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/raid1/www/Hosts/bankrupt/CAR_Public/050110.mbx C L A S S A C T I O N R E P O R T E R Monday, January 10, 2005, Vol. 7, No. 6 Headlines 3M CORPORATION: Antitrust Lawsuits Challenges Firm's Dominance ACE HOFFMAN: PA Attorney General Launches Consumer Fraud Lawsuit AHOLD NV: Dutch Court Orders Formal Management Investigation AMERICAN STOCK: Shareholders Launch Securities Suits in S.D. NY APPLE COMPUTER: Antitrust Suit Initiated in CA Over iPod, iTunes APPLE COMPUTER: Antitrust Suit Initiated in CA Over iPod, iTunes A.R. ACCESSORIES: Inks Settlement For Employee Back Wages Claim AT&T CORPORATION: To Pay $50T To Improperly Billed MO Residents BANK OF AMERICA: To Enter Mediation, Move Closer To Settlement CALIFORNIA: Suit Targets MLS Price-Fixing Settlement Attorneys CAPITAL CANDY: Enters Consent Decree For Contraband Cigarettes CNL RESTAURANTS: Firms Lodge Breach of Fiduciary Duty Suit in TX ENT & IMLER: Shareholders Launch Securities Fraud Lawsuit in IN EQUIFAX INFORMATION: Reaches Pact For VT Consumer Fraud Charges FEDERATED DEPARTMENT: NY Jury Indicts Former Exec For Perjury FINANCIAL NETWORK: Inks Settlement With NY AG Over Ponzi Scheme FLORIDA: Orange Tree Resident Lodges Lawsuit Over Water Quality FRANCE: Considers Installation of System Allowing Class Actions FRIEDMAN'S INC.: Faces TX Attorney General's Consumer Fraud Suit FRONT PAGE: Reaches Settlement For NY AG Wage Violations Probe GEOPHARMA INC.: Shareholders Launch Securities Suits in NY, FL HEARTLAND FARM: MO AG Nixon Files Suit Over Consumer Fraud ITF ENTERPRISES: NY AG Spitzer Gets TRO Against Pyramid Scheme MARYLAND: Judge Rules HUD Blundered On Baltimore Public Housing MEDCO HEALTH: Inks Deceptive Trade Practices Settlement With SD MISSOURI: MO AG Nixon Obtains TRO V. Fraudulent EBay Retailer ORBELLE TRADE: Recalls 7,700 Amber Cribs Due To Injury Hazard PRAECIS PHARMACEUTICALS: Shareholders File MA Securities Suits ROCHE DIAGNOSTICS: PA AG Warns V. Glucose Blood Testing Strips RAMSEY AUTO: Reaches Pact With NY AG Over Fraudulent Advertising ROYAL GROUP: Shareholders File Securities Fraud Suits in S.D. NY SCHERING-PLOUGH: PA AG Gets $6.175M Share in Drug Pricing Pact SUPPORTSOFT INC.: Shareholders Lodge Securities Suits in S.D. CA UNITED STATES: Group Says Tort Reform Kills Consumer Protection UNITED STATES: President Bush Renews Efforts To Curb Lawsuits VIMPEL-COMMUNICATIONS: Shareholder Lodge Stock Suits in S.D. NY WAL-MART STORES: MA Judge Grants Approval To Employees Wage Suit WORLDCOM INC.: Former Alltel Executive Part Of $18M Settlement YODER FORD: Reaches Settlement for TX AG's Consumer Fraud Suit New Securities Fraud Cases ANCHOR GLASS: Lerach Coughlin Lodges Securities Fraud Suit in FL ATHEROGENICS INC.: Brodsky & Smith Lodges Securities Suit in NY ATHEROGENICS INC.: Charles J. Piven Lodges Securities Suit in NY ATHEROGENICS INC.: Murray Frank Lodges Securities Suit in NY ATHEROGENICS INC.: Schatz & Nobel Lodges Securities Suit in NY CONEXANT SYSTEMS: Braun Law Group Lodges Securities Suit in CA CHINA AVIATION: Murray Frank Lodges Securities Fraud Suit in NY KRISPY KREME: Keller Rohrback Initiates ERISA Investigation SUPPORTSOFT INC.: Milberg Weiss Lodges Securities Suit in CA ********* 3M CORPORATION: Antitrust Lawsuits Challenges Firm's Dominance -------------------------------------------------------------- 3M Corporation, the company that invented Scotch tape 75 years ago and today makes about 90 percent of all transparent and invisible tape sold in the United States is currently facing a growing list of antitrust lawsuits, the Associated Press reports. Particularly, retailers around the country are suing the company, claiming that a rebate program it ran during the late 1990s further stifled what little competition existed in the household tape business. One of this retailers is Meijer Inc., a family-owned Michigan company that operates 160 huge general merchandise and grocery stores in the Midwest, recently filed a class action lawsuit in mid-December against the 3M Corporation on behalf of large retailers who bought Scotch tape and other generic "private label" tapes made by 3M in the late 1990s. If approved by a judge, the class could include other big retailers, like Staples and Kmart. Another retailer who is declaring war on 3M is Lakeland, Florida-based Publix Super Markets Inc., one of the biggest supermarket companies, which had filed a similar lawsuit in September, saying 3M's dominance of the transparent tape market had hurt its hundreds of stores in the Southeast. In August, a federal judge gave a St. Louis, Missouri-based school supplies company the approval it needed to pursue a class-action lawsuit on behalf of smaller retailers who bought Scotch tape (but not the private-label brands) after 1998. Other suits have also been filed in California, Florida, Tennessee, Wisconsin and Kansas. The wave of suits have been prompted by the U.S. Supreme Court's decision in June not to overturn a $68 million judgment against St. Paul, Minnesota-based 3M in a case brought by one of its few competitors, the tape maker LePage's Inc. Attorneys for Pittsburgh-based LePage's had argued that the rebate plan, which tied the price of tape to how much 3M product a store sold, had made it difficult for stores to sell any other brand. A federal jury in Philadelphia agreed and sided with LePage's in a 1999 verdict. Since that ruling, retailers are now lining up to say that they, too, have been hurt by the lack of competition. The Meijer and Publix Super Markets cases, and the case of the school supplies company, the Bradburn Parent/Teacher Store Inc., were all filed in federal court in Philadelphia. The lawsuits though are expected to take many months, if not years, to be resolved. ACE HOFFMAN: PA Attorney General Launches Consumer Fraud Lawsuit ---------------------------------------------------------------- Pennsylvania Attorney General Jerry Pappert filed a lawsuit against Luzerne County photographers and their businesses accused of accepting thousands of dollars from consumers for wedding, graduation, baptism and school photos that they failed to take, deliver or in some cases correct after consumers complained that they were of poor quality. The lawsuit is the result of an investigation into complaints from consumers located in Luzerne County, Pennsylvania, plus New York and Maryland. AG Pappert said the suit was filed against both John Kasenchak and his wife Maureen, individually, and doing business as Ace Hoffman Paramount Studios and AEJ Enterprises, Inc. The Kasenchak's and AEJ Enterprises are located at 575 Westmoreland Ave., Kingston, Luzerne County. Ace Hoffman Paramount Studios which is no longer in operation was located at 222 West Main St., Plymouth, Luzerne County. According to investigators with Pappert's Bureau of Consumer Protection, the defendants through 2003 entered into contracts with consumers and accepted more than $4,000 in deposits to photograph private weddings, graduations or other special occasions. During that time, eight consumers filed official complaints with the Bureau after they paid the defendants a deposit or the entire amount and never received their pictures. In some cases, the defendants delivered partial orders or pictures that were not the quality that was agreed to in their contracts. Others said they paid the defendants for photography services that were never performed because the business closed prior to the scheduled events. In all cases, consumers said they were unsuccessful in their repeated attempts to either obtain their photographs or refunds. AG Pappert said a newly married Luzerne County couple told his office that they spent a full year trying to contact the defendants to obtain their finished wedding photographs. To date, they never received the pictures and only have the proofs of their special day after paying the defendants more than $1,200 for a complete wedding photo package. Others said they paid the defendants for photography services and have no pictures of their private graduation, baptism or confirmation ceremonies. The Commonwealth is asking the court to require the defendants to: (1) Pay more than $4,100 in restitution to consumers identified in the lawsuit, plus additional restitution to those who come forward with documentation that they were similarly harmed. (2) Pay civil penalties of $1,000 per violation and $3,000 for each violation involving a consumer age 60 or older. (3) Permanently forfeit their right to work in the photography business in Pennsylvania until restitution and fines are paid. (4) Pay the Commonwealth's investigation costs. AG Pappert urged consumers who suspect that they were victimized in this case to obtain a complaint form by calling 1-800-441- 2555 or visiting www.attorneygeneral.gov to file a complaint electronically. The lawsuit was filed in Luzerne County Court. The case is being handled by Senior Deputy Attorney General J.P. McGowan of Pappert's Bureau of Consumer Protection in Scranton. AHOLD NV: Dutch Court Orders Formal Management Investigation ------------------------------------------------------------ The Amsterdam Commercial Court ordered a formal investigation of Dutch retailer Ahold NV's management from January 1998 to December 2003, ruling in favor of several shareholders who demanded the probe on behalf of investors who lost billions of euros after the profit overstatement scandal in 2003, Reuters reports. In February 2003, former chief executive Cees van der Hoeven and former chief financial officer Michael Meurs resigned after news broke out that the Company inflated its earnings by more than $1 billion in 2000-2002, by exaggerating sales at its US Foodservice subsidiary. Soon after, American and Dutch regulators started a probe into the Company's accounting practices, causing the Company's shares to drop by two-thirds of their value. When Ahold posted correct, audited books for 2002 seven months late, it reported a loss of 4.33 billion euros for 2002 under U.S. accounting rules, an earlier Class Action Reporter story (October 2,2004) states. The restatement spurred several shareholder fraud class actions filed in several United States federal courts and a probe by the United States Department of Justice. In September, the Company reached an 8 million euro ($10.6 million) settlement with the Dutch public prosecutor over charges of publishing false accounts. Last October, Ahold and three former top executives settled U.S. securities fraud charges without admitting guilt. The Securities and Exchange Commission did not fine Ahold. The Company is working to restore its operational and financial position, but Amsterdam Court President Huub Willems' ruling dealt a blow to its attempts to shake off the effects of the accounting scandal. Judge Willems said three investigators would focus on Ahold's improper consolidation of certain subsidiaries, accounting irregularities at its U.S. Foodservice unit and the supervision of subsidiaries, in particular their internal controls and accounting systems. "These matters have led to much commotion in society and further investigation can shed light on issues that still need clarification," Judge Willems said, Reuters reports. The request for the probe was brought by Dutch shareholder representative group, VEB. The Public Retirement Association of Colorado (COPERA), lead plaintiff in a class action suit before the U.S. Federal District Court of Maryland, was also party to the case. The court said there was a possibility that Ahold management could have uncovered and stopped accounting irregularities at U.S. Foodservice, which Ahold acquired in 2000 for $3.6 billion. "There are founded reasons to doubt that Ahold would not have been able to detect or prevent the frauds," Willems said. The judge said Ahold's due diligence checks prior to the buy had been below standard and the group's checks on U.S. Foodservice internal control system had been insufficient, according to Reuters. He also said that Ahold's management may not have acted responsibly by consolidating the accounts of several subsidiaries it did not wholly own. The court said there were no grounds to question management's decisions after the scandal broke in February 2003, including remuneration for new chief executive Anders Moberg or the group's information and disclosure policy. Ahold board member and chief legal counsel Peter Wakkie told Reuters that the Company would prefer a settlement with shareholders over a new, and perhaps prolonged, investigation. He said that the ".probe must be wrapped up soon because we have to get on with retailing. We would prefer a rapid settlement with shareholders to another investigation." He added that the Company would fully cooperate with the investigation and try to ensure it is concluded as quickly as possible. Andrew Entwistle, an attorney at law acting for COPERA in the class action, said he expected the U.S. court case to last at least another year. "We are always open to a settlement proposal," he told Reuters. AMERICAN STOCK: Shareholders Launch Securities Suits in S.D. NY --------------------------------------------------------------- The American Stock Exchange, AMEX Specialist Firms and Ameritrade: Options listed at the American Stock Exchange face a securities class action filed in the United States District Court for the Southern District of New York. The suit alleges that defendants, in clear violation of and contrary to the Firm Quote Rule, materially misrepresented both real time electronically displayed "bid" Equals and "ask" Equals quotes on listed equity options and that customer orders would be executed instantaneously when plaintiff (and other "Direct Access" Equals customers) accepted the bid or offer that was electronically displayed by the particular options specialist. Instead, defendants knowingly and intentionally, systematically refused to execute stock option transactions when Plaintiff, and others, submitted a limit order that specifically accepted the displayed quote or was specifically within the electronically displayed bid and ask -- which, under the appropriate circumstances, should have been executed instantaneously. Plaintiff claims that the wrongful conduct described above violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 and gives rise to state law claims such as breach of contract. This lawsuit was filed on behalf of investors who sought to execute direct access limit orders to buy or sell options listed at the American Stock Exchange by certain specialist firms and who were wrongfully refused executions and suffered damages between April 2, 2001 and December 3, 2004 inclusive. The plaintiff firms in this litigation are: (1) Lovell Stewart Halebian LLP, 500 Fifth Avenue, New York, NY, 10110, Phone: 212.608.1900, Fax: 212.719.4677, E-mail: info@lshllp.com (2) Squitieri & Fearon, LLP, 420 5th Avenue, 18th Floor, New York, NY, 10018, Phone: 212.575.2092, Fax: 212.575.2184, E-mail: lee@sfclasslaw.com APPLE COMPUTER: Antitrust Suit Initiated in CA Over iPod, iTunes ---------------------------------------------------------------- Attorneys have filed a 10-count lawsuit against Apple Computer, Inc. claiming that the ties between the company's iTunes music download service and its iPod violate state and federal antitrust law, the InternetNews.com reports. Titled, Slattery v. Apple, the suit was filed in the U.S. District Court for Northern District of California in San Jose and is a plea to allow the case to become a class action lawsuit on behalf of anyone who has used the iTunes service or bought an iPod from Apple since April 28, 2003, the day iTunes first opened shop. Though declining to comment further on the suit, according to Eric Belfi of New York-based Murray, Frank & Sailer LLP, one of the lawyers representing Thomas Slattery, a California resident, the suit is also seeking compensation for the affected users and to "disgorge its ill-gotten gains, and awarding the proceeds of this disgorgement to" the plaintiff and class action members. The suit is claiming that Apple broke the law when it altered the industry standard Advanced Audio Codec (AAC) file format and used it to restrict the music's usage outside the iPod. Songs sold to the public on iTunes, which is one of the most popular legal online music download sites, use the AAC with Fairplay Digital Rights Management (DRM), called AAC Protected. Furthermore, the suit claims that with the altered AAC files, users can't play the music on any other portable digital music player than iPod and they can't convert the music files to MP3 files. It is also claiming that Apple has rigged the hardware and software on its iPod so that files downloaded from other online music stores can't be directly played on the device. The suit further contends, "At the same time, by engaging in this unlawful conduct, Apple has managed to unlawfully maintain its monopoly market power in the market for online music sales because owners of the monopolized iPod product who wish to purchase music tracks online have no choice, given Apple's conduct, but to purchase these tracks only from Apple's iTunes store." Apple has been more than willing to cut deals with the iPod's popularity, but has come down hard on anyone trying to circumvent its technology. A year ago, HP arranged a tit-for-tat arrangement that let the company sell HP-branded digital music players based on the iPod in exchange for pre-installing the iTunes software on certain of its desktop and notebook lines. Rival online music providers have had a harder time, though. RealNetworks CEO Rob Glaser reportedly sent an e-mail to Mr. Jobs in April requesting Apple's Fairplay DRM license so his Rhapsody subscribers could listen to music on iPods. The deal didn't go through, and three months later Mr. Glaser came out with Harmony Technology, which reverse-engineered Apple's technology. Apple officials responded by calling Real hackers and mulling a lawsuit. The lawsuit, which was filed recently, states Apple's defense of its Fairplay DRM is to protect copyrights owned by the artists or music labels. But, according to the suit, "That defense, however, is both irrelevant and unavailing. In fact, other than Apple's iTunes, no other online music vendor has such a restriction in place; yet these other online vendors still manage to provide copyright protection mechanisms to artists and record labels -- often the same artists and labels whose same songs are sold online through iTunes." APPLE COMPUTER: Antitrust Suit Initiated in CA Over iPod, iTunes ---------------------------------------------------------------- Attorneys have filed a 10-count lawsuit against Apple Computer, Inc. claiming that the ties between the company's iTunes music download service and its iPod violate state and federal antitrust law, the InternetNews.com reports. Titled, Slattery v. Apple, the suit was filed in the U.S. District Court for Northern District of California in San Jose and is a plea to allow the case to become a class action lawsuit on behalf of anyone who has used the iTunes service or bought an iPod from Apple since April 28, 2003, the day iTunes first opened shop. Though declining to comment further on the suit, according to Eric Belfi of New York-based Murray, Frank & Sailer LLP, one of the lawyers representing Thomas Slattery, a California resident, the suit is also seeking compensation for the affected users and to "disgorge its ill-gotten gains, and awarding the proceeds of this disgorgement to" the plaintiff and class action members. The suit is claiming that Apple broke the law when it altered the industry standard Advanced Audio Codec (AAC) file format and used it to restrict the music's usage outside the iPod. Songs sold to the public on iTunes, which is one of the most popular legal online music download sites, use the AAC with Fairplay Digital Rights Management (DRM), called AAC Protected. Furthermore, the suit claims that with the altered AAC files, users can't play the music on any other portable digital music player than iPod and they can't convert the music files to MP3 files. It is also claiming that Apple has rigged the hardware and software on its iPod so that files downloaded from other online music stores can't be directly played on the device. The suit further contends, "At the same time, by engaging in this unlawful conduct, Apple has managed to unlawfully maintain its monopoly market power in the market for online music sales because owners of the monopolized iPod product who wish to purchase music tracks online have no choice, given Apple's conduct, but to purchase these tracks only from Apple's iTunes store." Apple has been more than willing to cut deals with the iPod's popularity, but has come down hard on anyone trying to circumvent its technology. A year ago, HP arranged a tit-for-tat arrangement that let the company sell HP-branded digital music players based on the iPod in exchange for pre-installing the iTunes software on certain of its desktop and notebook lines. Rival online music providers have had a harder time, though. RealNetworks CEO Rob Glaser reportedly sent an e-mail to Mr. Jobs in April requesting Apple's Fairplay DRM license so his Rhapsody subscribers could listen to music on iPods. The deal didn't go through, and three months later Mr. Glaser came out with Harmony Technology, which reverse-engineered Apple's technology. Apple officials responded by calling Real hackers and mulling a lawsuit. The lawsuit, which was filed recently, states Apple's defense of its Fairplay DRM is to protect copyrights owned by the artists or music labels. But, according to the suit, "That defense, however, is both irrelevant and unavailing. In fact, other than Apple's iTunes, no other online music vendor has such a restriction in place; yet these other online vendors still manage to provide copyright protection mechanisms to artists and record labels -- often the same artists and labels whose same songs are sold online through iTunes." A.R. ACCESSORIES: Inks Settlement For Employee Back Wages Claim --------------------------------------------------------------- The Wisconsin Department of Justice (DOJ) has settled a claim for back wages owed to approximately 620 former employees of A.R. Accessories, formerly of West Bend, for $2 million, Attorney General Peg Lautenschlager announced in a statement. The settlement amount will be paid by the company's three pre- bankruptcy petition lenders (Bank One, Firstar and Harris Bank & Trust-Chicago). The DOJ began prosecution of the claim in 1998, after the company filed bankruptcy. The case worked its way through four different courts, all the way to the United States Supreme Court. "This settlement demonstrates that Wisconsin will continue to fight for the rights of working families by putting their interests first and foremost when there are unpaid wages owed," AG Lautenschlager said. She continued that workers covered by the settlement would be contacted directly by the Wisconsin Department of Workforce Development (DWD), which investigated the workers' complaints for unpaid wages and referred the case to DOJ. DWD will provide employees with information about how they can participate in the settlement. AG Lautenschlager said this is not the end of the case. There are still administrative appeals filed by some of the former employees to DWD's Initial Determination of the wages owed to be dealt with. Also, DOJ is continuing to prosecute a claim against funds held by the company's Bankruptcy Liquidating Trust, perhaps another $200,000, on behalf of the workers. It could still be several months before distributions are made to workers, but the settlement with the lenders was the critical event necessary to bring this matter to closure. According to AG Lautenschlager, the key issue resolved by the lengthy court battle involved the validity of the state's wage lien, and the state's right to perfect the lien after a bankruptcy case is filed. The version of the wage lien in effect at the time the bankruptcy case was filed gave workers an absolute priority to secure unpaid wages. One of the ramifications of the state's prosecuting this case is that the wage lien statute has been amended, on three different occasions, since the fight began. "I don't think anyone would disagree with the observation that all three amendments have not favored Wisconsin employees," Lautenschlager said. "Under these provisions the workers would not be sharing the two million dollar judgment, but would instead be entitled to nothing. While today's settlement is a victory for Wisconsin workers, it also highlights the obstacles they face under the current law and the considerable work still to be done to ensure that workers are dealt with fairly in being able to collect wages they have earned and depend upon." AT&T CORPORATION: To Pay $50T To Improperly Billed MO Residents --------------------------------------------------------------- AT&T Corporation will pay $50,000 to the state of Missouri for improperly billing more than 29,000 consumers, state Attorney General Jay Nixon announced in a statement. Those Missourians who paid the improper charge will receive or already have received refunds or credits under an agreement obtained by Nixon. Beginning in January 2004, AT&T instituted a "monthly recurring charge" or a base charge of $3.95 per month for low-usage customers. AT&T mistakenly sent bills to former customers and some high-usage customers who would have been exempt from the charge. Approximately 1 million people nationwide were mistakenly billed, including 29,165 in Missouri. The improper billings in Missouri amounted to $285,147 although not everyone improperly billed paid the charges. The company attributed the billing mistakes primarily to computer coding and system errors. "No matter how these billings occurred, they amounted to several millions of dollars to consumers across the country," AG Nixon said. "AT&T needs to be held accountable to ensure that nothing like this happens again and that any consumers who paid charges they shouldn't have are made whole." The agreement, which will be filed in Cole County Circuit Court, requires AT&T to: (1) Establish and maintain a process for Missouri customers who paid improper charges to receive refunds or credits, if the customers have not already received those refunds or credits. (2) Immediately cease any collection efforts to collect the monthly recurring charge from customers who were improperly billed who did not pay those charges. (3) Implement and maintain measures to adequately respond to consumer inquiries and billing complaints. (4) Pay $50,000 to the Missouri Merchandising Revolving Fund, which is used to fund consumer protection and education efforts. For more details, contact Press Secretary Jim Gardner by Phone: 573-751-8844 by Fax: 573-751-5818 or by e-mail: communications@ago.mo.gov. BANK OF AMERICA: To Enter Mediation, Move Closer To Settlement -------------------------------------------------------------- Bank of America and Wells Fargo, both facing highly publicized class action lawsuits for charging paycheck-cashing fees, were ordered into mediation during a recent initial status conference with the court. The mediations are currently scheduled for February 8. However, according to the plaintiff's lawyer, it was disclosed in court that Bank of America and the plaintiff are close to resolving the case. "We are very optimistic about reaching a resolution with Bank of America," says Nick Roxborough, a partner of Los Angeles based Roxborough, Pomerance & Nye LLP (RPN), who filed the lawsuits. "Although ordered into mediation, Wells Fargo so far has not been so inclined to resolve this issue and has filed a motion for summary judgment, raising once again the proverbial preemption doctrine as the major lynch pin of its defense." The motion contends that any action brought against a national bank is completely preempted by federal law, explains Roxborough. To address issues Wells Fargo raised in court and to expand the scope and nature of the case, RPN filed a third amended complaint on behalf of Chaffee Enterprises Inc. -- the lead plaintiff in the Wells Fargo case -- adding causes of action for breach of contract, breach of the implied covenant of good faith and fair dealing, fraud, and negligence to its complaint. In addition, a series of documents and discovery concerning Well Fargo's $5 check cashing fee has been requested. Both class action lawsuits were originally filed last April on behalf of California employers who believe the banks' fees have placed them in violation of Section 212 of the California Labor Code, which requires that paychecks `be negotiable and payable in cash, on demand, without discount.' The suits seek injunctions to stop the banks from charging a $5 per paycheck cashing fee to employees of business payroll account holders as well as a refund of all such fees already paid by thousands of employees in California -- mostly lower-paid workers who don't hold personal checking accounts and rely on their employers' banks to cash their checks. For more details, contact Nick Roxborough of Roxborough, Pomerance & Nye LLP by Phone: 818-992-9999 OR Linda O'Hanlon of Straightline Communications by Phone: 818-386-1916 CALIFORNIA: Suit Targets MLS Price-Fixing Settlement Attorneys -------------------------------------------------------------- Arleen Freeman and James Alexander, real estate professionals who were members of Sandicor, a regional MLS formed by San Diego-area Realtor associations recently initiated a lawsuit in California Superior Court alleges that two San Diego-area lawyers "sold out" members of a multiple listing service price- fixing lawsuit, the Inman Real Estate News reports. The plaintiff are being represented by Barry & Associates, a San Francisco law firm known for real estate-related antitrust litigation against Realtor associations and MLSs. The lawsuit, which seeks $60 million in damages, alleges attorneys Daniel J. Mogin and Alexander M. Schack "secretly filed a class-action suit" in July 2004 entitled, Hemphill v. San Diego Association of Realtors that was adverse to a price-fixing litigation initiated by Ms. Freeman and Mr. Alexander, and in September 2004 "secretly settled" the case. Although Mr. Mogin could not be reached for comment, Mr. Schack told the Inman News that the allegations in the lawsuit "are untrue" and that there was "nothing secret" about the settlement process that he engaged in. He further stated, "Sometimes in class-actions, when you get to the settlement stage, people have a divergence of views about settlements." There will be a hearing on January 28 in federal court in San Diego County to consider the fairness of the settlement, he adds. According Mr. Schack, the settlement package that he put together with Mr. Mogin has a total value of about $6 million and that has worked on antitrust cases for over 15 years and class-action cases for over a decade. Barry, he also said, "attempted to get a class certified four separate times and was denied each time. "That speaks for itself," he said. Ms. Freeman, who was represented by David Barry, in 1997, filed a class-action lawsuit in California Supreme Court in San Diego County against Sandicor and five Realtor associations. In March 2003, the Ninth Circuit Court of Appeals found that there was illegal price-fixing for MLS services in San Diego County. According to the lawsuit filed this week, Mr. Mogin and Mr. Schack associated themselves with the Barry & Associates' legal team in mid-2003 to assist with the ongoing legal work relating to the Freeman case. The lawsuit alleges that both settled their lawsuit for about $168 per user of the MLS service, which is about 3 percent of the amount originally sought in the Freeman vs. San Diego Association of Realtors lawsuit. The lawsuit further states that both attorneys allegedly recruited Alan Hemphill to act as a class representative after the court in December 2003 found that Ms. Freeman and Mr. Alexander were not eligible as representatives for the class. Later, in May 2004, Mr. Mogin and Mr. Schack revealed a settlement plan "that was wholly adverse to the settlement plan" that was favored by Freeman and Alexander, the lawsuit also charges. "The likely judgment for each member of the class (sought in the Freeman case) was $5,884, amounting to over $65 million for the class," the lawsuit alleges. The suit further alleges that that the two lawyers "abandoned plaintiffs, accepted the adverse representation of Mr. Hemphill, and sold out the victim class so that they could receive an attorney's fee of $1.125 million as part of the Mr. Hemphill settlement," and the lawsuit seeks a declaration that the lawyers "committed perjury," "obstruction of justice," and "violated duties of fidelity and confidentiality" relating to their representation of Mr. Hemphill. Because of "procedural maneuvers" conducted by both attorneys, the plaintiffs concluded that it was "futile to oppose the Hemphill settlement," the lawsuit charges. A federal court in January 2004, issued an injunction against price-fixing by Sandicor and the five Realtor associations that own the MLS - the San Diego Association of Realtors, North County Association of Realtors, Pacific Southwest Association of Realtors, East San Diego Association of Realtors and the Coronado Association of Realtors. The injunction was filed January 21, 2004, in the federal district court for the Southern District of California in San Diego. In this case, the associations had argued that their MLS pricing structure was designed to avoid the possible closure of the smaller less-efficient associations at the time the regional MLS was established. The court rejected that argument as a defense against the price-fixing allegations. CAPITAL CANDY: Enters Consent Decree For Contraband Cigarettes -------------------------------------------------------------- The Chittenden Superior Court in Vermont entered a Consent Decree against Capital Candy Company, Inc. for selling contraband cigarettes, state Attorney General William Sorrell said in a statement. As part of the settlement, Capital Candy, a Barre-based distributor of cigarettes and other tobacco products, admitted that it illegally sold multiple cartons of Double Diamond brand cigarettes to Vermont retailers in October and November of 2003. Double Diamond cigarettes are manufactured by GTC Industries, Ltd. ("GTC") of Mumbai, India. The cigarettes were banned from sale in Vermont when the manufacturer failed to make certain payments required by Vermont law. Under legislation enacted in 2003 to enhance enforcement of Vermont's tobacco reporting and escrow laws, the Attorney General's Office publishes a directory of all tobacco product manufacturers whose products are approved for sale in Vermont. The law prohibits anyone from stamping or selling any tobacco products manufactured by companies not listed on the Directory. Because of past violations of Vermont law, GTC's products have not been approved for sale in Vermont since the Directory was published October 1, 2003. Capital Candy sold the banned cigarettes to retailers in Fairfield, Cambridge and Hancock, Vermont. The cigarettes were identified in a retail outlet and seized by the Department of Liquor Control. Further investigation by the Attorney General established that Capital Candy had illegally sold and distributed the product on seven separate occasions since the fall of 2003. "This lawsuit reflects our commitment to enforce this law strictly and aggressively," said Sorrell. "Capital Candy has not only admitted its violation of the law but has also adopted a new, computer-based inventory system to prevent this from happening again." The company has also been assessed a civil penalty of $5,000 and ordered to reimburse the Attorney General's Office for $4,500 in costs associated with the investigation and suit. In addition, Capital Candy has agreed that it will be subject to an automatic penalty for any future infractions of the law. Click Directory of Tobacco Products Approved for Sale in Vermont for a full listing. For more details, contact the Attorney General's office by Mail: 109 State Street, Montpelier VT 05609-1001 by Phone: (802) 828-3171 or by Fax: (802) 828-5341 CNL RESTAURANTS: Firms Lodge Breach of Fiduciary Duty Suit in TX ---------------------------------------------------------------- The law firm of Chimicles & Tikellis, LLP of Haverford, PA, the New York City-based firms of Goodkind Labaton Rudoff & Sucharow LLP and Wolf Haldenstein Adler Freeman & Herz LLP, and Dallas, TX counsel Craddock Reneker & Davis LLP initiated a class action lawsuit in the District Court of Dallas County, Texas, against CNL Restaurant Properties, Inc. ("CNLRP"), CNL Restaurant Investments, Inc., Restaurant Capital Corp., U.S. Restaurant Properties, Inc. (NYSE: USV) ("USRP") and CNL Income Fund, Ltd. I - XVIII, (collectively, the "CNL Income Funds"), and James M. Seneff, Jr., Robert A. Bourne and CNL Realty Corporation (collectively, the "General Partners"), on behalf of a class of all the Limited Partners of the CNL Income Funds ("Limited Partners" or "Class"). USRP and CNLRP are publicly owned real estate investment trusts and the 18 CNL Income Funds are publicly owned limited partnerships all of which are involved in the ownership and operation of restaurant properties located around the country. USRP is publicly traded; CNLRP stock is not traded on any exchange. The Complaint, brought by Sutter Acquisition Fund, Inc., which may be the largest single holder of units of the 18 CNL Income Funds, and Robert Lewis, an individual, charges the General Partners with breaches of both the fiduciary duties they owe to the Limited Partners and the Partnership Agreements. In addition, the Complaint alleges that Defendants CNLRP and USRP have aided and abetted the General Partners' breaches of fiduciary duties owed to the proposed Class. The action also seeks an accounting from the CNL Income Funds. Specifically, the Complaint alleges, among other things, that: (1) The CNL Income Funds are contributing 42% of the equity to the Surviving Corporation, but the CNL Income Funds' Limited Partners will receive only 33% of the Merger Consideration. The 9% spread (valued at more than $140 Million) between what the CNL Income Funds are contributing and what consideration they will be receiving is to be allocated wrongfully to the other merger participants, CNLRP and USRP. This is particularly egregious since the assets being contributed to the proposed Merger by the CNL Income Funds are of a higher overall quality than CNLRP, whose assets are substantially leveraged and include an appreciable number of assets that are tied up with tenants involved in bankruptcy proceedings. (2) The proposed Merger is a vehicle to bail out CNLRP from financial difficulties. Since General Partners Seneff and Bourne are also heavy investors in CNLRP, and own virtually no interest in the CNL Income Funds, the General Partners are in an irreconcilable conflict of interest that disables them from fulfilling their responsibilities as the General Partners of the 18 CNL Income Funds. (3) The General Partners and CNLRP have historically utilized their control and influence over the CNL Income Funds to bolster the financial consideration of CNLRP and to perpetuate the illusion that CNLRP was financially robust and could meet its distribution commitments. This was accomplished by causing certain CNL Income Funds to sell properties, sometimes at a loss, in order to raise cash to purchase properties from an affiliate of CNLRP and the General Partners, self-dealing transactions prohibited by the CNL Income Funds' Partnership Agreements and causing the CNL Income Funds to sell core properties in order to raise $30 Million in cash to be retained by the CNL Income Funds, rather than distributing it to the Limited Partners as is mandated by the Partnership Agreements, so that it can be used to fund the Merger. (4) The General Partners have also breached their fiduciary duties to the Limited Partners by, among other things: failing to explore and pursue alternative transactions to the proposed Merger that would maximize the Limited Partners' return on their investments; negotiating and participating in a Merger Agreement which constitutes wrongful self-dealing and is adverse to the interests of the Limited Partners, but is beneficial only to the other parties to the Merger including the General Partners; permitting and encouraging the conveyance, transfer and allocation of Merger Consideration rightfully belonging to the Limited Partners; causing the CNL Income Funds to participate in real estate purchases in violation of the Partnership Agreements; impermissibly retaining cash in order to effectuate the Merger that should have been distributed to the Limited Partners; and announcing that the General Partners will close the solicitation period of the Income Funds "in their sole discretion," which has the potential to seriously disadvantage the Limited Partners in the proxy solicitation process. (5) CNLRP and USRP are charged with having aided and abetted the General Partners in their breach of fiduciary duties owed to the Limited Partners by: arranging to receive Merger Consideration that is rightfully due the CNL Income Funds and allocating to the CNL Income Funds an amount that is substantially less than is mandated by the equity being contributed by the CNL Income Funds; sitting silent while the General Partner Defendants breached their fiduciary duties to the Limited Partners; retaining, instructing and encouraging the preparers of the so-called fairness opinions to distort and undervalue the CNL Income Funds; and using the CNL Income Funds as the instrumentalities and means to effect the Merger Agreement for the benefit of themselves and the other Defendants and to the detriment of the Limited Partners. The overarching objective of this action is to make certain that the Limited Partners of the CNL Income Funds receive their fair share of consideration from the proposed Merger or any other transaction that may materialize. This suit also seeks the removal and replacement of the General Partner Defendants from their positions with the CNL Income Funds. For more details, contact Nicholas E. Chimicles, Kimberly M. Donaldson or Kimberly M. Litman of CHIMICLES & TIKELLIS LLP by Mail: 361 West Lancaster Avenue, Haverford, PA 19041 by Phone: 610-642-8500 or 888-805-7848 by Fax: 610-649-3633 by E-mail: mail@chimicles.com or visit their Web site: http://www.chimicles.comOR Lawrence A. Sucharow or Beth Hoffman of GOODKIND LABATON RUDOFF & SUCHAROW LLP by Mail: 100 Park Avenue, New York, New York 10017 by Phone: 212-907-0700 by Fax: 212-818-0477 by E-Mail: info@glrslaw.com or visit their Web site: http://www.glrslaw.comOR Lawrence P. Kolker or Aya Bouchedid of WOLF HALDENSTEIN ADLER FREEMAN & HERZ LLP by Mail: 270 Madison Avenue, New York, New York 10016 by Phone: 212-545- 4600 by Fax: 212-686-0114 by E-Mail: newyork@whafh.com or visit their Web site: http://www.whafh.comOR D. Ronald Reneker of CRADDOCK RENEKER & DAVIS LLP by Mail: 3100 Monticello Avenue, Suite 550, Dallas, TX 75205 by Phone: 214-750-3550 by Fax: 214- 750-3551 by E-Mail: rreneker@dcrlawfirm.com or by visit their Web site: http://www.crdlawfirm.com. ENT & IMLER: Shareholders Launch Securities Fraud Lawsuit in IN --------------------------------------------------------------- Ent & Imler CPA Group, PC faces a securities class action filed in the United States District Court for the Southern District of Indiana, alleging that the Company, which acted as the Church Extension of the Church of God, Inc.'s (CEG) independent auditors from December 1997 to September 2002, violated the federal securities laws by certifying CEG's consolidated financial statements which were made a part of certain Offering Circulars, with Ent & Imler's approval, and otherwise helping to prepare the Offering Circulars. The complaint alleges that the Offering Circulars, including the consolidated financial statements, contained fraudulent misrepresentations and omissions that misled Noteholders and concealed CEG's true financial condition, including misrepresenting that the proceeds from the sale of Investment Notes would be used primarily to fund church loans and that CEG maintained a reserve of liquid assets equal to a percentage of CEG's outstanding note obligations, and omitting information that CEG was engaging in a series of high-risk "bargain sale" transactions using inflated appraisals and other means to exaggerate the value of the properties or businesses acquired by CEG. This securities fraud class action has been commenced on behalf of all persons (Noteholders) who purchased between April 30, 1998 and April 30, 2002 Investment Notes offered by Church Extension of the Church of God, Inc. through a series of Offering Circulars (dated April 30, 1998; April 30, 1999; May 1, 2000; and November 1, 2001) and who suffered losses as a result of their investment. The suit is styled "Central Community Church of God, et al. v. Ent & Imler CPA Group, PC, et al., case no. 03-CV-0667." The class period starts April 30,1998 and ends April 30,2002. Representing the plaintiffs is Sommer Barnard Attorneys, P.C., One Indiana Square, Suite 3500, Indianapolis, IN, 46204, Phone: 317.713.3500. EQUIFAX INFORMATION: Reaches Pact For VT Consumer Fraud Charges --------------------------------------------------------------- Vermont Attorney General William Sorrell forged a settlement with Equifax Information Services, Inc., one of the nation's largest credit bureaus, that requires the Company to send $100 to 161 Vermont consumers, in December 2004. Vermont law requires credit grantors - banks, mortgage and credit card companies, landlords, utility and telecommunication companies - to get the permission of a Vermont consumer before reviewing his or her credit report. Vermont law also requires credit bureaus to ensure that credit grantors comply with the law. In 2000, Equifax entered into a comprehensive Assurance of Discontinuance with Attorney General Sorrell requiring the credit bureau to take substantial steps to ensure that credit grantors comply with Vermont law and not review a Vermonter's credit report unless the company has the permission of the consumer. Equifax has largely been in compliance with the 2000 agreement. However, in 2002, it allowed Verizon to access credit reports of 161 Vermont consumers without their permission. The settlement, filed today in Washington Superior Court, requires Equifax to pay $100 to each of the consumers whose credit report was accessed without their permission. Vermont law provides for $100 "damage" payments to consumers when permission is not obtained. The settlement also requires Equifax to pay $25,200 to the State of Vermont. "Protecting the privacy of our financial information is important to all of us. This settlement sends a strong message to credit bureaus to pay close attention to Vermont's stringent credit reporting law," said Attorney General Sorrell. Consumers who have questions about whether they will receive the $100 can call the Consumer Assistance Program at 1-800-649-2424, or in Chittenden County and out of state at 802-656-3183. For more details, contact the Attorney General's office by Mail: 109 State Street, Montpelier VT 05609-1001 by Phone: (802) 828-3171 or by Fax: (802) 828-5341. FEDERATED DEPARTMENT: NY Jury Indicts Former Exec For Perjury ------------------------------------------------------------- A New York County grand jury has indicted the former Chairman and Chief Executive Officer of Federated Department Stores James Zimmerman for perjury and lying under oath to conceal evidence of possible antitrust violations, New York Attorney General Eliot Spitzer said in a statement. The charge stems from an investigation that began in 2002 of whether two leading department store chains and two prominent manufacturers of tableware had conspired to limit distribution of products sold to consumers. The upscale department store chains were accused of engineering a scheme to keep another national retailer - Bed, Bath & Beyond - from expanding into their lucrative tableware market. The companies involved - Federated, May Department Stores, Lenox, Inc., and Waterford Wedgwood, U.S.A.- settled that case in August 2004 and paid $2.9 million in civil penalties. Zimmerman was arraigned on January 4,2005 before Justice James Yates of the New York County Supreme Court, and charged with Perjury in the First Degree, a class D felony. The maximum sentence for a conviction of this crime is 2 1/3 - 7 years in state prison. According to the indictment, Zimmerman intentionally offered false testimony in a sworn statement on April 9, 2004. Specifically, Zimmerman was asked whether he had called Sir Anthony O'Reilly, the Chairman of the Board of Waterford, Wedgewood, PLC, to dissuade him from selling Waterford products through Bed Bath & Beyond or to otherwise encourage him to pull out of the negotiations to do so. Zimmerman repeatedly told the assistant attorney general taking the deposition that he had never discussed Bed Bath & Beyond in any way with anyone at Waterford, including O'Reilly. According to the indictment, Zimmerman knew that these denials were untrue. Zimmerman retired in 2004 as the top executive of Federated, which operates 450 department stores nationwide, including the flagship Macy's and Bloomingdale's stores in New York City. The case is being prosecuted by Assistant Attorney General Kristen Marcelle under the direction of Deputy Chief Kevin Suttlehan and Bureau Chief Janet Cohn of the Criminal Prosecutions Bureau. The case was investigated by Investigator Karon Richardson under the supervision of Deputy Chief Investigator Hank Lemons. The charges are merely accusations and the defendant is presumed innocent until and unless proven guilty. FINANCIAL NETWORK: Inks Settlement With NY AG Over Ponzi Scheme --------------------------------------------------------------- Financial Network Investment Corporation (FNIC) reached a settlement with New York Attorney General Eliot Spitzer that will provide $1.65 million for dozens of Western New Yorkers who were victimized in a scheme involving investments in pay phones. AG Spitzer filed a lawsuit against the Company in June 2002, alleging the Company bilked senior citizens by a scheme that involved Goldome Capital Management (GCM) of Depew, which targeted senior citizens with the sale of pay phones for $7,000 each. ETS Payphones, a Georgia company that manufactured the phones and orchestrated the scheme, paid GCM and its salespeople a commission to sell the phones. These same salespeople were also registered to sell securities for FNIC, a Torrance, California-based financial services company. Victims were told that they could buy the phones, lease them back to ETS to operate, and receive a "guaranteed" 14 percent return on their investment. Furthermore, the investors were told that they could sell the phones back to the ETS for the original purchase price at any time after six months. Typically, investors were persuaded by the brokers to liquidate conservative investments, such as retirement annuities, to fund their purchases. A federal investigation revealed the scheme to be a ponzi scheme in which investors' monthly checks from ETS were coming out of new investors' principal payments and not ETS' profits. The scam began in November 1998 and came to an end when ETS declared bankruptcy in September 2000. "The cooperation of this financial services firm will provide much needed relief for dozens of senior citizens - many of whom had liquidated their retirement savings," AG Spitzer said. "This case demonstrates the need for investors to be wary of `guaranteed' returns on investments that sound too good to be true, even if the sales pitch is made by an established company." State Supreme Court Justice Joseph G. Makowski of Erie County approved a consent order whereby FNIC will pay $1.65 million to 80 investors. The settlement represents an average recovery of over $20,000 per victim. Spitzer acknowledged that FNIC's efforts will greatly benefit the victimized investors, most of whom are senior citizens, and noted that the company itself received no monies from its brokers' unauthorized sales of the ETS phones. FNIC had no relationship with GCM or ETS, and the payphones were not FNIC products. Moreover, FNIC had told its brokers not to sell the ETS contracts, yet Spitzer alleged in legal papers that FNIC could have halted the scam if it had adequately supervised its brokers. In December 2001, Spitzer obtained over $5 million for over 300 other ETS victims from National Planning Corp., FNIC's successor as the company through which the brokers who sold the phones were registered. Spitzer also noted that a number of defendants have settled the charges against them by agreeing to be barred them from the securities industry and by either paying cash towards restitution or agreeing to money judgments. The lawsuit is still going forward against the remaining defendants who sold ETS phones. The case is being handled by Assistant Attorney General Dennis Rosen and Senior Investigator Peter Eiss of the Buffalo Regional Office. For More Information, contact the Attorney General's office by Phone: (518) 473-5525. FLORIDA: Orange Tree Resident Lodges Lawsuit Over Water Quality --------------------------------------------------------------- Fort Myers attorney Kelly Huang on behalf of Orange Tree resident Eugenia Pickard has lodged a class-action lawsuit against the Orange Tree Utility Co., which has more than 1,000 customers in Collier County, the Naples Daily News reports. The lawsuit alleges that the utility ignored persistent complaints from its customers about the quality of their water, failed to properly monitor the water and failed to adequately warn customers about the quality of the water. It is seeking payments of unspecified amounts to utility customers for their medical bills, property damage and extra water filtration devices. The suit also wants the utility to be required to set up a court-supervised program to monitor customers' health. Orange Tree Utility Co. President Roberto Bollt could not be reached for comment, but Jerry Buhr, the utility's attorney said the company is doing what is required of it. He also adds, "I don't believe they (customers) are going to have a claim as to the water not being of the quality they prefer it to be." Orange Tree's customers include residents of Twin Eagles, Orange Tree, Waterways, Valencia Lakes, Citrus Greens and homes on 33rd Avenue. The utility also serves Corkscrew Elementary School, Corkscrew Middle School and Palmetto Ridge High School. Water samples the utility collected July 28 had levels of trihalomethanes, or THMs, and haloacetic acids, or HAAs, at between four and seven times the legal limit. A new state law had required the utility to test the water for those chemicals for the first time in 2004. Some people who drink water with too many THMs over many years might experience problems with their livers, kidneys or central nervous systems and might have an increased risk of cancer, according to the U.S. Environmental Protection Agency. The EPA also adds that some people who drink water with HAAs over the allowable limit over many years may have an increased risk of cancer. FRANCE: Considers Installation of System Allowing Class Actions --------------------------------------------------------------- Just as President George W. Bush is launching efforts to curb class action lawsuit in the United States, France is now considering changing its legal code to allow such controversial collective actions in the country, the Financial Times reports. President Jacques Chirac has asked his government to examine how "groups of consumers and their associations could bring collective actions against abusive practices that have been observed in certain markets". France is the latest European country to consider ways of facilitating collective legal action against companies, after a string of financial and health scandals that have left confidence in the corporate sector in tatters. UK law was recently changed to allow groups of cases to be managed collectively, while German lawmakers are considering similar moves. The comments by France's president immediately sparked widespread unease in the French business and legal community, which has watched as class-action lawsuits have multiplied in the United States, forcing the collapse of some companies. The rash of class-action lawsuits in the U.S. has prompted President Bush to push for reform of the laws governing liability. According to Medef, the French employers' federation, a system that allowed class-action lawsuits did not serve justice. Jo�lle Simon, legal director of Medef told the Financial Times, "It is useless for consumers and harmful to business." However, shareholder activists welcomed President Chirac's initiative. According to Colette Neuville, president of Adam, an association for the defense of minority shareholders, the president's move was "a very, very good surprise. We have been asking for this for a long time." Few shareholders or consumers were prepared to take action against corporate abuses in France as the legal system was too costly and time-consuming and the risks were not clearly defined, she said. But, Ms. Neuville warned against merely copying the US system, whereby legal firms could reap significant rewards though plaintiffs were left with little. She told the Financial Times, "We have to invent a new system. We should not import the faults of the United States." French lawyers say that the key to preventing a U.S.-style bonanza of frivolous lawsuits was to avoid the introduction of contingency fees, a practice that allows firms to take a percentage of any settlement or award in lieu of fees. As a result of such practices, plaintiffs can pursue actions in the knowledge they will not be liable for costs should they lose. President Chirac's request, which was made during a New Year speech to business and trade union leaders, recently, is part of a government drive to strengthen consumer rights. Following the departure of Nicolas Sarkozy, a consumer champion, from the finance ministry last year to prepare for a presidential challenge in 2007, President Chirac is determined to demonstrate his government's popular credentials. Herv� Gaymard, finance minister, Dominique Perben, justice minister, and Christian Jacob, commerce minister, have been given the task of drawing up proposals for a new law. FRIEDMAN'S INC.: Faces TX Attorney General's Consumer Fraud Suit ---------------------------------------------------------------- Texas Attorney General Greg Abbott filed a suit against Friedman's Inc. of Savannah, Georgia, the nation's third-largest jewelry chain, alleging the company misled its customers about the level of "required" insurance coverage when applying for installment credit on purchases. "The company represents itself as a long-term, reliable friend of the customer, yet it went to great lengths to lure unwitting customers into misleading insurance contracts as part of jewelry purchases on credit," said Attorney General Abbott. "The company should have been clear that these `side' agreements are completely optional with such purchases." The Attorney General's investigation alleges the company ran afoul of the Texas Deceptive Trade Practices Act by pressuring lower-income customers into signing a "statement of insurance" while getting approved for purchases on credit. Such optional "credit" insurance protects the loan if the consumer misses payments or defaults. Company employees neglected to disclose the full nature, extent and expense of the coverage, and some customers were billed for the full credit insurance. Friedman's, which is incorporated in Delaware, touts itself as a "trusted neighborhood jeweler" since 1920, has operated 650 retail jewelry outlets in 22 southeastern and midwestern states, including 65 stores in Texas. The company offers multiple forms of credit on jewelry purchases, including the store's own "Advantage Credit" program - a card that triggers the company's retail installment credit contract with the customer. It is within this line of credit that the company engaged consumers in the scheme to buy credit insurance, which, often unbeknownst to buyers, can include property, life and disability insurance. This coverage should have been represented as optional to the customer, not mandatory, according to the lawsuit. For more details, contact the Attorney General by Phone: 800/252-8011, or visit the agency's Consumer Protection Web site: http://www.oag.state.tx.us. The Attorney General requests the court to order civil penalties of up to $20,000 per violation of the Deceptive Trade Practices Act, restitution to harmed consumers and attorneys' fees. FRONT PAGE: Reaches Settlement For NY AG Wage Violations Probe -------------------------------------------------------------- New York Attorney General Eliot Spitzer reached a settlement in December 2004 with a Staten Island restaurant that provides over $75,000 to workers who were not paid the minimum wage and overtime wages, which were violations of state law. The settlement ends the investigation into the labor practices of the Front Page Restaurant, located at 75 Page Avenue in Staten Island. The Attorney General's investigation found that between August of 1999, and August of 2004, the Front Page Restaurant paid wages as low as $2.25 per hour to its wait staff, far below required minimum wages for tipped employees. The investigation also found that the restaurant paid no overtime to its cooks, busboys, dishwashers, and delivery workers, despite schedules that required up to 60 hours of work per week. "My office has found that restaurant workers are frequent targets of exploitation. That exploitation not only hurts those workers, it drags down labor standards for all New Yorkers," Attorney General Spitzer said. "My office will continue to enforce labor laws and ensure that workers are paid the minimum wages, as required by law." Under the terms of the settlement, the Front Page Restaurant will pay to eligible workers up to $76,398.56 in restitution and statutory damages. In addition, the restaurant will be subject to monitoring to assure that it complies with minimum wage and overtime requirements in the future. For more details, contact the New York State Attorney General's labor help line by Phone: (212) 416-8700 or visit the Website: http://www.oag.state.ny.us. The case was handled by Assistant Attorneys General Michael Higgins and James Versocki under the supervision of Labor Bureau Chief M. Patricia Smith. GEOPHARMA INC.: Shareholders Launch Securities Suits in NY, FL -------------------------------------------------------------- GeoPharma, Inc. and certain of its present and former executive officers face several securities class action lawsuits filed in two United States federal courts of New York and Florida for violation of federal securities laws. The New York and Florida filings have substantially similar allegations. According to a press release dated December 2, 2004, the first complaint filed in the United States District Court for South District of New York alleges that GeoPharma and individual defendants issued false or misleading public statements in violation of the law. More specifically, the complaint alleges that GeoPharma claimed that it was developing a "patent-pending" drug for the treatment of oral inflammation suffered by cancer patients known as mucositis. The product was dubbed Mucotrol (TM). On December 1, 2004, GeoPharma issued a statement announcing that Mucotrol had been approved by the FDA. On this news, GeoPharma shares shot up on heavy volume, reaching $11.25 per share. Shortly thereafter, however, investigative journalists uncovered that the FDA had not approved any such drug. It was then conceded by the Company that Mucotrol was a "device", not a drug. This is a material difference. Nor was it the case that Mucotrol contained any medicinal ingredients at all. GeoPharm's sales projections were also called into question. On these revelations, GeoPharma shares sharply declined, last trading at $6.81 per share before trading was halted at 1:29 p.m. The first lawsuit was filed on behalf of all who purchased GeoPharma's securities on December 1, 2004. On December 20, 2004 the law firm of Vianale & Vianale filed a separate securities class action lawsuit in the United States District Court for the Middle District of Florida declaring an extended Class Period. The Florida action was filed on behalf of purchasers of the securities of GeoPharma's securities from July 13, 2004 to December 2, 2004, inclusive. The complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. On July 13, 2004, before the market opened for trading, GeoPharma and its wholly-owned subsidiary, Belcher Pharmaceuticals, Inc., issued a press release reporting that GeoPharma had met with success in a clinical study of its drug, MF5232, later named "Mucotrol," in treating patients with mucositis. Mucositis is an inflammation of the mucosa of the mouth that develops in cancer patients receiving radiation therapy and some patients with HIV/AIDS. In the press release, GeoPharma's President, Dr. Kotha Sekharam, described Mucotrol (which he invented), as a "drug." The stock rose 13% on the news and closed on July 13, 2004 at $5.44. The later complaint also alleges that on December 1, 2004 GeoPharma announced in a press release that its subsidiary, Belcher Pharmaceuticals, Inc., had received FDA approval for its "prescripition drug," Mucotrol. GeoPharma estimated that sales to the U.S. oncology market for Mucotrol could reach $75 million to $300 million per year. GeoPharma stock rose to $11.25, or 153%, on the news. On December 2, 2004, however, financial reporters learned after questioning the Company that Mucotrol was not a "drug" at all, but a device, making it far less attractive to market than a new drug. GeoPharma's claim that it had obtained FDA approval of Mucotrol was also untrue, as well as GeoPharma's announcement of potential annual U.S. sales of $75 million to $300 million. GeoPharma recanted its claim that Mucotrol was a drug in a December 2, 2004 press release. GeoPharma's stock price dropped from $11.25 to $6.81, on inordinate volume of 42 million shares traded. The plaintiff firms in this litigation are: (1) Paskowitz & Associates, Phone: 800.705.9529, E-mail: classattorney@aol.com (2) Pomerantz, Haudek, Block, Grossman & Gross, Mail: 100 Park Avenue, 26th Floor, New York, NY, 10017-5516, Phone: 212.661.1100, (3) Roy Jacobs & Associates, Mail: 350 Fifth Avenue Suite 3000, New York, NY, 10118, E-mail: classattorney@pipeline.com (4) Schatz & Nobel, P.C., 330 Main Street, Hartford, CT, 06106, Phone: 800.797.5499, Fax: 860.493.6290, E-mail: sn06106@AOL.com (5) Vianale & Vianale LLP, Mail: The Plaza - Suite 801, 5355 Town Center Road., Boca Raton, FL, 33486, Phone: 561.391.4900, Fax: 561.368.9274, E-mail: info@vianalelaw.com HEARTLAND FARM: MO AG Nixon Files Suit Over Consumer Fraud ---------------------------------------------------------- Missouri Attorney General Jay Nixon filed a suit against a Cole Camp couple and their farm-supply business after consumers complained about not receiving propane or fertilizers from the business as contracted. Because Heartland Farm Services Inc. didn't deliver the products as promised, some rural consumers who signed contracts for propane at lower summer rates were forced to pay winter heating season rates for the fuel, AG Nixon said in a statement. He is seeking a temporary restraining order from the Benton County Circuit Court against Heartland Farm Services and owners Raelene Bain and Robert Bain. Most of the complaints came from consumers in central and southern Missouri. According to the lawsuit, the defendants charged consumers a non-refundable fee of up to $3,500 to set up a "trade and business account" with Heartland. Consumers with such accounts were guaranteed a minimum 10 percent savings over retail prices. Heartland agreed in contracts to supply propane in installment deliveries; the buyer paid a deposit up front, and then was to pay the balance for each installment as it was delivered. "Consumers complained to us that Heartland reneged on its contracts by making only one or two deliveries, then refusing to deliver any more unless the customer paid in full for all future installments as well," Nixon said in a statement. "This puts the consumers in a bad situation, because they paid the nonrefundable fee so they could get lower propane prices during the winter. Heartland's reversal means they had to either pay the entire amount up front before delivery to obtain the cheaper rate, or pay the much higher winter rates on the open market." He added another consumer complained to the Attorney General's Office after paying the defendants more than $879,000 for various fertilizers. Heartland delivered a portion of the order, but the defendants have failed or refused to deliver approximately $337,500 worth of goods still owed to the consumer. The lawsuit asks the court to issue preliminary and permanent injunctions against the Bains and Heartland to stop further violations of Missouri consumer protection laws. Nixon also wants the court to order the defendants to pay appropriate penalties to the state and restitution to consumers harmed by their actions. For more details, contact Press Secretary Jim Gardner by Phone: 573-751-8844 by Fax: 573-751-5818 or by e-mail: communications@ago.mo.gov. ITF ENTERPRISES: NY AG Spitzer Gets TRO Against Pyramid Scheme -------------------------------------------------------------- New York Attorney General Eliot Spitzer's office obtained a court order freezing the assets of a Company and its principals who cheated hundreds of investors out of hundreds of thousands of dollars by luring them into a pyramid fraud investment scheme. The actions filed by AG Spitzer charge ITF Enterprises and its principals Ivory T. Fields Jr., Keisha Fields, Christian Polanco, Lesgar Grant, Terrance Blackett, Jessica Hinds, Jose Tavarez, and Tuck Smith with fraudulent, deceptive, and illegal practices. The temporary restraining orders, signed by Manhattan Supreme Court Justice William P. McCooe, prohibit the transfer of any assets pending future hearings. "These defendants deliberately target vulnerable consumers. New Yorkers looking to invest their hard earned money should not have to fall prey to scammers," said Attorney General Spitzer. "My office will work to stop individuals from luring investors with false promises and from bilking consumers." ITF Enterprises (67 Wall Street and 410 Park Avenue) and its principals operated an unlawful pyramid scheme raising about $3 million from more than 100 investors. They targeted primarily vulnerable consumers of limited means from African-American and Dominican communities in NYC. Among the victims are nurses aides, livery cab drivers, and public servants. Their investments ranged from $2,000 to $20,000. One woman invested close to $160,000 after taking out a second mortgage on her house. A pyramid scheme is a fraudulent system of making money based on recruiting an ever-increasing number of "investors." The initial promoters recruit these investors, who in turn recruit more investors. The scheme is called a "pyramid" because at each level, the number of investors increases. The small group of initial promoters at the top require an increasingly large base of later investors to support the scheme by providing profits to the earlier investors. Pyramid schemes are illegal in New York State, as well as in many other states. Assemblyman Adriano Espaillat said: "Once again Attorney General Spitzer steps up to the plate for consumers. We thank him for his commitment and steadfast support for issues faced by working immigrant families." Respondents gave their business a veneer of credibility by using mail-drops at prestigious addresses. They also gave themselves corporate titles such as CEO and President (in the case of Ivory Fields), despite the fact that the entity is not a corporation. Out of the $3 million raised, Respondents used $1.5 million for their own benefit. Among the most egregious uses of the money were $73,000 in bank debit card personal expenses for electronics, luxury items, and entertainment. These included an $11,000 purchase at an Italian clothing shop. There were also $130,000 in ATM cash withdrawals. Fields also used over $460,000 for expenditures such as rent, restaurants, travel, bank charges, and hotels. The case seeks a permanent injunction barring these business practices and restitution for consumers and civil penalties. For more details, contact the New York State Attorney General's Consumer Helpline: 1-800-771-7755 or visit the OAG's Website: http://www.oag.state.ny.us. The cases are being handled by Assistant Attorney Generals Elizabeth Block and Michael E. Jones of the Investor Protection Bureau under supervision of Bureau Chief David Brown IV with help from legal intern Bruce Alderman. MARYLAND: Judge Rules HUD Blundered On Baltimore Public Housing --------------------------------------------------------------- In a protracted civil rights lawsuit, Judge Marvin J. Garbis of Federal District Court recently concluded that black public housing tenants have been systematically consigned to segregated and poor neighborhoods of Baltimore City as a result of the policies of the United States Department of Housing and Urban Development, the New York Times reports. By not placing more public housing residents in suburban counties, HUD has failed to meet its obligations under the Fair Housing Act, the federal judge ruled. Judge Garbis's decision is the latest turn in nationwide efforts intended to reverse public housing policy that has historically sent public housing tenants to poor neighborhoods consisting of minority residents. In the 322-page decision, Judge Garbis wrote that HUD must adopt a "regional approach" to public housing that would disperse poor, black residents instead of concentrating them in city neighborhoods. The decision came in a class-action lawsuit brought by the American Civil Liberties Union on behalf of 14,000 Baltimore public housing tenants, who had claimed local and federal government policies had created "black ghettos," against HUD, the Baltimore Housing Authority and elected city officials. Judge Garbis ruled that the plaintiffs did not prove their claim that the City of Baltimore had failed to take adequate steps to try to reverse the effects of previous race discrimination in public housing. However, the judge rebuked HUD for not ensuring public housing "free from discrimination." Speaking before a packed courtroom in downtown Baltimore, Judge Garbis said HUD has been "effectively wearing blinders" through its failure to provide more public housing beyond the city's boundaries. He further said, "It is high time that HUD live up to its statutory mandate" and consider "regional approaches to promoting fair housing opportunities for African-American public housing residents in the Baltimore region." In his decision, the judge wrote, "Baltimore City should not be viewed as an island reservation for use as a container for all of the poor of a contiguous region" that includes surrounding counties. In Baltimore, the decision noted, 97 percent of public housing for families went to black families, mostly in poverty- stricken neighborhoods. In 2000, the judge said, the city was 64 percent black, while the Baltimore region, comprising the city and five suburban counties, was about 15 percent black. As a result of a consent decree issued earlier in the A.C.L.U. case, Baltimore demolished numerous high-rise projects and replaced them with new housing in the 1990's. While praising those improvements, Judge Garbis said, "There have not been significant opportunities for African-American residents of Baltimore City public housing to reside in racially mixed, rather than predominantly African-American, areas." The case, the judge said, will now move to the "remedial phase," in which the court will hear evidence and take action intended to ensure HUD officials adequately consider a regional approach to the desegregation of public housing in the Baltimore region. Lawyers for the plaintiffs, along with national housing and civil rights advocates, hailed the decision and said it underscores the importance of spreading public housing beyond the city. "The core of the case has been a failure of political will to locate public housing anywhere other than the poorest, blackest neighborhoods," said Andrew D. Freeman, a lawyer representing the A.C.L.U. HUD, Mr. Freeman said, is largely responsible for concentrating public housing in poor areas of the city and has an obligation to break the pattern by dispersing public housing. William F. Ryan Jr., a lawyer representing Baltimore City, said the decision heartened him. "Our position from the beginning was that the city has done everything it could over the last 50 years to provide good housing for its citizens," Mr. Ryan said. "And the city needs all the help it can get from the federal government and other sectors." MEDCO HEALTH: Inks Deceptive Trade Practices Settlement With SD --------------------------------------------------------------- South Dakota Attorney General Larry Long reached an agreement with Medco Health Solutions resolving claims of deceptive trade practices in December 2004. The State alleged that Medco encouraged prescribers to switch patients to different prescription drugs, but sometimes failed to pass the savings to patients or their health care plans. "We hope this settlement will result in a more honest and open approach to the pharmacy benefits industry," said AG Long. "This settlement is also essential in the continuing battle for affordable prescription drugs for the residents of South Dakota." 20 state attorneys general alleged that the drug switches actually resulted in increased costs to health plans and patients, primarily in follow-up doctor visits and tests. For example, Medco switched patients from certain cholesterol- lowering medications (statins) to Zocor, a drug that required patients to receive follow-up blood tests at additional costs. Under the multistate settlement, Medco is ordered to pay $2.5 million to patients who incurred expenses related to switches between cholesterol-controlling drugs from 1999 to the present. Affected consumers will receive a notice and claim form from the company in the mail within the next few months. This settlement was a result of a multistate action that was taken in April of 2004. The Attorney General's Office worked directly with the Bureau of Personnel in negotiating this agreement with Medco. Medco will pay the State of South Dakota $234,700 which will be returned to the general fund. Medco agreed to pay this amount to settle a claim they had failed to pass rebates on to the state while serving as the pharmaceutical benefits manager for state employees from 1995 to 2002. For more details, contact Sara Rabern by Phone: (605)773-3215. MISSOURI: MO AG Nixon Obtains TRO V. Fraudulent EBay Retailer ------------------------------------------------------------- Missouri Attorney General Jay Nixon obtained a temporary restraining order in Jackson County Circuit Court against a Raytown woman who offered dozens of items on Internet auction sites and didn't deliver the merchandise. AG Nixon asked the court to bar Hope Madewell from Internet sales and auctions. He also filed a civil lawsuit against Ms. Madewell asking for full restitution for all customers who never received a refund or merchandise; a civil penalty of $1,000 for each violation; a monetary penalty equal to 10 percent of restitution, payable to the state Merchandising Practices Revolving Fund; and full restitution to the state for the cost of investigating and prosecuting the case. "Consumers have found a wealth of convenience and merchandise via the Internet, but unfortunately, so have unscrupulous merchants," AG Nixon said. "If we are to take advantage of online technology and all its benefits, we must be ever vigilant in policing the actions of those who would otherwise defraud consumers." The suit alleges that since August 2003, Ms. Madewell - using her own name and a half dozen aliases - offered jewelry, watches, iPods and other items for sale on eBay and other Internet auction sites. When offering the items for sale she would advertise that payments could be made through PayPal, a payment service company. However, when a consumer won the auction, she would insist that payment be made via check or money order. At least 24 consumers nationwide are known to have paid for items offered by Ms. Madewell, but never received the merchandise or a refund. Ebay subsequently suspended her privilege to offer merchandise due to numerous complaints. A hearing on Nixon's request for an injunction against Madewell is scheduled for January 12. For more details, contact Press Secretary Jim Gardner by Phone: 573-751-8844 by Fax: 573-751-5818 or by e-mail: communications@ago.mo.gov. ORBELLE TRADE: Recalls 7,700 Amber Cribs Due To Injury Hazard ------------------------------------------------------------- Orbelle Trade Inc., of Brooklyn, New York is cooperating with the United States Consumer Product Safety Commission by voluntarily recalling about 7,700 Cribs. The Amber model crib included in this recall does not comply with crib safety standards due to a gap between the side rail and the crib mattress support, posing an entrapment hazard to infants. All other model cribs included in this recall do not have proper assembly instructions and diagrams required for cribs. They are also missing cautionary and warning labels as required by federal law. If the cribs are not assembled properly they could pose an entrapment hazard to infants. The cribs included in this recall are the Daniella, Leeat, Noa, Naomi, Gabriella, Amber and Series 300 model cribs. The cribs are wood and come in a variety of painted and stained finishes including natural, cherry, blonde, or white wood. Some of the cribs have built-in storage drawers on the side of the crib or underneath the crib. The crib model name may be printed on the lower part of the headboard of each crib and the manufacturer name is printed on each set of crib warnings when provided. Manufactured in Romania, the cribs were sold at all juvenile furniture stores in New York and New Jersey from January 2003 through August 2004 for between $135 and $335. If you own the Amber model crib, contact the firm to schedule an in-home repair or request a replacement crib. For all other model cribs, contact the firm to receive new assembly instructions and warning labels. Consumer Contact: Orbelle Trade Inc. at (800) 605-8018 between 9 a.m. and 4 p.m. ET Monday through Friday. PRAECIS PHARMACEUTICALS: Shareholders File MA Securities Suits -------------------------------------------------------------- Praecis Pharmaceuticals, Inc. and certain of its officers face several securities class actions filed in the United States District Court for the District of Massachusetts, on behalf of purchasers of the Company's securities from November 25,2003 to December 6,2004. The suits also name as defendants: (1) Malcolm Gefter, (2) Kevin McLaughlin, (3) Edward English and (4) William K. Heiden The suits allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaints allege that the company, its officer and directors violated securities laws by issuing false and misleading statements that caused the stock to inflate. More specifically, the Complaints allege that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (i) that the distribution of the Company's flagship drug, Plenaxis, had been severely restricted by the FDA, which significantly reduced the potential market for the therapy; (ii) that the Company failed to establish effective messaging to educate physicians about the product's indication and the appropriate patient population; (iii) that the Company, despite impressive enrollment numbers in the PLUS program, had difficulties convincing physicians to prescribe the product due to uncertainty over use and concerns over reimbursement; (iv) that the Company lacked adequate internal control; and (v) that as a result of the above, the defendants' fiscal 2004 projections were lacking in any reasonable basis when made. The complaints further allege that on December 6, 2004, Praecis provided an update on the Company's commercialization of Plenaxis in the United States. In the update, the Company stated that its had decided to remove its previous short- and long- term sales and earnings guidance, and that it did not anticipate providing further guidance until a consistent trend for Plenaxis sales emerges. The company said it has had trouble educating doctors and convincing them to prescribe the therapy due to concerns over insurance reimbursement. News of this shocked the market. Shares of Praecis fell $.56 per share, or 25.8 percent on December 6, 2004, to close at $1.61 per share. The first identified complaint is styled "Susan Katz, et al. v. Praecis Pharmaceuticals, Inc., et al., case no. 04-CV-12581." The plaintiff firms in this litigation are: (a) Charles J. Piven, World Trade Center-Baltimore,401 East Pratt Suite 2525, Baltimore, MD, 21202, Phone: 410.332.0030, E-mail: pivenlaw@erols.com (b) Dyer & Shuman, LLP, 801 East 17th Avenue, Denver, CO, 80218-1417, Phone: 303.861.3003, Fax: 800.711.6483, E- mail: info@dyershuman.com (c) Schatz & Nobel, P.C., 330 Main Street, Hartford, CT, 06106, Phone: 800.797.5499, Fax: 860.493.6290, E-mail: sn06106@AOL.com (d) Schiffrin & Barroway, LLP, 3 Bala Plaza E, Bala Cynwyd, PA, 19004, Phone: 610.667.7706, Fax: 610.667.7056, E- mail: info@sbclasslaw.com (e) Shapiro, Haber & Urmy LLP, 75 State Street, Boston, MA, 02109, Phone: 617.439.3939, Fax: 617.439.0134, E-mail: info@shulaw.com ROCHE DIAGNOSTICS: PA AG Warns V. Glucose Blood Testing Strips -------------------------------------------------------------- Pennsylvania Attorney General Jerry Pappert warned consumers not to rely on the results of certain glucose blood testing strips that may have been purchased or obtained in Pennsylvania, despite markings on the packages that state the products are not intended for use or sale in the United States. The strips produced by Roche Diagnostics may cause serious health problems, particularly to diabetics, by providing inaccurate blood sugar level readings. AG Pappert urged consumers to immediately stop using all glucose blood testing strips from Accu-Chek Sensor Comfort and Accu-Chek Advantage II that contain any of the following markings on the box: "Made in USA for Export Only" "For Sale Outside of the USA and Canada" "For Export Only" In addition, all Accu-Chek test strips with six digit lot numbers beginning with lot #44 are for exportation only and are not to be used in the United States. Consumers should also discontinue using any other blood test strip product that contains similar "export only" language and consult their doctor. The warning follows concerns by the product manufacturer that the strips may have been repackaged and reimported into the United States. According to the manufacturer, the alleged counterfeit products are NOT approved or cleared for use in the U.S. by the U.S. Food and Drug Administration. AG 4Pappert said consumers who use these products should check both the outside packaging for the "export only" label, and the lot number on the strip holder inside the box. The lot number should appear on the outside of the box and also on the plastic strip holders and computer chip inside the box. Failure to inspect these products could be dangerous and result in a false blood sugar reading that may significantly affect the proper treatment for diabetes or other illnesses. Glucose strips sold outside of the U.S. are programmed to test whole blood and not blood plasma as required in this country. As a result, these strips are calibrated differently than test strips sold in the United States and will provide a significantly different reading. According to the manufacturer, the glucose readings could deviate by as much as 12 percent. These inaccurate readings pose potential harm to those required to regularly monitor their blood sugar levels. AG Pappert said consumers who may have purchased the diabetic blood testing strips not intended for sale in the United States, should contact his Health Care Section toll-free by Phone: 1-877-888-4877. RAMSEY AUTO: Reaches Pact With NY AG Over Fraudulent Advertising ---------------------------------------------------------------- New York Attorney General Eliot Spitzer reached a settlement in December 2004 with nine New Jersey auto dealerships that advertise heavily in New York State and which use false, deceptive and misleading claims in their advertisements. State Supreme Court Justice Louis Barone of Westchester County signed a court order permanently barring Ramsey Auto Group - which operates nine dealerships in Mahwah, Saddle River and Ramsey, New Jersey - from violating New York laws that prohibit false advertising. The consent order also prohibits the dealerships from violating New York's advertising guidelines for auto dealers. "My office will continue to ensure that New York consumers are protected against false and misleading auto advertising, even if the offending dealership is located out-of-state," AG Spitzer said. "These efforts level the playing field so that out-of- state auto dealers cannot use false and deceptive advertising to gain a competitive advantage over New York auto dealers." AG Spitzer's office cited examples of misleading and deceptive advertisements placed by nine New Jersey dealerships in New York newspapers, including ads that: (1) Boldly promoted auto leases for "$0 Down" even though certain payments, mentioned only in a tiny footnote, actually would be due at lease signing; (2) Promoted low prices without disclosing that the prices were only for a small group of people who qualified for a specialized rebate such as a "college grad rebate" or a "military rebate"; (3) Promoted financing at low interest rates but failed to adequately disclose that those rates were restricted to a small percentage of customers with extremely high credit scores; (4) Promoted financing at low interest rates but failed to disclose that consumers who accepted these rates would be waiving substantial price rebates; (5) Failed to disclose that advertised prices did not include registration, title fees, and taxes; (6) Included misleading price comparisons; and (7) Included fine print footnotes that contradicted or materially altered the principal message of the advertisements. In addition to prohibiting false advertising, the court order requires the dealerships to pay $47,000 in civil penalties and costs. Spitzer's office sought a court order after the dealerships violated two prior out-of-court agreements to stop running deceptive ads. The Ramsey auto dealerships do business as: (i) Ramsey Volvo; (ii) Ramsey Infiniti, Inc.; (iii) Ramsey Nissan, Inc.; (iv) Belle Scarpe, Inc. doing business as Ramsey Saab; (v) RamSub Inc. doing business as Ramsey Subaru; (vi) Auto Imports Inc. doing business as Ramsey Mitsubishi; (vii) Ramsey Auto Imports of 17, Inc. doing business as Ramsey Chrysler Jeep; (viii) RamMaz, Inc. doing business as Ramsey Mazda; and (ix) Ramsey Pontiac-GMC, Inc. This case is the latest in an ongoing effort by Spitzer's office to monitor auto advertising and sales practices throughout the state. Since 1999, Spitzer's office has commenced approximately 200 enforcement actions against auto dealers and their advertising associations across the state. For more details, contact the Attorney General's consumer help line: 800-771-7755 or visit the Website: http://www.oag.state.ny.us. This case was handled by Assistant Attorney General Yasmin Rahman Kutty, under the supervision of Gary S. Brown, Assistant Attorney General in Charge of the Westchester Regional Office. ROYAL GROUP: Shareholders File Securities Fraud Suits in S.D. NY ---------------------------------------------------------------- Royal Group Technologies, Inc. faces several securities class actions filed in the United States District Court for the Southern District of New York, alleging that the Company violated United States securities laws by issuing false or misleading public statements. The complaint charges Royal Group and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaints allege that during the Class Period, defendants caused Royal Group's shares to trade at artificially inflated levels through the issuance of false and misleading financial statements. The statements were materially false and misleading because defendants knew, but failed to disclose the following: (1) that defendants engaged in a fraudulent scheme and/or conspiracy whereby defendants used false invoices to steal money from the Company and defraud shareholders; (2) that the defendant's use of false invoices caused the Company to overstate inventory and allowed defendants to delay writedowns on these assets in order to maintain purportedly strong earnings results; (3) that defendants falsely portrayed that the Company's U.S. window business was strong; (4) that the Company materially overstated its financial results during the Class Period; and (5) that as consequence of the above, the defendants' projection for fiscal year 2003-2004 were materially overstated and were lacking an any reasonable basis when made. More specifically, the Complaints allege that Royal Group and certain of its top executive officers were engaged in a conspiracy to defraud shareholders as disclosed on October 15, 2004 when Royal Group announced that it had received a Royal Canadian Mounted Police production order relating to alleged violations of the Criminal Code for fraud and conspiracy between January 1996 and January 2004. When this was revealed, shares of Royal Group fell $1.12 per share, or 12.49 percent, on October 18, 2004, to close at $7.85 per share. The plaintiff firms in this litigation are: (i) Charles J. Piven, World Trade Center-Baltimore,401 East Pratt Suite 2525, Baltimore, MD, 21202, Phone: 410.332.0030, E-mail: pivenlaw@erols.com (ii) Dyer & Shuman, LLP, 801 East 17th Avenue, Denver, CO, 80218-1417, Phone: 303.861.3003, Fax; 800.711.6483, E- mail: info@dyershuman.com (iii) Schatz & Nobel, P.C., 330 Main Street, Hartford, CT, 06106, Phone: 800.797.5499, Fax: 860.493.6290, E-mail: sn06106@AOL.com (iv) Schiffrin & Barroway, LLP, 3 Bala Plaza E, Bala Cynwyd, PA, 19004, Phone: 610.667.7706, Fax: 610.667.7056, E- mail: info@sbclasslaw.com SCHERING-PLOUGH: PA AG Gets $6.175M Share in Drug Pricing Pact -------------------------------------------------------------- As part of his continuing effort to enforce the Medicaid laws and crack down on prescription drug pricing fraud, Attorney General Jerry Pappert's Medicaid Fraud Control Section has secured $6,175,000 for the Pennsylvania Medicaid Program as its share of a national settlement with Schering-Plough Corporation in December 2004. Pappert said the Pennsylvania settlement is part of a national $290 million settlement following a guilty plea by Schering Sales Corporation, a subsidiary of Schering-Plough, to criminal charges that it fraudulently marketed and priced its blockbuster allergy drug, Claritin. "Prescription drug pricing fraud hurts all of us by driving up the costs of health care and medication," Pappert said. "We must remain vigilant in ensuring that drug companies follow our Medicaid laws and stop companies that defraud consumers and state programs." Pappert said his office today has remitted a check for $2,843,619.55 to the state Department of Public Welfare representing the Commonwealth's share of the Schering-Plough settlement. In addition, Pappert said, the federal government has been remitted approximately $3,332,000 for its share of the Pennsylvania settlement. Pappert explained that the state Medicaid programs are jointly funded by the state and federal governments. "These funds will be used by the state Medicaid programs to provide health care services to the most needy and vulnerable citizens," Pappert said. "We must continue to find ways, including battling fraud, to reduce the high costs of prescription drugs." Pappert explained that Schering's marketing of Claritin violated the federal Medicaid Drug Rebate Statute, which requires drug manufacturers to report accurate "best price" information to the government. Officials use the information to calculate the rebates drug manufacturers pay to the states to ensure the state Medicaid programs purchase the drug at the manufacturers' lowest price for the product. Pappert said the "best price" is the lowest price that a manufacturer offers its products for sale to commercial purchasers. In the Schering case, Pappert said, two large health maintenance organizations (HMOs) threatened to drop Claritin from their formularies due to its high price. Pappert explained that in the late 1990s Claritin was Schering's best selling drug, though it was substantially more expensive than its closest competitor, Allegra. Pappert said when the HMOs threatened to drop Claritin, Schering devised various incentives to indirectly lower the price of Claritin. However, Schering failed to report the discounts to the Medicaid programs. "Schering devised an illegal kickback scheme to keep its high- priced drug, Claritin, on the list of drugs offered by these HMOs while continuing to charge the state Medicaid programs the same high costs," Pappert said. "This forced poor people, those on Medicaid, to pay more for this drug than people with private insurance." As a result of this scheme, Pappert said, the Medicaid programs and certain public health systems paid much more for Claritin from 1998-2002 than customers of the two HMOs. To resolve the claims, Schering-Plough agreed to pay the states the $290 million settlement. For the scheme, Pappert said, Schering Sales pleaded guilty to criminal charges brought by U.S. Attorney Patrick L. Meehan of Eastern District of Pennsylvania. In addition, the company agreed to pay a $52.5 million fine for violating the Anti- Kickback Act. In addition to the criminal conviction, fine and settlement, Pappert noted that Schering-Plough has agreed to enter into a corporate integrity agreement with the federal Department of Health and Human Services that addresses Schering's sales, marketing and pricing of its drugs to government programs. This integrity agreement includes five years of independent audits to ensure that Schering complies with all federally funded health care programs. Pappert said the National Association of Medicaid Fraud Control Units represented the states in negotiating the settlement. The negotiating team included Chief Deputy Attorney General Christopher Abruzzo of Pappert's Medicaid Fraud Control Section. The $6.2 million Schering Medicaid settlement was the fourth major settlement this year announced by Pappert. Earlier this year, Pappert's Medicaid Fraud Control Section secured $8.4 million from Bayer, $2.6 million from GlaxoSmithKline and $1.3 million from Abbott Laboratories for the Pennsylvania Medicaid Program. So far, Pappert has announced that his office has secured $18.5 million in Medicaid settlements for the Pennsylvania Medicaid Program. SUPPORTSOFT INC.: Shareholders Lodge Securities Suits in S.D. CA ---------------------------------------------------------------- SupportSoft, Inc. faces several securities class actions filed in the United States District Court for the Southern District of California, alleging that it violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. Specifically, the complaint alleges that Defendants issued a series of false and misleading statements to the market during the Class Period. These statements were false and misleading because the Company failed to disclose that its business model was in fact not materially differentiated from other enterprise software companies, that its customers were implementing additional hurdles to contract approvals and that it was experiencing execution difficulties. The complaint further alleges that on October 4, 2004, the Company announced its preliminary financial results for the third quarter 2004, ended September 30, 2004. The Company announced that it expected total revenues for the third quarter 2004 to be in the range of $11.9 million to $12.3 million as compared to $13.5 million for the same period the prior year. The Company claimed that "tightness in IT spending" and "more complex approval processes" was the reason for the significant miss. On this news, the Company's share price dropped from $9.62 per share to $6.21 per share, representing a drop of 35.4% on extremely heavy trading volume. The first identified suit in the litigation is styled "Autumn Partners, LLC., et al. v. Supportsoft, Inc., et al., Case No. 04-CV-5222," filed under Judge Hon. William P Dimitrouleas. The class period starts January 20,2004 and ends October 1,2004. The plaintiff firms in the litigation are: (1) Charles J. Piven, World Trade Center-Baltimore, 401 East Pratt Suite 2525, Baltimore, MD, 21202, Phone: 410.332.0030, E-mail: pivenlaw@erols.com (2) Goodkind Labaton Rudoff & Sucharow LLP, 100 Park Avenue, New York, NY, 10017, Phone: 212.907.0700, Fax: 212.818.0477, E-mail: info@glrslaw.com (3) Roy Jacobs & Associates, 350 Fifth Avenue Suite 3000, New York, NY, 10118, E-mail: classattorney@pipeline.com (4) Schatz & Nobel, P.C., 330 Main Street, Hartford, CT, 06106, Phone: 800.797.5499, Fax: 860.493.6290, E-mail: sn06106@AOL.com (5) Schiffrin & Barroway, LLP, 3 Bala Plaza E, Bala Cynwyd, PA, 19004, Phone: 610.667.7706, Fax: 610.667.7056, E-mail: info@sbclasslaw.com UNITED STATES: Group Says Tort Reform Kills Consumer Protection --------------------------------------------------------------- In a media conference call, members of the Coalition to Preserve Access to Justice, including Consumers Union, Public Citizen, US PIRG and the Alliance for Justice, accused the White House of assaulting consumer access to the courts and limiting consumer protection in response to President Bush's tort "deform" blitz this week. The President, promoting limits on consumer lawsuits but not business lawsuits, essentially blames consumers for hindering the nation's economic growth. According to White House spokespersons, consumer lawsuits against corporations are a major drain on the economy, and President Bush met with Congressional leaders at the White House to talk about limiting consumer class actions. "The Bush Administration's class action bill takes rights away from ordinary Americans and shifts it to powerful industries," said Sandy Brantley of the Alliance for Justice, a member of the Coalition to Preserve Access to Justice. "Industries know that our courtrooms are the one place where judges and juries hold them accountable when they rip off consumers, make defective and dangerous drugs, discriminate against employees, or pollute the environment. So powerful industries have turned to smoke-filled back rooms where they can railroad anti-consumer bills through Congress to help them escape the reach of our courts." "The class action bill is a giveaway to the drug companies, polluters, banks and other big campaign donors that want to avoid responsibility for their wrongdoing, but it is unfair to victims. The Senate should hold hearings and have a full debate on the President's class action limitation proposal," said Ed Mierzwinski of US PIRG, and a member of the Coalition. A recent study by Public Citizen found that businesses are much more likely to sue than are individuals. Businesses file four times as many lawsuits as individuals do, according to the study. Moreover, businesses and their attorneys were 69 percent more likely than individual tort plaintiffs and their attorneys to be sanctioned by federal judges for filing frivolous claims or defenses. (The study is available at http://www.citizen.org/Congress/civjus/index.cfm) "Corporations think America is too litigious only when they are on the receiving end of a lawsuit," said Frank Clemente, director of Public Citizen's Congress Watch and a member of the Coalition. Public Citizen's study of the number of lawsuits examined two states and two counties with comparable data and included two jurisdictions frequently cited as "judicial hellholes" -- the state of Mississippi and Philadelphia County, Pa. In addition, there are many jurisdictions in which consumer class action lawsuits cannot even get heard. Specifically, six circuit courts and 26 district courts have consistently refused to hear multi-state consumer cases. "It's ridiculous to say consumer lawsuits are to blame for the economic mess when there's evidence that so many worthy cases can't even get to trial," said Sally Greenberg of Consumers Union, also a member of the Coalition. "The president keeps talking about lawsuit abuse, but consumers and workers are the ones being abused." The assault on consumer lawsuits is part of President Bush's program to decrease the costs of litigation for corporations. Yet it comes at a time when even more evidence of corporate wrongdoing -- most recently in the pharmaceutical industry's continued marketing of Vioxx and Celebrex when those drugs were obviously harmful to consumers. A number of bills are before Congress intended to restrict consumers' ability to bring suit for corporate wrongs, among them the so-called Class Action "Fairness" Act in the Senate, which would restrict class action suits in multiple ways, making it difficult for consumers to hold corporations accountable. The Coalition to Preserve Access to Justice is a group of 80 consumer, civil rights and environmental organizations formed to fight attempts to limit class action lawsuits used by victims of discrimination, consumer fraud, and toxic pollution. UNITED STATES: President Bush Renews Efforts To Curb Lawsuits ------------------------------------------------------------- In an attempt to breath new life to federal limits on class action lawsuits, which is an important issue for many conservatives who say frivolous litigation hurts businesses, President George W. Bush said after meeting with lawmakers of both parties mostly Republicans in the Cabinet Room, "Class- action lawsuits have become a problem in the United States. The judicial system is not fair, it is unbalanced, and it's tilted. It is a problem we intend to fix," the Associated Press reports. Though none of the lawmakers spoke up while reporters were present, the president declared: "Members around this table are willing to set aside their political party to do what is right for workers and business owners alike." Curbing class-action lawsuits is one of the goals in the president's second-term agenda for sweeping tort overhaul. Just recently in Illinois, he renewed his effort to impose nationwide ceilings on medical malpractice awards for pain and suffering. The president after his Illinois visit is set to go to Michigan to push Congress to set limits on jury awards in asbestos lawsuits. "Our tort system has become a needless disadvantage for American manufacturers and entrepreneurs" because they are higher in the United States than in any other major industrialized nation, President Bush said in Illinois. Senate Majority Leader Bill Frist of Tennessee has said that class-action legislation will be the first bill introduced in the Senate this session. A GOP bill that that was shot down last year would have moved more class-action lawsuits in which one person or a small group represents the interests of an entire class of people in court out of state courts and into federal courts where awards typically are smaller. Many consumer groups and Democrats say that the legislation only helps businesses escape judgments for wrongdoing, according to them huge damage awards and class-action lawsuits are necessary tools to ensure corporations play by the rules. The consumer watchdog group Public Citizen found that businesses "are the real cause of the 'litigation explosion.'" Businesses file four times as many lawsuits as consumers do, according to a study by the Coalition to Preserve Access to Justice, a group of consumer, civil rights and environmental organizations trying to fight attempts to limit class-action lawsuits. The group also found that businesses and their attorneys are more than three times as likely to be sanctioned by federal judges for filing frivolous claims or defenses. According to Joan Claybrook, president of Public Citizen, "Consumers have no other remedy unless they can join together and bring a class-action case." VIMPEL-COMMUNICATIONS: Shareholder Lodge Stock Suits in S.D. NY --------------------------------------------------------------- Vimpel-Communications (a/k/a Vympel Communicatii), Alexander V. Izosimov and Elena A. Shmatova face several securities class actions filed in the United States District Court for the Southern District of New York. The suits allege violations of the Securities Exchange Act of 1934. More specifically, the Complaints allege 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 VimpelCom was passing fifty percent (50%) of its revenues from its Moscow operations to its wholly owned subsidiary KB Impuls, thereby improperly deducting fifty percent (50%) of Moscow revenues as expenses to VimpelCom; (2) as such, VimpelCom was only paying taxes on fifty percent (50%) of the Moscow revenues rather than on all revenues from its Moscow operations, including revenues passed onto KB Impuls; (3) that this improper deduction caused VimpelCom to artificially inflate its financial results by at least US$534 million for fiscal years 2001-2003; (4) that as a result of this, the Company's financial results were in violation of generally accepted accounting principles ("GAAP"); (5) that the Company lacked adequate internal controls; and (6) that as a result of the above, the Company's financial results were materially inflated at all relevant times. The complaints further allege that on December 8, 2004, VimpelCom announced that it had received an act with preliminary conclusions of the review of VimpelCom's 2001 tax filing by its tax inspectorate, stating that the Company owed an additional 2.5 billion rubles which is approximately US$90 million in tax (plus 1.9 billion rubles or approximately US$67 million in fines and penalties). A large portion of this amount related to the deductibility of expenses incurred by VimpelCom in connection with the agency relationship between VimpelCom and its wholly owned subsidiary, KB Impuls, which held the GSM license for the city of Moscow and the Moscow region. News of this shocked the market. Shares of VimpelCom fell $8.38 per share, or 21.78 percent, to close at $30.10 per share on unusually high trading volume. The plaintiff firms in this litigation are: (i) Charles J. Piven, World Trade Center-Baltimore,401 East Pratt Suite 2525, Baltimore, MD, 21202, Phone: 410.332.0030, Fax: pivenlaw@erols.com (ii) Milberg Weiss Bershad & Schulman LLP (New York), One Pennsylvania Plaza, 49th Floor, New York, NY, 10119, Phone: 212.594.5300, Fax: 212.868.1229, E-mail: info@milbergweiss.com (iii) Murray, Frank & Sailer LLP, 275 Madison Ave 34th Flr, New York, NY, 10016, Phone: 212.682.1818, Fax: 212.682.1892, E-mail: email@rabinlaw.com (iv) Schatz & Nobel, P.C., 330 Main Street, Hartford, CT, 06106, Phone: 800.797.5499, Fax: 860.493.6290, E-mail: sn06106@AOL.com (v) Schiffrin & Barroway, LLP, 3 Bala Plaza E, Bala Cynwyd, PA, 19004, Phone: 610.667.7706, Fax: 610.667.7056, E- mail: info@sbclasslaw.com WAL-MART STORES: MA Judge Grants Approval To Employees Wage Suit ---------------------------------------------------------------- A Middlesex court judge has approved a suit representing some 55,000 current and former Wal-Mart workers, which is alleging that retail giant Wal-Mart Stores, Inc. failed to pay employees for time worked and neglected to give them meal and rest breaks, the Boston Herald reports. In the eight-page ruling by Superior Court Judge Ernest B. Murphy cites an affidavit by a computer expert hired by the plaintiffs. The expert had allegedly found 7,000 instances during a one-year period when Wal-Mart managers deleted large blocks of time from their employee payroll records. According to Medford consumer lawyer Robert Bonsignore, an attorney representing lead plaintiffs, former employees Crystal Salvas and Elaine Polion, "This is huge. What this means is we have a reasonable probability of success, based on a very tiny sample that showed they knowingly took time away from employees." However, Wal-Mart spokeswoman Christi Gallagher denied those charges saying that, "This court's ruling does not address the merits of the case. There's been no determination that Wal-Mart engaged in any of these unlawful activities." Wal-Mart had withdrawn one motion to dismiss the suit last month, and the court denied a second motion New Year's Eve. Filed in August 2001, the suit represents one of at least 35 lawsuits nationwide involving pay and other workplace issues raised against Wal-Mart. If the employees prove that Wal-Mart failed to pay them for all the time they worked, they could be awarded three times the amount owed. Wal-Mart has reportedly shelled out $50 million to settle a similar suit brought by its Colorado employees. A settlement in the Bay State could cost twice that. WORLDCOM INC.: Former Alltel Executive Part Of $18M Settlement -------------------------------------------------------------- Several news organization have reported that Max Bobbitt Jr., a former executive at rural telecommunications company Alltel Corporation of Little Rock, is among 10 WorldCom, Inc. executives, who have agreed to pay $18 million to settle a class action lawsuit against them, the Arkansas Business Online reports. The lawsuit was filed by WorldCom investors who lost millions when the Clinton, Mississippi-based telecommunications firm collapsed in July 2002. WorldCom's $107 billion bankruptcy was the largest in U.S. history. The settlement is unusual in that Mr. Bobbitt and the other nine WorldCom executives will collectively pay $18 million out of their own pockets, which will be part of a $54 million settlement with the New York State Common Retirement Fund. According to attorneys for the plaintiffs, the executives' personal payments were a key part of the negotiations from the start because the plaintiffs wanted to make an example of the executives. It is unclear, however, how much of the $18 million Mr. Bobbitt will pay. Mr. Bobbitt is a former president and chief financial officer at Alltel, who was with the company until 1995, when he retired with a five-year non-compete clause and a retirement package worth about a half a million dollars a year. According to several accounts, Mr. Bobbitt disagreed with then-CEO Joe Ford on the direction the company was headed, which led to Mr. Bobbitt's departure. Mr. Bobbitt was among several who left the company during that time. Since then, Mr. Bobbitt served as president and CEO of two telecommunications companies, Asian American Telecommunications Corporation and Metromedia China Corporation. In 1998, he became a telecom consultant and was on the board of directors of Metromedia and Verso Technologies Inc. At WorldCom, Mr. Bobbitt served on the company's audit, executive compensation and stock option committees. YODER FORD: Reaches Settlement for TX AG's Consumer Fraud Suit -------------------------------------------------------------- Texas Attorney General Greg Abbott reached an agreement with Yoder Ford (also known as Hacienda Ford) of Edinburg in December 2004 that will yield refunds for about 130 new vehicle buyers who were tricked into paying for vehicle alarm systems that added about $800 to the advertised vehicle price. "Although a Yoder Ford representative wrongfully engaged in this scheme, the company uncovered the conduct and cooperated with my office in resolving this matter with its customers," said Attorney General Abbott. "The business wisely chose to settle to our satisfaction with consumers who deserve refunds for overpayment." From April through July 2001, Yoder Ford advertised sales prices for certain vehicles in newspaper ads to lure prospective customers to the showroom floor to inquire about the sale. However, the dealer never intended to sell the vehicles at the advertised sale prices. In the "bait" scheme at the close of the sale, the dealer added the $800 price of the alarm system to the advertised price, in many instances without the consent or knowledge of the buyer and without disclosing that the purchase was optional. While the newspaper ads inconspicuously noted that a charge for the alarm would be added to the advertised price, only tax, title and license fees may be lawfully excluded from this price. The scheme violates the Texas Deceptive Trade Practices Act by advertising the sale of vehicles with the intent not to sell them as advertised. In June 2002 the Attorney General also sued two other car dealerships, Knapp Chevrolet of Harlingen and Burns Motors of McAllen, for engaging in an identical bait advertising scheme. These cases are pending in court. Consumers who purchased a new vehicle from Yoder Ford from April through July 2001 may be eligible for refunds. These persons will receive notice from the Attorney General by mail at the address they gave the dealership when they purchased a vehicle. Consumers who may have moved since then should call the Attorney General's McAllen office at 956/682-4547 (ext. 106) to leave a forwarding address. New Securities Fraud Cases ANCHOR GLASS: Lerach Coughlin Lodges Securities Fraud Suit in FL ---------------------------------------------------------------- The law firm of Lerach Coughlin Stoia Geller Rudman & Robbins LLP ("Lerach Coughlin") initiated a class action lawsuit in the United States District Court for the Middle District of Florida on behalf of investors who purchased Anchor Glass Container Corporation ("Anchor Glass" or the "Company") (NASDAQ: AGCC) common stock pursuant and/or traceable to the Company's initial public offering of its common stock on or about September 25, 2003 through November 4, 2004 (the "Class Period"). The complaint charges Anchor Glass and certain of its officers and directors with violations of the Securities Act of 1933 and the Securities Exchange Act of 1934. Anchor Glass purports to be the third largest manufacturer of glass containers in the United States, with a primary focus on the beverage and food industries. The complaint alleges that during the Class Period, defendants issued numerous statements concerning the Company's financial performance. As alleged in the complaint, these statements were materially false and misleading because they failed to disclose that: (1) that a portion of the Company's inventory had become impaired and should have been written-off; (2) that despite decreased demand for its products, the Company was continuing to produce the same level of output; (3) that defendants were experiencing difficulties in executing the Company's strategy, resulting in the forced closure of at least one of the Company's facilities; and (4) that as a result of the foregoing, the Company's assets and net income were materially overstated at all relevant times. Then, on November 5, 2004, before the market opened for trading, the Company announced lower earnings for the third quarter of 2004; the closing of its Connellsville facility; its plan to curtail production in the fourth quarter; a restructuring charge of $47-$57 million, which includes a charge for asset impairment; the retirement of the Company's Chief Executive Officer, defendant Richard Deneau; and the suspension of the Company's dividend. In response to these disclosures, shares of Anchor Glass stock fell $2.14 per share, or 27%, to close at $5.80 per share. For more details, contact Samuel H. Rudman or David A. Rosenfeld of Lerach Coughlin by Phone: 800/449-4900 or 619/231-1058 by E- mail: wsl@lerachlaw.com or visit their Web site: http://www.lerachlaw.com/cases/anchorglass/. ATHEROGENICS INC.: Brodsky & Smith Lodges Securities Suit in NY --------------------------------------------------------------- The law offices of Brodsky & Smith, LLC initiated a securities class action lawsuit on behalf of shareholders who purchased the common stock and other securities of Atherogenics, Inc. ("Atherogenics" or the "Company") (Nasdaq:AGIX), between September 28, 2004 and December 31, 2004 inclusive (the "Class Period"). The class action lawsuit was filed in the United States District Court for the Southern District of New York. The Complaint alleges that defendants violated federal securities laws by issuing a series of material misrepresentations to the market during the Class Period, thereby artificially inflating the price of Atherogenics securities. No class has yet been certified in the above action. For more details, contact Marc L. Ackerman, Esq. or Evan J. Smith, Esq. at Brodsky & Smith, LLC by Mail: Two Bala Plaza, Suite 602, Bala Cynwyd, PA 19004, by Phone: 877-LEGAL-90 or by E-mail: clients@brodsky-smith.com. ATHEROGENICS INC.: Charles J. Piven Lodges Securities Suit in NY ---------------------------------------------------------------- The law offices of Charles J. Piven, P.A. initiated a securities class action on behalf of shareholders who purchased, converted, exchanged or otherwise acquired the common stock of Atherogenics, Inc. (Nasdaq:AGIX) between September 28, 2004 and December 31, 2004, inclusive (the "Class Period"). The case is pending in the United States District Court for the Southern District of New York against defendant Atherogenics and one or more of its officers. The action charges that defendants violated federal securities laws by issuing a series of materially false and misleading statements to the market throughout the Class Period, which statements had the effect of artificially inflating the market price of the Company's securities. No class has yet been certified in the above action. For more details, contact the Law Offices Of Charles J. Piven, P.A. by Mail: The World Trade Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore, Maryland 21202 by Phone: 410/986-0036 by E-mail: hoffman@pivenlaw.com. ATHEROGENICS INC.: Murray Frank Lodges Securities Suit in NY ------------------------------------------------------------ The law firm of Murray, Frank & Sailer LLP initiated a class action lawsuit in the United States District Court for the Southern District of New York, civil action number 05-cv-61, on behalf of shareholders who purchased or otherwise acquired the securities of Atherogenics, Inc. ("AGIX" or the "Company") (Nasdaq:AGIX) between September 28, 2004 and December 31, 2004, inclusive (the "Class Period"). The complaint charges AGIX, Russell Medford, Mark Colonnese, and Robert Scott with violations of United States securities laws. 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 hyped the results of an inconclusive and limited study of AGI-1067; (2) that the statistically impressive levels of plaque reduction, described by AGIX in the initial announcement, varied significantly from the results achieved by the Cleveland Clinic; (3) that the Company was burning cash at a high rate; and (4) that the Company manipulated the study's results in order to enter into a strategic partnership with a major pharmaceutical company to complete the development and commercialization of AGI-1067. For more details, contact Eric J. Belfi or Aaron Patton of Murray, Frank & Sailer LLP by Phone: (800) 497-8076 or (212) 682-1818 by Fax: (212) 682-1892 or by E-mail: info@murrayfrank.com. ATHEROGENICS INC.: Schatz & Nobel Lodges Securities Suit in NY -------------------------------------------------------------- The law firm of Schatz & Nobel, P.C., initiated a lawsuit seeking class action status in the United States District Court for the Southern District of New York on behalf of all persons, who purchased the publicly traded securities of Atherogenics, Inc. (NasdaqNM: AGIX) ("Atherogenics") between September 28, 2004 and December 31, 2004 (the "Class Period"). The Complaint alleges that Atherogenics violated federal securities laws by issuing false or misleading public statements. Specifically the Complaint alleges that Atherogenics misrepresented the results of an inconclusive and limited study of its experimental drug AGI-1067. Moreover, the Complaint alleges that Atherogenics manipulated that study's results in order to enter into a strategic partnership with a major pharmaceutical company so as to complete the development and commercialization of AGI-1067. When the truth was revealed the price of Atherogenics stock fell from a close of $23.56 per share on December 31, 2004, to close at $18.72 on January 3, 2005, the next trading day. For more details, contact Wayne T. Boulton by Phone: (800) 797-5499 by E-mail: sn06106@aol.com or visit their Web site: http://www.snlaw.net. CONEXANT SYSTEMS: Braun Law Group Lodges Securities Suit in CA -------------------------------------------------------------- The Braun Law Group, P.C. initiated a class action lawsuit was filed in the U.S. District Court for the Central District of California on behalf of all persons who purchased the publicly traded securities of Conexant Systems, Inc. (Nasdaq:CNXT) ("Conexant") between March 1, 2004 and November 4, 2004 (the "Class Period"), including all former holders of GlobespanVirata, Inc. ("Globespan") who acquired Conexant shares in the merger completed March 1, 2004. Defendants include Conexant, Dwight W. Decker, and Armando Geday. The Complaint charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10-b(5). Conexant specializes in semiconductor solutions for broadband communications, enterprise networks and the digital home. The Complaint alleges that Conexant and certain of its officers and directors made a series of material misrepresentations concerning Conexant's earnings and integration with Globespan. Specifically, the complaint alleges that Conexant repeatedly stated that the integration was successful when in fact there were significant problems with respect to the combined companies' parallel DSL and wireless technology offerings, as well as their sales and administration functions. The complaint alleges that Conexant issued false and misleading statements when it claimed that its wireless LAN ("WLAN") business was experiencing reduced growth due to competition from Taiwan-based chip suppliers when, in fact, the problem was actually caused by the combined companies' WLAN business not being properly integrated in the merger. Plaintiff seeks to recover damages on behalf of the Class and is represented by the Braun Law Group, P.C. whose attorneys have significant experience and expertise in prosecuting class actions and have played lead roles in major cases resulting in the recovery of millions of dollars to investors. For more details, contact Michael D. Braun, Esq. or Marc L. Godino, Esq. of the Braun Law Group, P.C. by Phone: (310) 442-7755 or (888) 658-7100 by E-mail: info@braunlawgroup.com. CHINA AVIATION: Murray Frank Lodges Securities Fraud Suit in NY --------------------------------------------------------------- The law firm of Murray, Frank & Sailer LLP has filed a class action lawsuit in the United States District Court for the Southern District of New York, civil action number 05-cv-60, on behalf of shareholders who purchased or otherwise acquired the securities of China Aviation Oil Singapore Corporation ("China Aviation" or the "Company") (Singapore:CNAO.SI) between February 5, 2004 and November 30, 2004, inclusive (the "Class Period"). The Complaint alleges that, during the Class Period, defendants issued false and misleading statements regarding the Company's business and prospects. As a result of the defendants' false statements, China Aviation shares traded at inflated levels during the Class Period, whereby the Company's top officers and directors assisted the Company's parent company/controlling shareholder in the sale of $120 million worth of its own shares. More specifically, the complaint alleges the following facts, which were known by each of the defendants but concealed from the investing public during the Class Period: (1) that contrary to the Company's prospectus, the Company did not have the necessary risk management controls in place for hedging and trading; (2) that contrary to the private placement offering documents, the funds raised were not to fund an acquisition of the controlling shareholders but rather to meet margin calls for the massive derivative losses in the Company; and (3) that the Company's financial statements were grossly overstated or the Company was hiding liabilities totaling in excess of $550 million in derivative trading losses. On November 30, 2004, Bloomberg published an article entitled "China Aviation Seeks Court Protection After $550 Million Oil Loss," which stated in part: China Aviation Oil (Singapore) Corp., supplier of a third of China's jet fuel, will ask Singapore's High Court for protection from creditors after losing about $550 million from bad bets on oil prices. Also on November 30, 2004, Bloomberg published an article entitled "Singapore Shareholder Group 'Shocked' by China Aviation Loss," which stated in part: The Securities Investors Association Singapore, a group representing retail investors in the city-state, said it's "shocked" by China Aviation Oil (Singapore) Corp.'s $550 million loss from bad debts on the price of oil. "To the shareholders, it's a corporate earthquake. . . ." David Gerald, president of the group, said in an interview. "Is this another Barings? They're asking." China Aviation is not currently trading on any securities exchange. For more details, contact Eric J. Belfi or Aaron Patton of Murray, Frank & Sailer LLP by Phone: (800) 497-8076 or (212) 682-1818 by Fax: (212) 682-1892 or by E-mail: info@murrayfrank.com. KRISPY KREME: Keller Rohrback Initiates ERISA Investigation ----------------------------------------------------------- The law firm of Keller Rohrback L.L.P. recently revealed it is investigating Krispy Kreme Doughnuts, Inc. ("Krispy Kreme" or the "Company") (NYSE:KKD) for violations of the Employee Retirement Income Security Act of 1974 ("ERISA"). The investigation focuses on investments in Company stock by the Krispy Kreme Doughnut Corp. Retirement Savings Plan and the Krispy Kreme Profit Sharing Stock Ownership Plan (the "Plans") between August 21, 2003 and the present (the "Class Period"). Keller Rohrback's investigation focuses on concerns that Krispy Kreme and other fiduciaries for the Plans may have breached their ERISA-mandated fiduciary duties of loyalty and prudence by (1) failing to prudently and loyally manage the Plans' assets by imprudently investing a significant amount of the Plans' assets in Krispy Kreme stock; (2) failing to monitor and provide fiduciary appointees with information that the appointing fiduciaries knew or should have known that the monitored fiduciaries must have in order to prudently manage the Plans' assets; (3) failing to provide complete and accurate information to participants and beneficiaries; and (4) breaching their duty to avoid conflicts of interest. The Company recently announced that it would restate its earnings for fiscal 2004. Yesterday the stock closed at $9.70 per share. At the start of the class period, August 21, 2003, the stock traded as high as $47.50 per share. For more details, contact Jennifer Tuato'o, Paralegal of Keller Rohrback L.L.P. by Phone: (800) 776-6044 by E-mail: investor@kellerrohrback.com or visit their Web sites: http://www.erisafraud.comor http://www.seattleclassaction.com. SUPPORTSOFT INC.: Milberg Weiss Lodges Securities Suit in CA ------------------------------------------------------------ The law firm of Milberg Weiss Bershad & Schulman LLP initiated a class action lawsuit on behalf of purchasers of the securities of SupportSoft, Inc. ("SupportSoft" or the "Company") (NASDAQ:SPRT) between January 20, 2004 and October 1, 2004, inclusive (the "Class Period") seeking to pursue remedies under the Securities Exchange Act of 1934 (the "Exchange Act"). The action is pending in the United States District Court for the Northern District of California against defendants SupportSoft, Radha R.Basu (Chairman and CEO) and Brian M. Beattie (CFO). The complaint alleges that SupportSoft was a provider of support and service management software (referred to as real-time service management software) designed to accelerate and automate enterprise technical support, customer service and end-point management. The complaint further alleges that, throughout the Class Period, defendants claimed that SupportSoft was among an elite group of companies able to deliver in difficult economic times, touted the Company's "crisp execution," and, each quarter, increased 2004 revenue and earnings guidance, such that by the third quarter the Company was guiding analysts and investors to believe that revenues and earnings per share would be in the range of $65 million to $69 million and $0.34 to $0.37, respectively. These statements were materially false and misleading because, among other things, the Company was not executing "crisply" but rather was unable to meet customer specifications, and there was no reasonable basis for defendant's revenue and earnings projections when made. The truth emerged before the open of trading on October 4, 2004. On that date, defendants reported preliminary financial results for the third quarter ended September 30, 2004, announced a third-quarter loss of $0.01 to $0.04 per share, and announced that revenue had declined to as low as $11.9 million from $13.5 million. It was the largest drop since the Company went public in 2000. On this news, the price of SupportSoft shares fell 38.8%, from a closing price of $9.62 on October 1, 2004, the last day before the earnings announcement, to a low of $5.89 on October 4, 2004. The Company subsequently lowered its 2004 revenue and earnings per share guidance to $59 million to $59.7 million and $0.20 to $0.22, respectively. During the Class Period, when SupportSoft shares were trading at artificially inflated prices, the defendants sold 350,000 of their personally held shares for proceeds of $3,568,000. For more details, contact Steven G. Schulman, Peter E. Seidman or Andrei V. Rado by Mail: One Pennsylvania Plaza, 49th fl., New York, NY 10119-0165 by Phone: (800) 320-5081 by E-mail: sfeerick@milbergweiss.com or visit their Web site: http://www.milbergweiss.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 2005. 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. 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