As summarized by the lead counsel’s website, additional cases have been filed on behalf of investors. The various cases were consolidated and on March 20, 2001, Wolf Haldenstein Adler Freeman & Herz LLP was appointed Lead Counsel. A Consolidated Amended Complaint was filed on June 4, 2001. Defendants filed a motion to dismiss on July 13, 2001. Plaintiffs' opposition to the motion to dismiss was filed on August 17, 2001. Defendants' reply was filed on September 18, 2001. On December 7, 2001, the court granted defendants' motion to dismiss, but granted plaintiffs' leave to replead. On July 1, 2002, the court entered a default judgment against defendants for failure to defend the action. The case was closed on November 1, 2002.
The Complaint filed on August 16, 2000, alleges that certain of the Company's officers and directors violated the federal securities laws by providing materially false and misleading information about the Company's business, operations and financial condition and by siphoning off Company money and violating banking rules and regulations. In particular, the complaint alleges that throughout the Class Period, the defendants made false statements about the Company's financial results and misleadingly touted AppOnline's goal of becoming "a dominant player in the growing online home mortgage business." As a result of these false and misleading statements, the Company's stock traded at artificially inflated prices during the class period.
The complaint further alleges that on or around May 24, 2000, after nearly a year of positive news had been issued by the Company, Newsday reported that Island Mortgage Network, Inc., a subsidiary of AppOnline, was fined by the FHA for making loans that did not comply with FHA standards, based on allegedly false documentation and incomplete or incorrect information. On June 30, 2000, New York State Banking Regulators suspended Island's banking license for allegedly making loans it could not fund and refusing to allow regulators access to its files. On August 14, 2000, AppOnline stock closed at $0.08 per share, down 98.5% from a class period high of $5.50. Trading of AppOnline was then halted.
AppOnline filed for protection under the federal bankruptcy laws on or about July 19, 2000 and has not been named as a defendant in this action.
Plaintiffs commenced the action titled Horvitz, et al. v. AppOnline.Com, Inc., Dawcin International Corp., et al. in the United States District Court, Eastern District, on March 17, 2000, seeking damages in an amount to be determined at trial, but in no event less than $800,000. Plaintiffs allege violations of the Securities Exchange Act. According to the docket, on October 5, 2000, the Court entered the Order and Default Judgment against defendants Dawcin International, First Equities, Corp., IMN Equities Corp., Fidelity Transfer, Edward Capuano, Jeffrey Skulsky requiring the defendants to issue a number of shares to the plaintiff. On June 29, 2001, the Court entered a Stipulation and Order of Dismissal dismissing claims against defendant Jersey Transfer & Trust Co., Inc. Finally, on February 27, 2004, the Court entered the Order dismissing the case due to a bankruptcy stay. According to the Order, at the completion of the bankruptcy stay the court will reopen the case upon receipt of letter from counsel so requesting. The case was administratively closed.