According to the docket, on January 29, 2001, the Court issued an Order preliminarily approving the settlement. On May 23, 2001, a hearing was held to approve the settlement. That day, the Court approved the settlement and issued an Order and Final Judgment and Dismissal. On January 22, 2003, the Court further issued an Order authorizing the distribution of the net settlement fund.
As announced in the Notice of Pendency and Settlement, a settlement hearing is to be on May 9, 2001, at 10 a m, before the Honorable Lloyd D. George, United States District Judge, at the United States District Court for the District of Nevada, to consider the fairness, reasonableness and adequacy of the Settlement as set forth in the Stipulation of Settlement between Lead Plaintiffs and the Settling Defendants, dated May 3, 2000, on file with the Court. The Settlement will result in the creation of a cash settlement fund in the aggregate principal amount of $225,000.
According to the Notice, in or around June, 1997, Mednet filed for protection from its creditors under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Nevada, In re Mednet, MPC Corporation, Case No 97-25800 (Bankr, D Nev ) An order confirming Mednet's plan of reorganization and discharge under Chapter 11 was entered by the Bankruptcy Court on or about August 12, 1998 As a result of its bankruptcy, Mednet was not named as a defendant in the Action. In or around September, 1999, Defendant Mednet's former president and chief executive officer and a member of Mednet's board of directors filed for protection from his creditors under Chapter 7 of the Bankruptcy Code and remains a party to the Action in name only, and is not a party to the Settlement.
In or around September, 1999, the Ballard Spahr Andrews & Ingersoll Defendants filed a motion to dismiss the Complaint with prejudice as to them. That motion was granted on or about March 10, 2000. As a result, the Ballard Spahr Andrews & Ingersoll Defendants are no longer parties to the Action. In or around October and November, 1999, the McGladrey & Pullen Defendants, the Wall Street Group, and the Officer and Director Defendants filed various motions to dismiss the Complaint, all of which remain pending. Pursuant to this Stipulation, Lead Plaintiffs, the McGladrey & Pullen Defendants, the Wall Street Group, and the Officer and Director Defendants have agreed that those motions shall be stayed pending final approval of the Settlement and entry of the Order of Final Judgment and Dismissal. Pursuant to the Stipulation, Lead Plaintiffs and the Settling Defendants agreed to certification of a plaintiff class solely for purposes of the Settlement By its Order Preliminarily Approving Settlement, the Court certified the Class as all Persons who purchased Mednet Stock during the period from August 1, 1995 through and including March 10, 1997.
The First Amended Class Action Complaint filed on April 21, 1998 alleges fraud in the sale of securities in violation of Section 10(b) of the Securities Exchange Act and Rule 10b-5 promulgated thereunder; fraud; breach of contract; breach of fiduciary duty; and conversion. The First Amended Complaint alleges the defendants published false and fraudulent press releases, and false and fraudulent financial reports. The First Amended Complaint also alleges that Ballard Spahr Andrews & Ingersoll breached contractual and fiduciary duties owed to subscribers of Series A Preferred Shares and converted investor funds by releasing $5,350,000 in escrow funds to Mednet despite escrow instructions that a minimum of $6,000,000 representing 300,000 units of Series A Preferred Shares be sold prior to a release of funds to Mednet. The First Amended Complaint alleges that this $5,350,000 should have been returned to investors by Ballard Spahr Andrews & Ingersoll pursuant to the escrow instructions, and the investment canceled.
The securities class action is commenced on behalf of purchasers of Mednet Common Stock, Mednet Series A Preferred Stock, Mednet Series D Preferred Stock, Mednet Series E Convertible Preferred Stock, and Mednet Series F Convertible Preferred Stock; during the time period of Aug. 1, 1995 through March 10, 1997. Named as defendants are certain Individual Defendants, McGladrey & Pullen, L.L.P., Ballard Spahr Andrews & Ingersoll, and The Wall Street Group Inc.