SourceCorp Unit Head, Shareholders Settle For $3M

SourceCorp Unit Head, Shareholders Settle For $3M - 2/2/2009

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2009 News and Press Releases

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News	News 2009
HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

SETTLEMENT NEWS:

SourceCorp Unit Head, Shareholders Settle For $3M
Shannon Henson

Securities Law 360. February 2, 2009
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EXCERPT: The plaintiffs in a class action brought by shareholders of SourceCorp Inc. over losses stemming from an alleged illegal accounting scheme have asked a judge to grant preliminary approval of a $3 million settlement with the only remaining defendant. In a motion filed Friday in the U.S. District Court for the Northern District of Texas, counsel for the plaintiffs asked the court to give the green light for the settlement between the class and the only remaining defendant, Bill D. Deaton, the founder and president of SourceCorp subsidiary Image Entry Inc. “The settlement achieves a prompt and substantial recovery for the class and is unquestionably superior to another possibility which unmistakably exists if the litigation continued: no recovery at all,” the motion said. The litigation dates back to late 2004 when four proposed class actions were filed in the Northern District of Texas against business process outsourcing and consulting firm SourceCorp and some of the company's officers and executives. Judge David C. Godbey consolidated the cases in March 2005. The suits named the company, CEO Ed H. Bowman and chief financial officer Barry Edwards. An amended complaint added SourceCorp subsidiary Image Entry and Deaton. A first amended complaint in the case said Image Entry and Deaton “cooked Image's books,” passing the inflated earnings information to SourceCorp. When the alleged illegal accounting practices came to light, SourceCorp's common stock fell more than $5 a share in one day. The suit said that Deaton and Image shifted expenses to off-balance sheet entities so that Deaton could collect a $25 million payday. The payment was contingent on Image hitting certain revenue and earning targets for the three years after SourceCorp bought the company, the suit said.

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