Ware
Enterprises and Ware falsely guarantee investors 10% monthly
interest payments on their investments for the first ten months
followed by a 5% perpetual monthly return. According to the
SEC's Complaint, Ware entices potential investors portraying the
Company as a "private clientele group investment firm" whose
Dreamkeeper Program is "engineered for the not so wealthy to
have a chance to make the same type of percentages on their
money that the wealthy have been enjoying for centuries." The
defendants also falsely represent that Ware Enterprises has over
$100 million in assets, when, according to the SEC's Complaint,
its bank account records actually reflect balance of only $2
million.
The SEC's complaint also alleges that, although Ware Enterprises
and Ware claim to generate returns for investors by making
investments in, among other things, commercial and residential
real estate, small businesses, and the "markets of the world,"
in reality, the defendants conducted a typical Ponzi scheme by
using new investors' investments to make interest payments to
existing investors.
The SEC's complaint charges Ware Enterprises and Ware with
violating Sections 5(a), 5(c) and 17(a) of the Securities Act of
1933, Section 10(b) of the Securities Exchange Act of 1934 and
Rule 10b-5 thereunder, and Ware with violating Sections 206(1)
and 206(2) of the Investment Advisers Act of 1940. Those
sections and rules prohibit certain transactions in securities
not registered with the Commission, prohibit fraud in the offer
and sale, and in connection with the purchase and sale, of
securities, and prohibit investment advisers from defrauding
clients.
W.E. BASSETT: Recalls 220T Eyelash Curlers Due To Injury Hazard
---------------------------------------------------------------
The W.E. Bassett Company, of Shelton, Connecticut, is
cooperating with the United States Consumer Product Safety
Commission by voluntarily recalling about 220,000 "Frosted Grip"
Eyelash Curlers.
The plastic handles can detach and cause consumers to lose their
grip, resulting in injuries to the eyes and face. Bassett has
received 11 reports of injuries from the grip handles breaking
off, causing abrasions, contusions and bruising in and around
the eye.
The "Frosted Grip" eyelash curlers have pink-plastic handles and
are sold with a rubber re-fill pad. The eyelash curlers were
sold under various brand names including TRIM and Salon Plus.
There are no identifying marks on the eyelash curler. However,
item numbers are printed on the packaging. Item numbers involved
in the recall include 5-87B (sold at Wal-Mart, CVS and Shopko),
5-87RA (sold at Rite Aid) and 5-87S (sold at Kroger).
Manufactured in China, the eyelash curlers were sold at CVS,
Meijer, Kroger, Rite Aid, SaveMart, Shopko, and Wal-Mart stores
nationwide from September 2003 to June 2004 for between $3 and
$4.
Consumers should stop using these eyelash curlers immediately
and contact The W.E. Bassett Company for a prepaid mailer to
return the eyelash curler for a free replacement plus a $5 off
coupon towards any TRIM product.
For more details, contact The W.E. Bassett Company by Phone:
(877) 929-1933 between 8 a.m. and 5 p.m. ET Monday through
Friday or visit their Web site: http://www.trim.com
WORLD CLASS: FL Court Enters Final Judgment, Imposes Penalties
--------------------------------------------------------------
The Securities and Exchange Commission through the U.S. District
Court for the Southern District of Florida obtained a Final
Judgment of Permanent Injunction and Other Relief (Final
Judgment) against Defendants World Class Limousines, Inc., and
1-800-GET-LIMO, Inc. (Corporate Defendants) and a Final Judgment
Setting Amount of Disgorgement and Civil Penalties as to
Defendant Anthony Caliendo (Caliendo), respectively. The Final
Judgment, entered with the Corporate Defendants' consent,
without admitting or denying the allegations of the SEC's
Complaint, enjoins them from violations of Sections 5(a), 5(c)
and 17(a) of the Securities Act of 1933, Section 10(b) of the
Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The
Final Judgment as to Caliendo finds him jointly and severally
liable with the Corporate Defendants for disgorgement in the
amount of $1,500,000, plus prejudgment interest in the amount of
$22,500, and orders Caliendo to pay a civil penalty in the
amount of $120,000. On June 24, 2004, the SEC filed a motion to
dismiss its disgorgement claims against the Corporate Defendants
since both companies are defunct and any remaining assets had
become part of the receivership estate.
On April 18, 2002, the Court had entered a Judgment against
Caliendo, with Caliendo's consent. The Judgment permanently
enjoined him firm violations of Sections 5(a), 5(c) and 17(a) of
the Securities Act of 1933, Section 10(b) of the Exchange Act of
1934, and Rule 10b-5 thereunder. The action is titled, SEC v.
World Class Limousines, Inc., 1-800-Get-Limo, Inc., and Anthony
P. Caliendo, Jr., Case No. 01-7834-CIV-Jordan/Bandstra (S.D.
Fla.)] (LR-18807).
New Securities Fraud Cases
BAXTER INTERNATIONAL: Schatz & Nobel Files Securities Suit in IL
----------------------------------------------------------------
The law firm of Schatz & Nobel, P.C., initiated a lawsuit
seeking class action status in the United States District Court
for the Northern District of Illinois on behalf of all persons
who purchased the publicly traded securities of Baxter
International, Inc. (NYSE: BAX) ("Baxter") between April 19,
2001 and July 21, 2004, inclusive (the "Class Period"). Also
included, are all those who acquired Baxter's shares through its
acquisitions of Autros, Fusion Medical, ESI Lederle, Acambis,
Alpha-1, Cook Pharmaceutical, and Icodextrin and present and
former employees who purchased stock through Baxter's Retirement
Savings Plans.
The Complaint alleges that Baxter and certain of its officers
and directors issued materially false statements concerning
Baxter's financial condition. Specifically, defendants failed to
disclose that:
(1) Baxter's financial results during the Class Period were
materially overstated as Baxter had improperly
recognized $40 million in revenues and maintained
inadequate and incorrect provisions for bad debts
relating to its Brazilian operations; and
(2) as a result of the foregoing, Baxter's financial
results, including its net income figures, were
materially and artificially inflated and in violation
of Generally Accepted Accounting Principles ("GAAP").
On July 22, 2004, Baxter announced that it planned to restate
its financial results for the years 2001 through 2003, and for
the first quarter of 2004. The restatement was the result of
incorrect revenue recognition and inadequate provisions for bad
debts in Brazil, which would result in a decrease in net income
over the restatement period by an amount expected to be no more
than $40 million, or $0.07 per diluted share. On this news,
Baxter fell $1.48 per share, or 4.59%, to close at $30.79 per
share.
For more details, contact Nancy A. Kulesa of Schatz & Nobel,
P.C. by Phone: (800) 797-5499 or by E-mail: sn06106@aol.com or
visit their Web site: http://www.snlaw.net
BENNETT ENVIRONMENTAL: Shalov Stone Lodges Securities Suit in NY
----------------------------------------------------------------
The law firm of Shalov Stone & Bonner LLP initiated a class
action on behalf of all persons who purchased the securities of
Bennett Environmental, Inc. (AMEX: BEL) (TSX: BEV) in the period
from June 2, 2003 to July 22, 2004 in the United States District
Court for the Southern District of New York, and includes
American and Canadian investors.
The complaint alleges that the defendants made material
misrepresentations and omissions of material facts concerning
the company's business performance during the relevant time
period. According to the complaint, throughout the relevant time
period, defendants misrepresented the financial condition of the
company by stating that the largest contract in the company's
history was in full force and effect when, in fact, the contract
had been substantially withdrawn almost immediately after its
execution.
For more details, contact Thomas G. Ciarlone, Jr., of Shalov
Stone & Bonner LLP by Mail: 485 Seventh Avenue, Suite 1000, New
York, NY 10018 by Phone: (212) 239-4340 or by E-mail:
tciarlone@lawssb.com
FERRO CORPORATION: Schatz & Nobel Files Securities Lawsuit in OH
----------------------------------------------------------------
The law firm of Schatz & Nobel, P.C., initiated a lawsuit
seeking class action status in the United States District Court
for the Northern District of Ohio on behalf of all persons who
purchased the publicly traded securities of Ferro Corporation
(NYSE: FOE) ("Ferro") between October 28, 2003 and July 22,
2004, inclusive (the "Class Period").
The Complaint alleges that Ferro, a major international producer
of performance materials for a broad range of manufacturers, and
certain of its officers and directors issued materially false
statements concerning Ferro's business condition. Specifically,
defendants knew but concealed that:
(1) Ferro's polymer additives business was not profitable
and was incurring greater losses than had been
reported;
(2) Ferro's efforts to raise the prices of its polymer
additives to products to offset increasing "raw
materials" costs had been ineffective, further eroding
the Company's revenues and profits;
(3) that the Company's polymer additives business unit
understated its operating costs by failing to report
the increasing losses that were plaguing the Company
thereby affecting the reliability of the Company's
forecasting process; and
(4) that the Company's disclosure controls and procedures
were wholly ineffective contrary to defendants
representations to investors.
On July 23, 2004, defendants revealed that Ferro was slashing
earnings expectations for the second quarter of fiscal 2004 by
more than 70% based upon an internal review, purportedly
conducted in conjunction with Ferro's closing its books for the
quarter, which unearthed a multi-million dollar overstatement of
earnings resulting from certain unspecified accounting
manipulations. On this news, the price of Ferro fell $4.00 per
share, more than 16%, to close at $20.68 per share.
For more details, contact Nancy A. Kulesa of Schatz & Nobel,
P.C. by Phone: (800) 797-5499 or by E-mail: sn06106@aol.com or
visit their Web site: http://www.snlaw.net
FERRO CORPORATION: Schiffrin & Barroway Files OH Securities Suit
----------------------------------------------------------------
The law firm of Schiffrin & Barroway, LLP initiated a class
action lawsuit in the United States District Court for the
Northern District of Ohio on behalf of all securities purchasers
of Ferro Corp. (NYSE: FOE) ("Ferro" or the "Company") from
October 28, 2003 through July 22, 2004, inclusive (the "Class
Period").
The complaint charges Ferro, Hector R. Ortino, and Thomas M.
Gannon with violations of Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder. According to the complaint, defendants issued a
series of material misrepresentations to the market between
October 28, 2003 and July 22, 2004, about the Company's
financial condition thereby artificially inflating the price of
Ferro's shares. More specifically, the Complaint alleges that
the Company failed to disclose and misrepresented the following
material adverse facts, which were known to defendants or
recklessly disregarded by them:
(1) that the Company's financial results were materially
overstated;
(2) that the Company's Polymer Additives business unit
overstated the business unit's performance because of
its inability to raise selling prices to keep pace with
raw material costs;
(3) that the Company's Polymer Additives business unit also
understated its operating costs by failing to report
the increasing losses that were plaguing the Company
thereby affecting the reliability of the Company's
forecasting process;
(4) that the Company lacked adequate internal controls; and
(5) that as a result of the above, the Company's financial
statements were not in conformity with Generally
Accepted Accounting Principles ("GAAP") and were
materially overstated at all relevant times.
On July 23, 2004, defendants revealed that the Company was
slashing earnings expectations for the second quarter of fiscal
2004 by more than 70% based upon an internal review, purportedly
conducted in conjunction with Ferro's closing its books for the
quarter, which unearthed a multi-million-dollar overstatement of
earnings resulting from certain unspecified accounting
manipulations. News of this shocked the market. Shares of Ferro
plunged $4.00 per share, or 16.21 percent, to close at $20.68
per share on unusually high trading volume.
For more details, contact Marc A. Topaz, Esq. or Darren J.
Check, Esq. of Schiffrin & Barroway, LLP by Mail: Three Bala
Plaza East, Suite 400, Bala Cynwyd, PA 19004 Phone:
1-888-299-7706 or 1-610-667-7706 by E-mail: info@sbclasslaw.com
FOCAL COMMUNICATIONS: Kaplan Fox Lodges Securities Lawsuit in NY
----------------------------------------------------------------
The law firm of Kaplan Fox & Kilsheimer LLP initiated a class
action, on behalf of Los Angeles Employees Retirement
Association ("LACERA"), against Citigroup Inc. ("Citigroup"),
Salomon Smith Barney Inc. ("Salomon"), Citigroup Global Markets,
Inc. and Jack Grubman, in the United States District Court for
the Southern District of New York on behalf of all persons or
entities who purchased the common stock of Focal Communications,
Inc. ("Focal" or the "Company") (NASDAQ: FCOM) between July 29,
1999 through August 13, 2001, inclusive (the "Class Period").
LACERA is a public pension fund that manages assets of
approximately $30 billion for 87,624 active Los Angeles County
employees, and 47,233 retired members. LACERA distributes almost
$1.3 billion each year in retirement benefits.
The complaint alleges that Defendants violated the federal
securities laws by issuing false and misleading analyst reports
regarding Focal that recommended the purchase of Focal common
stock and which set price targets for Focal common stock,
without any reasonable factual basis. In issuing Focal reports,
in which it recommended the purchase of Focal common stock,
Defendants failed to disclose material, non-public, adverse
information which contradicted their recommendation to purchase
Focal stock. Throughout the Class Period, Defendants maintained
a "Buy" recommendation on Focal in order to obtain and support
lucrative financial deals for Salomon.
The Class Period begins on July 29, 1999, the date when Salomon
"initiated coverage" of and issued their first report on Focal.
The Class Period ends on August 13, 2001, the date Defendants
belatedly downgraded Focal from a "Buy" to a "Neutral."
As a result of Defendants' false and misleading analyst reports,
Focal common stock traded at artificially inflated levels during
the class period.
For more details, contact Robert N. Kaplan, Frederic S. Fox,
Donald R. Hall of Kaplan Fox & Kilsheimer LLP by Mail: 805 Third
Ave., 22nd Floor, New York, NY 10022 by Phone: 800-290-1952 or
212-687-1980 by Fax: 212-687-7714 or by E-mail:
rkaplan@kaplanfox.com or ffox@kaplanfox.com or
dhall@kaplanfox.com
NASSDA CORPORATION: Brian M. Felgoise Lodges CA Securities Suit
---------------------------------------------------------------
The law offices of Brian M. Felgoise, P.C. commenced a
securities class action on behalf of shareholders who acquired
Nassda Corporation (NASDAQ: NSDA) securities between December
13, 2001 and June 11, 2004, inclusive (the Class Period),
including those who acquired their shares pursuant to its
Initial Public Offering ("IPO").
The case is pending in the United States District Court for the
Northern District of California, against the company and certain
key officers and directors.
The action charges that defendants violated the federal
securities laws by issuing a series of materially false and
misleading statements to the market throughout the Class Period
which statements had the effect of artificially inflating the
market price of the Company's securities. No class has yet been
certified in the above action.
For more details, contact Brian M. Felgoise, Esq. by Mail: 261
Old York Road, Suite 423, Jenkintown, PA 19046 by Phone:
(215) 886-1900 or by E-mail: FelgoiseLaw@aol.com
NASSDA CORPORATION: Lerach Coughlin Lodges Securities Suit in CA
----------------------------------------------------------------
The law firm of Lerach Coughlin Stoia & Robbins LLP initiated a
class action has been commenced in the United States District
Court for the Northern District of California on behalf of
purchasers of Nassda Corporation ("Nassda") (NASDAQ:NSDA)
publicly traded securities during the period between December
13, 2001 and June 11, 2004 (the "Class Period"), including those
who acquired their shares pursuant to its Initial Public
Offering ("IPO").
The complaint charges Nassda and certain of its officers and
directors with violations of the Securities Exchange Act of
1934. Nassda is a provider of full-chip circuit simulation and
analysis software for the design and verification of complex
nanometer-scale semiconductors.
According to the complaint, Nassda began licensing its software
in July 1999. Nassda's founders are all former employees of
Synopsys Corporation ("Synopsys"), the World's second-largest
maker of electronic design automation software. Synopsys filed
two suits against the Company, including a complaint in state
court that alleges misappropriation of trade secrets and a suit
in federal court charging patent infringement. Synopsys is the
owner of United States Patent No. 5,878,053 (the "'053 patent"),
entitled "Hierarchical Power Network Simulation and Analysis
Tool for Reliability Testing of Deep Submicron Designs." The
complaint alleges that during the Class Period, Nassda was
infringing on the Synopsys '053 patent by making, using,
selling, distributing, advertising, marketing and creating
source code for products, including Nassda's Hierarchical
Storage and Isomorphic Matching ("HSIM") software product.
Synopsys has alleged that Nassda has actively induced
infringement of, or contributed to the infringement of, the '053
patent by making infringing products and creating source code
for infringing products and then selling, distributing,
advertising and marketing those infringing products to others.
Synopsys gave Nassda actual notice of the '053 patent and sought
from Nassda information that would assist Synopsys in further
investigating the extent to which Nassda's products are within
the scope of each claim of the '053 patent. Nassda refused to
provide substantive information in response to this request.
Synopsys informed Nassda that it was infringing the '053 patent,
but Nassda has continued to pursue its infringing activities.
Several current employees of Nassda were formerly key employees
of Synopsys who left Synopsys en masse to develop Nassda's
infringing product. These employees knew or should have known
that their actions, in creating, selling and distributing
Nassda's infringing software products, constituted patent
infringement.
On January 10, 2003, a judge ruled that some of Nassda's
founders copied proprietary source code from Synopsys to help
develop their software. The judge found that certain former
Synopsys employees viewed Synopsys products days before leaving
Synopsys and then used those products to develop Nassda's
programs used in semiconductor design.
These disclosures caused Nassda's stock to decline by 50% to
less than $6 per share before closing at $7.10 per share on
January 10, 2003, on volume of more than 5.7 million shares.
Then on Monday June 14, 2004, Nassda revealed that the
California state court on June 11, 2004 issued orders against
Nassda and individual defendants named in the litigation with
Synopsys. These orders limited Nassda's defenses regarding the
timing and the development of the initial HSIM source code and
the evidence that Nassda and the remaining individual defendants
could present at trial. The court's orders established as fact
that the first 60,000 lines of source code of HSIM and all ideas
and concepts reflected therein were derived from Synopsys's
source code or other Synopsys materials while the individual
defendants were employed by Synopsys. The court also ruled that
Nassda and the individual defendants acted in concert to
intentionally alter, destroy, lose or misplace items requested
in discovery and conceal evidence. The Company's shares
plummeted to below $4.00 per share on this news.
For more details, contact William Lerach or Darren Robbins of
Lerach Coughlin Stoia & Robbins LLP by Phone: 800-449-4900 or by
E-mail: wsl@lcsr.com or visit their Web site:
http://www.lcsr.com/cases/nassda/
NASSDA CORPORATION: Schiffrin & Barroway Files CA Stock Lawsuit
---------------------------------------------------------------
The law firm of Schiffrin & Barroway, LLP initiated a class
action lawsuit in the United States District Court for the
Northern District of California on behalf of all purchasers of
the common stock of Nassda Corporation (Nasdaq: NSDA) from
December 13, 2001 through June 11, 2004, inclusive (the "Class
Period").
The complaint charges Nassda and certain of its officers and
directors with violations of the Securities Exchange Act of
1934. Nassda is a provider of full-chip circuit simulation and
analysis software for the design and verification of complex
nanometer-scale semiconductors. According to the complaint,
Nassda began licensing its software in July 1999. Nassda's
founders are all former employees of Synopsys Corporation
("Synopsys"), the world's second-largest maker of electronic
design automation software. Synopsys filed two suits against the
Company, including a complaint in state court that alleges
misappropriation of trade secrets and a suit in federal court
charging patent infringement. Synopsys is the owner of United
States Patent No. 5,878,053 (the "'053 patent"), entitled
"Hierarchical Power Network Simulation and Analysis Tool for
Reliability Testing of Deep Submicron Designs." The complaint
alleges that during the Class Period, Nassda was infringing on
the Synopsys '053 patent by making, using, selling,
distributing, advertising, marketing and creating source code
for products, including Nassda's Hierarchical Storage and
Isomorphic Matching ("HSIM") software product. Synopsys has
alleged that Nassda has actively induced infringement of, or
contributed to the infringement of, the '053 patent by making
infringing products and creating source code for infringing
products and then selling, distributing, advertising and
marketing those infringing products to others. Synopsys gave
Nassda actual notice of the '053 patent and sought from Nassda
information that would assist Synopsys in further investigating
the extent to which Nassda's products are within the scope of
each claim of the '053 patent. Nassda refused to provide
substantive information in response to this request. Synopsys
informed Nassda that it was infringing the '053 patent, but
Nassda has continued to pursue its infringing activities.
Several current employees of Nassda were formerly key employees
of Synopsys who left Synopsys en masse to develop Nassda's
infringing product. These employees knew or should have known
that their actions, in creating, selling and distributing
Nassda's infringing software products, constituted patent
infringement.
On January 10, 2003, a judge ruled that some of Nassda's
founders copied proprietary source code from Synopsys to help
develop their software. The judge found that certain former
Synopsys employees viewed Synopsys products days before leaving
Synopsys and then used those products to develop Nassda's
programs used in semiconductor design. These disclosures caused
Nassda's stock to decline by 50% to less than $6 per share
before closing at $7.10 per share on January 10, 2003, on volume
of more than 5.7 million shares.
Then on Monday, June 14, 2004, Nassda revealed that the
California state court on June 11, 2004 issued orders against
Nassda and individual defendants named in the litigation with
Synopsys. These orders limited Nassda's defenses regarding the
timing and the development of the initial HSIM source code and
the evidence that Nassda and the remaining individual defendants
could present at trial. The court's orders established as fact
that the first 60,000 lines of source code of HSIM and all ideas
and concepts reflected therein were derived from Synopsys's
source code or other Synopsys materials while the individual
defendants were employed by Synopsys. The court also ruled that
Nassda and the individual defendants acted in concert to
intentionally alter, destroy, lose or misplace items requested
in discovery and conceal evidence. The Company's shares
plummeted to below $4.00 per share on this news.
For more details, contact Marc A. Topaz, Esq. or Darren J.
Check, Esq. of Schiffrin & Barroway, LLP by Mail: Three Bala
Plaza East, Suite 400, Bala Cynwyd, PA 19004 Phone:
1-888-299-7706 or 1-610-667-7706 by E-mail: info@sbclasslaw.com
RED HAT: Kaplan Fox Lodges Securities Fraud Lawsuit in E.D. NC
--------------------------------------------------------------
The law firm of Kaplan Fox & Kilsheimer LLP initiated a class
action suit in the United States District Court for the Eastern
District of North Carolina against Red Hat, Inc. ("Red Hat" or
the "Company") (NASDAQ: RHAT) and certain of its officers and
directors, on behalf of all persons or entities who purchased
the publicly traded securities of Red Hat between December 18,
2003 and July 12, 2004, inclusive (the "Class Period"). The case
number for the action is 5:04-CV-531.
The complaint alleges that during the Class Period, defendants
violated Sections 10(b) and 20(a) of the Securities and Exchange
Act of 1934 by issuing materially false and misleading
statements about the Company's financial results that caused Red
Hat's shares to trade at artificially inflated levels.
Specifically, the complaint alleges defendants violated federal
securities laws by reporting materially inflated revenues, net
income, and operating profits, by reporting that it had earned a
greater amount of revenue than the Company had actually earned.
As a result of defendants' accounting machinations, the price of
Red Hat common stock is alleged to have traded at artificially
inflated prices.
On July 13, 2004, in a press release, the Company admitted that
revenue had been incorrectly reported during the Class Period
and that the Company would restate its audited financial results
for its 2002, 2003 and 2004 fiscal years as well as its
unaudited financial statements for its fiscal quarter ended May
31, 2004. Following discussions with the Company's independent
auditors, Red Hat reportedly began accounting for revenue from
subscription agreements on a daily basis over the term of the
contract. Previously, the company accounted for the subscription
revenue on a monthly basis. The Company also revealed that the
SEC was investigating the accuracy of one of its fiscal year 10-
K reports. On this news, the Company's stock price dropped more
than 22% to close at $15.73, amid heavy trading volume.
For more details, contact Frederic S. Fox, Jeffrey P. Campisi or
Joel B. Strauss of Kaplan Fox & Kilsheimer LLP by Mail: 805
Third Ave., 22nd Floor, New York, NY 10022 by Phone:
800-290-1952 or 212-687-1980 by Fax: 212-687-7714 or by E-mail:
ffox@kaplanfox.com or jcampisi@kaplanfox.com or
jstrauss@kaplanfox.com OR Laurence D. King of Kaplan Fox &
Kilsheimer LLP by Mail: 555 Montgomery St., San Francisco, CA
94111 by Phone: 415-772-4700 by Fax: 415-772-4707 or by E-mail:
lking@kaplanfox.com
SALESFORCE.COM INC: Schiffrin & Barroway Files NC Stock Lawsuit
---------------------------------------------------------------
The law firm of Schiffrin & Barroway, LLP initiated a class
action lawsuit in the United States District Court for the
Eastern District of North Carolina on behalf of all purchasers
securities of salesforce.com, inc. (NYSE: CRM) ("salesforce" or
the "Company") from June 21, 2004 through July 21, 2004,
inclusive (the "Class Period").
The complaint charges that salesforce, Marc R. Benioff, and
Steve Cakebread violated the Securities Exchange Act of 1934.
More specifically, the Complaint alleges that the Company failed
to disclose and misrepresented the following material adverse
facts, which were known to defendants or recklessly disregarded
by them:
(1) that the Company knew or recklessly disregarded the
fact that its revenues and earnings per share were
steadily declining;
(2) that the defendants concealed the aforementioned facts
from the investing public in order to boost the price
of the I.P.O., which netted the Company $126 million;
and
(3) and that as a consequence of the foregoing, defendants
lacked a reasonable basis for their positive statements
about the Company's growth and progress.
On July 21, 2004, salesforce warned that profit and revenue for
the full year will be lower than expected, and the stock
promptly plunged. Shares of salesforce fell $4.36 per share or
27.15 percent, on July 21, 2004, to close at $11.70 per share.
For more details, contact Marc A. Topaz, Esq. or Darren J.
Check, Esq. of Schiffrin & Barroway, LLP by Mail: Three Bala
Plaza East, Suite 400, Bala Cynwyd, PA 19004 Phone:
1-888-299-7706 or 1-610-667-7706 by E-mail: info@sbclasslaw.com
SYNOVIS LIFE: Wolf Haldenstein Files Securities Fraud Suit in MN
----------------------------------------------------------------
The law firm of Wolf Haldenstein Adler Freeman & Herz LLP
initiated a class action lawsuit in the United States District
Court for the District of Minnesota, on behalf of all persons
who purchased or otherwise acquired the securities of Synovis
Life Technologies, Inc. ("Synovis" or the "Company") (Nasdaq:
SYNO) between October 16, 2003 and May 18, 2004, inclusive, (the
"Class Period") against defendants Synovis and certain officers
and directors of the Company.
The case name is Sharon v. Synovis Life Technologies, Inc., et
al.
The complaint alleges that defendants violated the federal
securities laws by issuing materially false and misleading
statements throughout the Class Period that had the effect of
artificially inflating the market price of the Company's
securities.
The complaint further alleges that defendants' statements during
the class period were materially false and misleading when made
because they failed to disclose or indicate the following:
(1) the Company's surgical business and interventional
business were experiencing serious financial problems
and Synovis failed to adequately adapt its business
model to the highly competitive contract manufacturing
business;
(2) the Company's surgical business lagged because of
disappointing sales of Synovis's Peri-Strips product,
specifically the fact that Peri-Strips are only used in
25% of gastric by-pass procedures;
(3) reimbursement pressures, lack of trained gastric by-
pass surgeons, and a new competing product from Gore
Medical;
(d) the performance of the Company's interventional
business suffered as Synovis's largest customers did
not place orders due to continued inventory buildups
and had little to zero growth prospects;
(e) as a result of the above, the defendants' fiscal 2004
projections of $.56 - $.60 EPS and $75 - $79 million in
revenues were lacking in any reasonable basis when
made.
For more details, contact Fred Taylor Isquith, Esq., Gregory M.
Nespole, Esq., or Derek Behnke of Wolf Haldenstein Adler Freeman
& Herz LLP by Mail: 270 Madison Avenue, New York, NY 10016 by
Phone: (800) 575-0735 by E-mail: classmember@whafh.com or visit
our Web site: http://www.whafh.com/cases/synovis.htm
WHITE ELECTRONIC: Schiffrin & Barroway Lodges AZ Securities Suit
----------------------------------------------------------------
The law firm of Schiffrin & Barroway, LLP initiated a class
action lawsuit in the United States District Court for the
District of Arizona on behalf of all securities purchasers of
White Electronic Designs Corporation (Nasdaq: WEDC) ("WEDC" or
the "Company") from January 23, 2003 through June 9, 2004,
inclusive (the "Class Period").
The complaint charges that WEDC, Hamid R. Shokrogozar, Edward A.
White, and William J. Rodes violated the Securities Exchange Act
of 1934. More specifically, the Complaint alleges that the
Company failed to disclose and misrepresented the following
material adverse facts, which were known to defendants or
recklessly disregarded by them:
(1) that the Company improperly recognized revenues from
sales to its reseller by booking revenue when the goods
were shipped to the reseller rather than at the time
when the resellers sold the product to its end
customer;
(2) that the Company's financial results for the first
three quarters of 2003 were in violation of Generally
Accepted Accounting Principles ("GAAP");
(3) that as a consequence of the foregoing, the Company
needed to defer $1,116,000 of net sales and $741,000 of
related gross profit for 2003;
(4) that the Company's financial results were materially
and artificially inflated at all relevant times;
(5) that defendants knew or recklessly disregarded that a
shift in military spending from weapons and equipment
procurement programs to spending in support of other
military priorities caused a significant reduction in
the Company's net income; and
(6) that as a consequence of the foregoing, defendants
lacked a reasonable basis for their positive statements
about the Company's growth and progress.
On June 9, 2004, WEDC announced that it expected net sales for
the third fiscal quarter ending July 3, 2004 would be between
$24 million and $25 million, as compared to $28.9 million in the
second quarter of fiscal 2004. News of this shocked the market.
Shares of WEDC fell $.83 per share or 13.86 percent on June 10,
2004 to close at $5.16 per share.
For more details, contact Marc A. Topaz, Esq. or Darren J.
Check, Esq. of Schiffrin & Barroway, LLP by Mail: Three Bala
Plaza East, Suite 400, Bala Cynwyd, PA 19004 Phone:
1-888-299-7706 or 1-610-667-7706 by E-mail: info@sbclasslaw.com
*********
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the Class Action Reporter. Submissions
via e-mail to carconf@beard.com are encouraged.
Each Friday's edition of the CAR includes a section featuring
news on asbestos-related litigation and profiles of target
asbestos defendants that, according to independent researches,
collectively face billions of dollars in asbestos-related
liabilities.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Class Action Reporter is a daily newsletter, co-published by
Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland
USA. Glenn Ruel Se¤orin, Aurora Fatima Antonio and Lyndsey
Resnick, Editors.
Copyright 2004. All rights reserved. ISSN 1525-2272.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
prior written permission of the publishers.
Information contained herein is obtained from sources believed
to be reliable, but is not guaranteed.
The CAR subscription rate is $575 for six months delivered via
e-mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Christopher
Beard at 240/629-3300.
* * * End of Transmission * * *