Re: 8/23/01 - [IFTA] OTCBB Newswire: Shareholders File $5 Million Class Action Suit Against Infotopia; Infotopia Responds to $5 million Class Action Suit
Shareholders File $5 Million Class Action Suit Against Infotopia
Houston, TX -- (OTCBB NEWSWIRE) -- August 23, 2001, Just as many suspected a reverse split was inevitable for Infotopia Inc. (IFTA: .59), many more suspected since the reverse split, a lawsuit by the shareholders would follow. Today, Goodkind Labaton Rudoff & Sucharow LLP (GLRS) announced that it has filed a suit in the United States District Court for the Northern District of Ohio against Infotopia, Inc. and four members of the company's senior management for stock fraud. The plaintiffs, twenty-six stockholders of Infotopia, are seeking a minimum of $5 million in damages and have asserted a claim for punitive damages.
Named in the suit aside from Infotopia (IFTA) are Daniel Hoyng, Infotopia's chief executive officer and chairman of the board, Ernest Zavoral, the company's president and a director, Marek Lozowicki, an officer and a director, and Clinton Smith, an attorney who is also a director.
The complaint alleges that the plaintiffs were induced through a series of false and misleading statements made by the company's senior management between June and September 2000 to exercise warrants to purchase Infotopia stock. The stockholders exercised their warrants in mid-September by surrendering promissory notes issued by Infotopia that provided for the return of principal within 270 days together with 10% interest.
The stockholders claim that they relied on statements by Hoyng and other officers and directors that the "Torso Tiger" sales "will continue for many years to come" and that earnings of 20 cents per share could be "safely projected" "for this fiscal year." In fact, according to the complaint, Infotopia discontinued the sale of this product as of December 31, 2000 and the company reported a loss of over $16 million dollars for the three months ending November 30, 2000 and a loss of over $26 million for the ten months ended December 31, 2000. Other false and misleading statements alleged in the complaint relate to an announced Letter of Agreement for a $20 million financing package that was characterized in an August 4, 2000 press release as a "real home run for our company." In a letter to the shareholders on September 28, 2000 Hoyng disclosed that the Letter of Agreement was in fact only a letter of intent that never materialized into any financing for Infotopia.
The stockholders further assert that the false and misleading statements had the effect of causing the stock price to rise from 12 cents per share on August 23, 2000 to $1.12 per share on September 12, 2000. Several of the insiders sold hundreds of thousands of shares through September 20 realizing substantial profits. The suing stockholders' stock was not registered by the company until over a month later when the stock price had dropped to the 20 cent per share range. Adjusted for a recent 200:1 reverse split, the stock is currently trading at less than a half a cent per share.
The plaintiffs are represented by Mark S. Arisohn, Esq. of the New York law firm, Goodkind Labaton Rudoff & Sucharow LLP, a national leader in securities fraud litigation. For a copy of the complaint, please go to the GLRS web site, www.glrs.com. For additional information or comments, please contact Mr. Arisohn. at 212-907-0840.
At 2:27 EST, IFTA is falling .105 (15%), on volume of 255,700. In many of OTCBB News Network stories we place emphasis on the old adage, "if it sounds to go to be true, it usually is." If the shareholders win this litigation, this will be another case for the argument.
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Infotopia Responds to $5 million Class Action Suit
CANFIELD, Ohio-- (OTCBB NEWSWIRE) -- August 23, 2001, In a press release issued this evening, Infotopia Inc. (IFTA: .44) denies the allegations in the action commenced today in federal court in Ohio ("Ohio Action"), to the extent that they are set forth in today's press release by the plaintiff's law firm Goodkind Labaton Rudoff & Sucharow LLP.
The press release by Infotopia, claims some of the plaintiffs in the lawsuit brought against the company are also defendants in a lawsuit commenced by the company in New York. The company has instructed their attorneys to investigate whether a preliminary injunction against these individuals in the New York case applies in the class action case.
Daniel Hoyng, Infotopia CEO and Chairman stated "We categorically deny these allegations and will continue our business as usual," in the press release today. He also feels the action brought today is an attempt to circumvent the judicial process in New York.
IFTA closed down .255 (35%) in today's session. See Shareholders File $5 Million Class Action Suit Against Infotopia .
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