An order of discontinuance was entered on February 06, 2008, in which the settled action is discontinued without costs to either parties.
According to the US District Court Civil Docket as of 02/20/2004, plaintiffs agree not to prosecute the action against Pierce, subject to the conditions further set forth in this Stipulation. Pierce agrees that within a reasonably prompt period he will respond in good faith to discovery requests hereafter propounded to Pierce by plaintiffs as if he continued to be a party in the action. Pierce agrees that any statutes of limitations applicable to the claims asserted or that could have been asserted by plaintiffs under federal, state or common law against him shall be tolled from the date of the filing of the complaint until the termination date of this agreement, that is, 60 days after receipt of written notice of termination as provided hereinafter. This agreement may be terminated by Pierce or by plaintiffs upon 60 days written notice to counsel for the opposing party. After the expiration of such notice, plaintiffs may amend the then extant complaint or may file a new or amended complaint to assert claims against Pierce. The passage of time from filing of the complaint up to and including the date on which Pierce is named as a defendant in any new or amended complaint shall not be counted in determining the timeliness of the commencement of any proposed claims against Pierce. In the event plaintiffs elect to amend the complaint or file a new pleading asserting claims against Pierce, counsel for Pierce agrees to accept service of any such amended complaint or new complaint on behalf of Pierce without requiring plaintiffs to file a formal motion to amend with the Court. Nothing in this agreement shall be interpreted as limiting Pierce's right to seek dismissal of the complaint or any claims that may hereafter be interposed against him by plaintiffs.
The complaint alleges that, throughout the Class Period, defendants engaged in fraudulent actions which included, among other things, 1) reporting millions of dollars in fictitious earnings, revenues, expenses and assets, deliberately concealed by defendants' creation of phony bank statements, checks, invoices and a general ledger, which they supplied to 800America's auditor; 2) the misappropriation and looting of substantial assets of the Company by defendants David Elie Rabi (Rabi)
and Tillie Ruth Steeples (Steeples) through transfers of funds from 800America accounts to accounts controlled by Rabi and/or Staples; 3) the issuance of a press release falsely denying Rabi's criminal past and failing to disclose that Steeples was a control person of the Company; and 4) the filing of a 10-KSB which listed as officers and/or directors or "significant employees" several individuals who had either left the Company or could not be located by the Company.
The Complaint further alleges that 800America maintained two separate sets of books in furtherance of their fraud, in which virtually all of its reported revenues in fiscal years 2001 and 2002 were fictitious. In addition, 800America reported approximately $13.2 million in cash assets for fiscal year 2001-supported by a phony bank statement provided to the Company's auditor reflecting approximately $12.67 million in cash-while the actual bank statement reflected that such account never contained more than $640.66 for that entire period. On November 13, 2002, the Securities & Exchange Commission (SEC) filed a civil action against 800America, Rabi and Steeples in the Southern District of New York, alleging that the Company falsified virtually all of its reported revenue, concealed the criminal histories of Rabi and Steeples, and otherwise perpetrated a massive fraud against investors. Both Rabi and Steeples were arrested on criminal charges in connection with this fraud.