Re: 8/7/01 - [ECNC/KKRS] Individual Investors File Personal Federal Lawsuit Against eConnect & Thomas Hughes Regarding Alleged Stock Fraud
Individual Investors File Personal Federal Lawsuit Against eConnect & Thomas Hughes Regarding Alleged Stock Fraud
LOS ANGELES, Aug 7, 2001 /PRNewswire via COMTEX/ -- David Greenstein, a former California attorney and a Civil Litigation Paralegal for over 30 years, announced today he filed an individual action in the U.S. District Court in Los Angeles against eConnect (OTC Bulletin Board: ECNC chart, msgs), Thomas Hughes, and several eConnect officers and associates based upon violations of Federal Securities Law. The suit is similar to the Class Action suits filed against eConnect and its principals by the SEC respecting activities of eConnect, Thomas Hughes and others alleged to have been involved in the publication of false and misleading Press Releases causing loss to investors in the millions of dollars. The SEC, after investigation, filed a complaint against eConnect and others for SEC law violations based on fraud.
Mr. Greenstein said, "We opted out of the Class Action Settlement because it gives defrauded stockholders essentially nothing. After talking with one SEC attorney involved in the case and two of the Class Action attorneys, I found the matter was settled because eConnect says it has no money to pay or insurance to cover a potential multi-million dollar judgment. It appears, though, the individuals involved do have property to satisfy judgments which based on fraud, cannot be discharged in bankruptcy. We're looking to get back what we lost due to the fraud and to possibly help other investors, some of whom lost their life savings. I understand stocks, especially in small cap companies, are a gamble. If I lose in a stock gamble, so be it, but if the house rigs the game against me, then it's not a loss I will assume quietly. Anyone can sue as I did without an attorney if they opt out of the Class Action settlement before August 27, 2001."
Mr. Hughes is also a Director of Kanakaris Wireless, having been appointed after the SEC halted trading in eConnect stock."
An informational website has been set up at home.earthlink.net to let other investors find how they may be able to recover their losses.
A special e-mail address (eConnectlawsuit@earthlink.net) has been set up for anyone wishing more information.
Mr. Greenstein encourages eConnect investor to check the website out for his/her own benefit.
MAKE YOUR OPINION COUNT - Click Here
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Source: David Greenstein
Contact:
David Greenstein, Civil Litigation Paralegal, +1-818-716-8389
URL: home.earthlink.net
siliconinvestor.com
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Getting ripped off?
DISCLAIMER:
I AM NOT AN ATTORNEY. I AM NOT ADVISING YOU ON LAW, PROCEDURE OR WHAT TO DO. THE INTENT OF THIS PAGE IS TO SHARE MY EXPERIENCE WITH YOU AND TO GIVE YOU FOOD FOR THOUGHT. WHATEVER YOU DO IN THIS MATTER IS YOUR CHOICE. IF YOU HAVE LEGAL QUESTIONS, CONSULT AN ATTORNEY.
WHO AM I & I STEAL THEIR THUNDER
As I said above, I am a California Civil Litigation Paralegal and have been so for the better part of 30 years.
There is a saying which goes, “I steal their thunder” meaning such as when in trial, if you know something is going to come out which may be considered negative to your side, steal the thunder of the other side and bring it out yourself first. Along this line- - - - - -
Prior to 1971 I was a California licensed attorney. In 1971, I made a great error of judgment and as a result was disbarred. I stayed in law however and when invited after five (5) years by the State Bar to reapply for admission, I declined. Having learned what I did about lawyers I had lost most respect for lawyers, wasn’t interested in being either a Serpico or Don Quixote and understood the truth in what Oliver Wendell Holmes meant when he said, “To My Friends Justice, all others, the law”.
Since 1971 I have been a Civil Litigation Paralegal. I have also had some successful businesses such as being the Medico/Legal Administrator of a medium sized medical clinic in the San Fernando Valley (just outside of Los Angeles). I also built from the swamp up, a very successful Bed and Breakfast in the Caribbean, which I sold over a year ago after having it almost 10 years.
With the exception of eConnect, I did well in the Bull Market of recent years.
I kept involved in law by “ghosting” for several local attorneys have done a fair amount of appeals work. I also have done some personal public interest matters on my own including two class actions with one being against Ultra-Slim Fast resulting in a favorable termination (nominal money to me as the plaintiff).
I am also a one time Jeopardy champion (1988) and have written two books which are: 1) “Sue & Grow Rich. How to Handle Your Own Personal Injury Claim Without an Attorney” and “The Complete Handbook of Child Custody, Visitation & Support”. You can look these up in an older edition of Bowkers’ “Books in Print”.
I tell you the above so you can have the facts and use them to determine how much if any credibility you will grant me in what I say herein.
WHY AM I DOING THIS WEB PAGE?
Because I can. Because I gave eConnect and Tom Hughes the chance to do the right thing and I was ignored. Because it costs me nothing and it just might help someone out there who lost money they could not afford. It’s that simple.
However, even if you think I have an ulterior motive, consider this: If something is the truth, it doesn’t matter who brings it to you, be it Moses, Jesus or Hitler. Facts are facts. I am giving you a door to information. Don’t believe me, do your own research as I should have done before but don’t close your eyes to information and possibilities.
Remember, as the great German philosopher-poet Goth said: "There's nothing more terrible than ignorance in action." ("Es ist nichts schrecklicher als eine tätige Unwissenheit.")
INTRODUCTION:
Read this history because at the end, there is something, which might just help get you back some of the losses you suffered by reason of the eConnect fraud. And note I use the word “fraud” with knowledge of its meaning and implications.
I was an eConnect victim. I got caught in the Pump & Dump and when the SEC halted trading of eConnect stock (see: cnnfn.cnn.com, I held my breath since I was holding a very long position.
I was lurking on the RagingBull board and started posting on March 13, 2000. If you check the archives of Raging Bull under my screen name “Talosian”, you will see I was a long and strong supporter of eConnect. I posted often against a Class Action saying only the attorneys would benefit.
THE CLASS ACTION:
When the SEC halted trading in eConnect stock, attorneys immediately jumped on the Class Action bandwagon (43 suits in all were filed across the U.S.) and slightly more than a year later, a (sweetheart) settlement was reached and is being proposed to persons who purchased stock between November 18, 1999 and March 13, 2000.
THE PROPOSED SETTLEMENT:
As you may know, the Proposed Class Action Settlement gives the attorneys $350,000 cash and the victims of eConnect and Mr. Hughes get the option to purchase more eConnect stock at fixed price of $1.00 per share during the next ten years. Currently, the stock of eConnect is hovering around $0.06 per share. That’s it. Click here to view the proposed settlement (http://home.earthlink.net/%7Eenterprise/econ/econstmt.pdf).
Personally, I figured the settlement is worth its weight in toilet paper. I took some time and checked into things (with a little help from a friend within the SEC) and found Mr. Hughes has seriously big bucks and is sitting pretty on our money. Remember that it was Hughes who approved the phony press releases, which pumped eConnect stock.
I’M MAD AS HELL AND NOT GOING TO TAKE THIS ANYMORE:
At this point, I figured I had two choices, 1) Take part in the settlement or 2) Do something on my own.
I figured the settlement as worthless since even if eConnect ever makes any money, I’m positive Hughes and crew will be taking it in salaries, bonuses, etc.
So scrap option #1.
The only thing left for me was to sue eConnect, Hughes and crew for fraud. But how could I do this? I’m reasonably good at research so here is what I did.
I knew there was a complaint in the Federal Court in California against eConnect, Hughes and others into which all the other cases had been consolidated, so I got a copy of the Consolidated Complaint from the court (can be done by mail). This is a long sucker but it was full of information, some which even I had not even known. After reading the facts in the Consolidated Complaint, there was no doubt eConnect was liable for fraud.
After reading the literature sent me about the Proposed settlement, I knew I could opt out of the settlement by simply sending a letter to the Claims Administrator postmarked no later than August 27, 2001 and thus not being bound by it and I could sue on my own (http://home.earthlink.net/~enterprise/econ/claim.pdf). You most likely received a copy of the Proposed Settlement. So I opted out since I was getting nothing anyway.
Well, it didn’t take too much creative ability to scan the Complaint and modify it to for an individual rather than a Class.
VOILA! In about 2 hours, I had a really good Complaint (see below which is in .pdf format).
Now what? I found where my local United States District Court was located. As this happens, it was the same where all the individual class actions against eConnect were consolidated but there are hundreds of U.S. District Courts around the country and I could have filed in any of them where I live. If you’re curious where your U.S. District Court is, you can check: findlaw.com
Next, I found the Federal Rules of Civil Procedure on the web
law.cornell.edu .
The Rules seemed intimidating at first but when I looked at them one by one, I found them actually simple. Of course, I am pretty decent at research. I had to make a few calls asking about local forms and procedures but I found the people with the court system pretty helpful. I found that in addition to the Complaint, I needed a Form CV-71 (Civil Cover Sheet cacd.uscourts.gov and a Form CV-1A (Summons cacd.uscourts.gov. I downloaded both and they were easy to fill in. Between the calls and reading the Federal Rules of Civil Procedure, I got ready to file my suit.
So I took my original and 2 copies to the Federal Court (or I could have sent them by mail) and my check for $150.00. Next thing I know, I have an issued summons and a conformed copy of my complaint. Next stop, any Sheriff, Marshal or Registered Process Server. They get paid under $50 and they serve your papers on eConnect in California and I am in the race. If you did the same thing, usually your local process server (in the yellow pages under process servers) has connections with other process servers in California where eConnect and Hughes reside.
Once eConnect and the others are served, I simply (OK, so it’s not that simple but then what in life is?) keep researching the Rules. I will keep posting what happens to my suit, including the documents, so anyone can see them.
If you choose to do the same, our cases will probably follow parallel paths. If you choose to do this, you have at least one major advantage from the git-go. I was told by an attorney relative, that if someone opts out of the Class Action settlement and filed on their own, their suit can not be consolidated with any other suit. Remember though, this is what an attorney told me and he may be right but I’m not saying this with any authority, I’m only repeating what the attorney told me.
You are in your local court and if its in Montana, New York or Texas, eConnect is going to have to get a local attorney to fight you. Nuff said?
And of course don’t forget the courts always try to assist parties in reaching settlements. I have heard a lot of people ask the court for a Voluntary Settlement Conference and the court grants them. I’ll bet a lot of cases settle at the VSC.
BOTTOM LINE:
If I didn’t opt out of the Class Action Settlement, I would have let eConnect, Hughes and the rest of
them rip me off for serious bucks. At least now I have a chance. I don’t need an attorney to get my day in court and I can use the allegations in the Complaint I filed as an outline of what to say to the judge. Actually Federal Court seems really clean cut as opposed to state courts and their “The Practice” or “L.A. Law” procedures. It’ seems to me like it’s really pretty much “Show & Tell” in Federal Court.
Even if I don’t get anything, and I am confident I will, I feel better having fought than let them walk all over me. Here for your information only, is a copy of my Complaint against eConnect, Hughes and others. I have changed the names to protect my privacy but the rest is the same. Hope it is of interest to you. Click here for a copy of the complaint (http://home.earthlink.net/%7Eenterprise/econ/econ.pdf).
LATE BREAKING THOUGHT:
I want take a moment and go into go what I call the Alliance Equities Mystery.
On May 17, 2001, Alliance Equities announced it had taken a major position in eConnect ( click here to see the news release home.earthlink.net.
Now this seems pretty good however does Alliance know something we don’t? Or more accurately, why is Alliance doing this when a scant seven (7) months ago, this same Alliance Equities filed 2 Form 144s indicating a proposed sale of a total of 2,794,920 eConnect shares. But here is the real interesting part: In it’s Form 144s, Alliance indicated expected proceeds from the sale of $1,574,890 or, according to my Handy-Dandy Thrifty Drug Store calculator, Alliance would be selling those shares for a whopping $0.563 per share.
Now here is another good question: Where did Alliance get the shares to sell. Well, for the answer to that, check out sec.gov and you will find out Alliance Equities in not a new player w/eConnect but what I call a co-conspirator.
Yes, you have to dig long and deep (its called Due Diligence) to find out who is sleeping with whom here but when you do, you will get a pretty good picture. What you’re going to find is Alliance got the stock from eConnect directly or indirectly.
And now one last thing to think about.
When stock prices go up, it’s usually because there is some positive announcement to the public. We hear something good about a company, we think it will make money and we buy its stock. Another scenario. The stock price suddenly starts going up for no apparent reason. We see the price go up and figure we should buy now and sell when it goes higher. We often do just that without thinking.
When a stock takes a serious percentage jump for no apparent reason, I see two possibilities. 1) Insiders leaked information and those in the circle start buying. 2) Insiders, directly or indirectly, start buying in order to get a tidal wave of buying started and then they well sell when the stock goes up a good percentage. Personally, I call this stock manipulation.
So what is the point here?
On July 26, 2001, eConnect stock was in the area of five ($0.05) cents per share. In one trading day, it jumped 22.03% to $0.072 on a volume of 3,758,400 shares traded. And this was with NO ANNOUNCEMENT whatsoever from anyone. Click here to see the actual 5-day chart (http://finance.yahoo.com/q?s=ecnc.ob&d=c&t=5d).
So who is playing games here? Well, I would put my money on Mr. Tom Hughes who owns literally millions of shares in eConnect. I’m sorry, but with his past history of false, fraudulent and illegal dealings (Hey Tom, why don’t you sue me for what I said here?) and having gotten away with it to boot, he knows how to do it and has a track record to prove it.
UPDATES AND LATE BREAKING NEWS:
August 9, 2001. As required by local Federal Court Rules requiring an "early meeting of counsel", I called the attorney for eConnect and Mr. Hughes asking him to return my call to discuss the matters required by the Federal Rule. This was on August 6, 2001. To date, I have received no return phone call or other communication.
UPDATE August 16, 2001
On 8/16/2001 I went to the office of Class Action Lead Counsels Weiss & Yourman to view their file on eConnect. I spoke extensively with Co-lead counsel Vahn Alexander, Esq and reviewed hundreds of the literally thousands of documents compiled by the attorneys.
I found nothing new or that I didn’t know but what were the most interesting and the most disturbing was what I found out regarding something I was not allowed at that time to see.
Mr. Alexander told me the decision to settle was based in the greatest part on the “fact” there was no insurance to cover the fraud and the individual defendants had no assets to cover an anticipated judgment.
The latter statement piqued my interest and I asked how it was known the individual defendants did not have any assets. Mr. Alexander told me that the individual defendants had submitted financial statements to the attorneys for the Class. I asked if these financial statements had been investigated or if they were taken at face value. To my utter amazement, I was told the financial statements supplied by the defendants were taken at face value. I found it hard to believe all the individual co-defendants are paupers. But this wasn’t the end of my amazement.
I asked to see the financial statements and was told that I could not see them since they were given to my attorneys in confidence and with the understanding they would not be given to or viewed by class members and possibly even the court.
I had more than a real problem with this position since according to my understanding, the lead attorneys were representing the Class and I am a member of the class so effectively and in law, these attorneys are representing me. Since when can an attorney be given information on a case and not share it with their clients?
I also asked how class members can decide if they want to agree to the proposed settlement or object to it if they are not provided all the information in the hands of their attorneys. Mr. Alexander did not have any answers for me on these points but said he would refer my concerns to Lawrence King, Esq who was handling that aspect of the case. I was told it was up to Mr. King if I could see the financial statements of the defendants but I left with the distinct impression that I would not be allowed to see them and they might not even be provided to the court.
Apparently the court may simply rubber-stamps an approval when a settlement is reached in a Class Action.
I strongly feel that each class member has the right to see the financial statements provided their attorneys from the defendants so they can decide how they want to vote on the proposed settlement. I also feel attorneys have an ethical obligation to provide their clients with all the information they have about the defendants.
I encourage each and every one of you to write to the Judge and the lead attorneys and demand to see the financial statements provided by the defendants.
And don’t forget certain things are time critical here.
Read the Class Action Notice and you will see if you bought stock during the class period, you are a class member.
If you don’t file your claim by October 12, 2001 and don’t request exclusion from the settlement by August 27, 2001, it appears you will be forever barred against seeking any recovery from eConnect and/or the other individual defendants and not have any right to buy the stock at $1.00 per share over the next ten (10) years. If course I feel the stock will never get anywhere near $1.00 per share so long as Mr. Hughes and his people are in charge. But then this is my personal opinion.
I for one will be sending the following letter on this point to the court and the attorneys for the class and defendants as I feel is proper and required by court procedure. Please feel free to use my letter as a frame for any letter you want to send.
August 17, 2001
Hon. Margaret M. Morrow
United States District Judge
United States District Court
Central District of California
255 E. Temple Street, Room #790
Los Angeles, Ca 90012-4793
Weiss & Yourman
Attorneys at law
10940 Wilshire Bl. 24th. Floor
Los Angeles, Ca 90024
Lead Class Action Attorneys
Attention: Vahn Alexander, Esq.
Michael Braun, Esq.
Mark Godino, Esq.
Stull, Stull & Brody
10940 Wilshire Bl. #2300
Los Angeles, Ca 90024
Co-Lead Class Action Attorneys
Kaplan, Kilsheimer & Fox, LLP
805 3rd. Avenue, 22nd. Floor
New York, N.Y. 10022
Steven J. Aaronoff, Esq.
The Christenson Miller Law Office
2121 Avenue of the Stars
18th. Floor
Los Angeles, Ca 90067
Attorneys for eConnect
Re: eConnect Class Action Settlement
Master File # CV00-2674 MMM (JWJx)
Settlement Hearing: 9/10/2001
Dear Judge Morrow:
I am a member of the Class in the above matter set in your court as indicated above.
It has come to my attention that my attorneys representing the Class in this matter have received information from the individual defendants in this action respecting their financial status. I am also advised that my attorneys are supporting the Proposed Settlement with one of the basis being that essentially the company and the individual defendants have no money, insurance or other property from which a judgment could be paid. I was told this directly and in writing by counsel for the Class.
I am further advised the financial information provided my attorneys was given with the understanding my attorneys would not divulge the contents of the financial statements to any other class member or me. I am also informed that my attorneys may not even provide this information to this court. I do not understand this situation.
As a Class member, I am now essentially being asked to decide if I want to support the Proposed Settlement, opt out of the class and pursue my own remedies or object to the settlement and have my attorneys put in further work.
There is no way I can make an intelligent and informed decision on what to do in this matter when my attorneys will not provide me with information which I feel is critical to my ability to make a decision. I am amazed my attorneys would agree to withhold this critical information from me as their client.
I may not be able to attend the settlement hearing and so I am asking by way of this letter for this court to continue the hearing and order my attorneys to provide me with copies of the financial information they have with respect to the individual defendants so I can make an informed decision as to how I want to proceed.
Thank you very much for your attention to and consideration of this request.
Sincerely,
DAVID GREENSTEIN
CONCLUSION:
In two words: FIGHT BACK! I am, and you can too.
Keep checking back.
Stay tuned.
David
talosian70@hotmail.com
home.earthlink.net |
