Unitech Industries, Inc. - Securities Class Action

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Copyright (c) 2001
Stanford Law School

Unitech Industries, Inc. Conclusion: The original complaint alleges that Unitech's officers and managers were under pressure to provide ever increasing growth for the Company. In Unitech's November 16, 1994 prospectus for an initial public offering, the Company stated that proceeds from the offering plus expected cash flow would satisfy its cash flow requirements for at least eighteen months. In its February 13, 1995 Form 10-K for FY94, the Company reported a 26% increase in sales, a 173% increase in earnings. For each of the first three quarters of FY95, the MD&A section reported no cash flow or liquidity problems, and the Forms 10-Q claimed increased income. On December 21, 1995, management issued a release stating that there were potential misstatements in Unitech's quarterly financial reports and that the Company might seek protection from its creditors. During the class period, Unitech's stock dropped from a high of in violation of their duty to refrain from trading while in possession of material, adverse information. Plaintiffs also allege that defendants knowing publicized materially false and misleading information in a deliberate scheme to maintain the illusion of Company growth. Defendants purportedly did so in order to enhance their employment position, compensation, and the value of their stock. Based on these assertions, plaintiffs allege violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and rule 10b-5 promulgated thereunder. The complaint alleges that Unitech's 10-Qs for the prior three quarters were materially false and misleading because: (1) they were not prepared in accordance with generally accepted accounting principles; (2) they materially overstated net income, earnings per share and assets; and (3) they failed to disclose material problems with respect to operating cash flow and liquidity. The CEO, the COO, a vice president, and a director allegedly sold Unitech shares while in possession of the material, adverse information alleged in the complaint. The complaint alleges violations of sections 10(b), 20, and 20A of the Securities Exchange Act of 1934 Act, and Rule 10b-5 promulgated thereunder.

As summarized by the Company’s 8-K for July 31, 1997, on or about December 21, 1995, Unitech and certain of its present and former officers and directors were named in a multi-count securities lawsuit before the United States District Court for the District of Arizona, styled Daniel B. Zonies et al. v. John F. Londelius, et al., No. CIV 95-2892-PHX-PGR (D. Ariz) ("Zonies Action"). On or about January 9, 1996, a separate group of Unitech shareholders filed a multi-count federal securities action against certain of the same defendants in a case captioned James Barge et al. v. Unitech Industries, Inc., et al. , No. CIV 96-009-PHX-SMM ("Barge Action"). On or about January 16, 1996, a third group of Unitech shareholders filed a similar federal securities action, styled Norman Weiss et al. v. John Londelius et al., No. CIV 96-0132-PHX-RCB ("Weiss Action"). The Weiss Action complaint is virtually identical to the complaint filed in the Barge Action. By virtue of the automatic stay set forth pursuant to 11 U.S.C. Section 362 of the Bankruptcy Rule, no efforts have been made to pursue any direct recoveries against Unitech to date, No defendant has filed an answer or motion to dismiss in any of the securities fraud actions. Although the same events underlie all three actions, they have not yet been consolidated and no class certification hearings have been held or scheduled. However, on March 7, 1996, the plaintiffs in the Zonies Action filed a motion to consolidate all related actions.

On March 6, 1996, a First Amended Class Action Complaint was filed, terminating defendant Unitech Industries and adding several individual defendants. On December 13, 1996, the Court entered Pretrial Order No. 1 granting the motion to consolidate 2:95-cv-2892 with member cases 2:96-cv-94, 2:96-cv-132, and further appointing plaintiffs' co-lead counsel (Sherrie R Savett, Genna D Kidd, Jules Brody, Mark Levine, Andrew S Friedman, Francis J. Balint). On January 8, 1997, a Consolidated Class Action Complaint was filed. On February 7, 1997, defendant Semple & Cooper filed a motion to dismiss the consolidated class action complaint. On August 5, 1997, the Court entered the Order dismissing the claims against Semple & Cooper only, and the case continued as to the remaining defendants. On July 13, 1998, a Stipulation of Settlement was filed.

On November 24, 1998, the Court entered the Final Judgment and Order of Dismissal by U.S. District Judge Paul G. Rosenblatt. The court approved the settlement of the class action, awarded Plaintiffs’ counsel $225,000 in attorneys' fees and $22,934.54 in expenses, and approved the proposed plan of allocation as set forth in the stipulation. Pursuant to Rule 54(b) FRCP the Clerk of the Court was ordered to enter the final judgment and dismiss the case.

INDUSTRY CLASSIFICATION:
SIC Code: 3690
Sector: Capital Goods
Industry: Constr. & Agric. Machinery

COMPANY/ISSUER NAME:	Unitech Industries, Inc.
COMPANY/ISSUER TICKER:	UTIIQ
COMPANY WEBSITE:	http://www.unitech-industries.com/

FIRST IDENTIFIED COMPLAINT IN THE DATABASE

Daniel B. Zonies, et al. v. Unitech Industries, Inc., et al.

COURT: D. Arizona	DOCKET NUMBER: 95-CV-02892
JUDGE NAME: Hon. Paul G. Rosenblatt
DATE FILED: 01/10/1996	SOURCE: Business Wires
CLASS PERIOD START: 02/13/1995	CLASS PERIOD END: 12/20/1995
TYPE OF COMPLAINT: Complaint (Unamended and Unconsolidated)
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Harold B. Obstfeld 260 Madison Avenue, New York, NY, 10016 (voice) 212.696.1210, (fax) , Schiffrin & Barroway LLP 3 Bala Plaza E, Bala Cynwyd, PA, 19004 (voice) 610.667.7706, (fax) 610.667.7056, info@sbclasslaw.com Zlotnick & Thomas , , , (voice) , (fax) , _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 3

DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT
Class Action Complaint
Type: Complaint		Date on the document: 12/21/1995

REFERENCE COMPLAINT

In Re: Unitech Securities Litigation

COURT: D. Arizona	DOCKET NUMBER: 95-CV-02892
JUDGE NAME: Hon. Paul G. Rosenblatt
DATE FILED: 01/08/1997	SOURCE: Business Wires
CLASS PERIOD START: 02/13/1995	CLASS PERIOD END: 12/21/1995
TYPE OF COMPLAINT: Consolidated Complaint
PLAINTIFF FIRMS NAMED IN COMPLAINT:
Berger & Montague PC 1622 Locust Street, Philadelphia, PA, 19103 (voice) 800.424.6690, (fax) 215.875.4604, investorprotect@bm.net Bonnett, Fairbourn, Friedman & Balint, PC (Phoenix) 4041 N. Cental Avenue, Suite 1100, Phoenix, AZ, 85012-3311nta (voice) 602.274.1100, (fax) , Stull, Stull & Brody (New York) 6 East 45th Street, New York, NY, 10017 (voice) 310.209.2468, (fax) 310.209.2087, SSBNY@aol.com _____________________________________________ TOTAL NUMBER OF PLAINTIFF FIRMS: 3

DOCUMENTS FOR THE REFERENCE COMPLAINT
First Amended Class Action Complaint
Type: Complaint		Date on the document: 03/06/1996
Consolidated Class Action Complaint
Type: Complaint		Date on the document: 01/08/1997
Stipulation Of Settlement Regarding Class Action Claims
Type: Settlement		Date on the document: 07/13/1998
Final Judgment And Order Of Dismissal
Type: Order		Date on the document: 11/23/1998
Order Approving Plan Of Allocation
Type: Order		Date on the document: 11/23/1998
Final Judgment And Order Of Dismissal
Type: Order		Date on the document: 11/24/1998
U.S. District Court Civil Docket
Type: Docket		Date on the document: 12/14/2000

OTHER DOCUMENTS
Class Action Complaint
Case Name and/or Number: Barge, et al. v. Unitech Industries, Inc., et al.
Type: Complaint		Date on the document: 01/10/1996

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