I received a reply from LONE regarding an e-mail query I made yesterday asking if there were any corporate developments behind the recent stock price activity and I also mentioned the Aug. 4 lawsuit. Jayne Davis responded that there have been no new developments and provided me with a statement regarding the lawsuit, which she said I may share:
If you wish, you may post the following regarding the fraud suit. It is a meaningful event but not breaking news. It was a business decision not to issue a press release.
The fraud suit just filed goes back to events that happened in the fall of 1998. LifeOne had a settlement deal with the named entities, which I'll refer to as the Sutton group, parties who were not named in the California litigation, that they could sell a certain number of shares over a set time period. The escrow agent for that group was Shane Henty Sutton. Soon after the deal was made, we got hit with the involuntary bankruptcy, which would have stayed the deal with the Sutton group. And we believed that had occurred. Instead, the Sutton group immediately took their shares and transfered them offshore, which they then dumped on the market in a matter of days. We discovered these events recently while going through transfer records looking for other matters. The Sutton group in effect breached the escrow agreement and cost the company several million as the stock price dropped from around $0.70 to $0.10. Ironically, soon after we had discovered their scheme, they came back to us claiming that the company owes them more money because they didn't get enough from the shares that they sold, not knowing that we had uncovered their scheme. We have responded with the fraud suit.
Thanks for keeping me informed.
Jayne |
