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To: mmmary who wrote (11017)	1/28/2003 11:07:08 AM
From: StockDung	Respond to of 19428

Pre-Paid denies rumors of investigation By: TONY PIPPEN, Staff writer January 27, 2003 ADA - Harland Stonecipher, founder and CEO of Pre-Paid Legal Services Inc., denied today that the company's business practices and stock market activity are under scrutiny from the U.S. Securities and Exchange Commission and the New York Attorney General's office, as reported in the New York Post. "We've had no contact from the SEC or the New York Attorney General's Office, and I don't think we will," Stonecipher told the Ada Evening News, "but if they should call, we will be glad to give them any information they want. We're doing everything properly and don't have anything to be concerned about. "This was just another abusive tactic of the short sellers, who made a lot of money Thursday when our stocks fell. I'm going to say they (the short sellers) probably made $10 million yesterday. It really did not affect Pre-Paid. We're not going to sell any of our stock. But it hurts our shareholders if they sell when the price is low. Pre-Paid stocks closed at $18.62 a share Thursday. The Daily Oklahoman reported that New York Attorney General Eliot Spitzer and the SEC are investigating the activities of hedge fund Gotham Partners Management Co., which in late November issued a report touting Pre-Paid's stock, posted it on the Internet and then published it on the Business Wire, a news service. Within a week, Pre-Paid shares rose 16 percent. The Oklahoman also reported that on Dec. 4, Randy Harp, Pre-Paid's chief operating officer, sold 55,000 shares and Gotham Partners later sold 200,000 shares. The hedge fund's Web site research vanished after the New York Times reported that Gotham Partners sold 20 percent of its stake in Pre-Paid well below its target price of $67. The New York Post reported Thursday that the probe of Gotham Partners had widened to include Pre-Paid and will likely include other companies on which Gotham Partners issued reports. "The same New York Post writer wrote an article about 90 days ago saying we were being investigated by the SEC, and we haven't heard anything from them," Stonecipher said. Pre-Paid's stock dropped 5.7 percent Thursday. The company's stock is down nearly 30 percent since the beginning of the month. Stonecipher said Pre-Paid had nothing to do with Gotham Partner's actions and defended Harp's action in selling part of his stock shares. "Randy did everything properly. He owed the company some money and we wanted all officers who have borrowed money from the company to have all their loans paid off by the end of 2002. He went through all the proper channels. He had no way of knowing the stocks were going to fall." Stonecipher explained that in past years the company had loaned money to officers, but none of those loans were forgiven. "I've never forgiven a debt at Pre-Paid," Stonecipher said. "If we loan money, we will make money off that debt for our shareholders. In fact, Randy was paying a higher interest on the loan than we could get for our money in other places." Stonecipher said Pre-Paid had no idea what Gotham Partners was going to report. "Anybody can write a report on us," he said. "We give anybody who writes a report on our company our basic financial information. We don't have any say over what they will do with it. We knew nothing about Gotham Partners, but later learned a little about them when they called for our company information." Stonecipher said he supports Spitzer's investigation of Gotham Partners, which also issued negative reports on other companies. He said he welcomes Spitzer's investigation of short sellers, just as he welcomed Oklahoma Attorney General Drew Edmonds' letter in November to the SEC seeking an investigation into alleged manipulation by investors who profit when the company's stock price falls. These are the investors Stonecipher calls short sellers. These short sellers borrow shares and sell them in the hope they can replace the shares later when the price falls. Stonecipher said that in the past, these short sellers have been able to hide, but he believes that will change and they will be exposed. ©The Ada Evening News 2003

To: mmmary who wrote (11017)	1/28/2003 2:26:32 PM
From: StockDung	Respond to of 19428

Another Party Joins Gotham Fray By Matthew Goldstein Senior Writer 01/28/2003 01:10 PM EST thestreet.com

To: mmmary who wrote (11017)	1/29/2003 8:49:26 AM
From: StockDung	Respond to of 19428

'MOLDMAN' HIT BY CONDO SUIT By PAUL THARP James Nederlander and wife in their condo at 515 Park. - NYP: Jennifer Weisbord January 29, 2003 -- Goldman Sachs is being accused of bankrolling shoddy condos for the rich - glossy apartments where pipes freeze, elevators fail and killer mold runs wild. A handful of lawsuits against the Wall Street powerhouse - along with their partner-developers Millennium Partners and the Zeckendorf brothers - claim that glitzy new towers they built on the East Side, in Washington, D.C., and elsewhere are little more than gilded ghettos. Goldman allegedly allowed shoddy construction in violation of building codes to shave costs and earn higher profits. The result was persistent mold, electrical shorts, flooding of storerooms and other problems, lawsuits claim. Goldman and its partners declined to comment on the allegations. One of the toxic towers is billed as the world's most expensive condo - 515 Park Ave., where one-quarter of the wealthy residents have moved out of their $10 million-and-up apartments in the past two weeks. Over the weekend, two officers of the condo's board - which itself has been sued by residents for allegedly covering up the building's problems - also got their apartments ruined when sprinkler heads ruptured from frozen pipes and flooded six floors. The condo board was dragged into court by an owner at 515 Park for allegedly allowing the shoddy construction to cause deadly mold that has sickened his entire family. The board, in turn, has sued Goldman and several construction firms in Manhattan Supreme Court. The board claims Goldman sent experienced observer teams from its real estate arm, Whitehall Street, to oversee the construction step by step, but apparently ignored obvious missteps. The board's suit says the Zeckendorfs knew about but covered up a "multitude of design and construction defects and deficiencies" throughout the building. The suit alleges that the Zeckendorfs allowed the building to go up without proper insulation on walls or pipes, and permitted foundations that leaked. Concrete slabs and mortar used in the project was also not in compliance with code, the suit claims. It also charges that water leaked around windows, that fire escape stairwells were poorly constructed and didn't meet fire code rules and that electrical systems were not installed according to code. Another Goldman and Millennium-backed condo in Washington, D.C. - The Ritz Carlton Residences - is also said to be plagued with mold and shoddy construction. It's home to sports stars such as basketball legend Michael Jordan and women's soccer champ Mia Hamm. Several residents at the Ritz, where apartments cost up to $6 million, have accused the builders and others of fraud for allegedly cutting corners and covering it up. At 515 Park, among the troubled owners are several senior executives and employees at Goldman Sachs - which put up 20 percent of the tower's $100 million construction budget. The building brought in more than $305 million in sales. Numerous Goldman executives and their friends took insider deals on apartments there, but some - including Glenn Fuhrman, who manages the personal fortune of computer titan Michael Dell - have been forced to flee the mold infestation. Among residents in the 43-story limestone-clad tower are French luxury tycoon Bernard Arnault, music producer Antonio "L.A." Reid and Broadway impresario James Nederlander - who has departed for his Arizona home. One angry millionaire condo owner at 515 Park says he and his neighbors have lost millions. "It is a dangerous place to live, and the value of the condos has been virtually wiped out," owner Richard Kramer, a real estate investor, said in his $400 million lawsuit against Goldman and others. Kramer said his $10 million apartment was unbearable. He said elevators, phones and television service were "regularly inoperative" and that "hot water was frequently unavailable."

To: mmmary who wrote (11017)	1/30/2003 8:37:01 PM
From: StockDung	Respond to of 19428

Pre-Paid Legal Says SEC Probing Trading of Its Shares (Update2) By David Evans Ada, Oklahoma, Jan. 30 (Bloomberg) -- Pre-Paid Legal Services Inc. said U.S. prosecutors and the Securities and Exchange Commission are investigating trading in its shares ahead of an announcement that sent the stock down 26 percent. The company said after the close of trading on Friday, Jan. 3, that its membership had declined for the first time in 39 quarters. The shares plummeted the following Monday. The company, which sells insurance policies that pay for some legal services, has about 1.4 million members who pay about $21 a month each. Ada, Oklahoma-based Pre-Paid said in a statement that it learned earlier this week of an informal SEC investigation and received a subpoena from the U.S. Attorney for the Southern District of New York. The company said both sought information ``relating to trading activities in the company's stock in advance of the January 2003 announcement of recruiting and membership production results for the fourth quarter of 2002.'' The U.S. attorney's subpoena indicates there's a criminal investigation of the trading, said Alan Bromberg, professor of securities law at Southern Methodist University. Marvin Simlon, spokesman for the U.S. attorney for the southern district of New York, declined comment, citing policy. Melanie Lawson, a spokeswoman for Pre-Paid, declined to comment. Chief Operating Officer Pre-Paid's shares fell 14 percent, or $2.51 to $15.69 in after- hours trading at 4:08 p.m. New York time. The company's announcement came at the close of regular New York Stock Exchange trading. The shares fell 27 cents in regular trading. Bromberg said in an earlier interview that Pre-Paid Chief Operating Officer Randy Harp may have violated insider-trading laws when he sold $1.6 million of stock on Dec. 4, a month before Pre- Paid announced that its streak of quarterly membership growth was ending. That announcement drove its shares down $6.61 on Jan. 6, the next day of trading. In the fourth quarter, Pre-Paid lost 13 percent, or 176,511, of its members, while recruiting 169,350 new members, leaving 1,382,306 members on Dec. 31. The company also announced on Jan. 3 that Harland Stonecipher, the chief executive officer, replaced Wilburn Smith as president. Smith said the company knew by early December that the company would report the membership decline. Insufficient Growth ``In early December, we saw growth wasn't'' sufficient to have another quarterly rise, Smith said in a Jan. 3 interview. Bromberg said that if Harp knew when he sold his stock that the quarter would be down, that was probably material non-public information, and Harp violated insider-trading rules. Securities and Exchange Commission Rule 10b-5 prohibits corporate insiders from trading on inside information not disclosed to the public. Harp's voicemail says he will be out of the office for the rest of the week. He previously declined to comment on his stock sales. On Dec. 4, Harp sold 55,000 shares for $28.60 to $28.82 each, raising about $1.6 million. The day before the sale, the company said Harp would sell shares in December to repay $1.3 million of personal loans from the company. In the month preceding Harp's sale, the Pre-Paid's shares had risen 27 percent, boosted by two positive reports on the company's prospects. The first came on Nov. 7 in a press release from SM Berger & Co., Pre-Paid's $5,000-a-month investor relations consultant. The statement predicted another record quarter. ``Pre-Paid Legal Services' performance for the past three quarters of this year bodes well for the company to achieve its 39th consecutive quarter of increased membership and revenues,'' said Stanley Berger, president of SM Berger, in the release. On Nov. 22, hedge fund operator Gotham Partners Management Co. issued a press release calling Pre-Paid shares ``extremely undervalued at current market prices.'' The shares, which closed at $24.84 that day, gained another 15 percent by the time Harp sold.

To: mmmary who wrote (11017)	1/31/2003 8:09:53 AM
From: StockDung	Respond to of 19428

2003-01-31 Federal regulators looking at Pre-Paid By Don Mecoy The Oklahoman ADA -- Federal regulators are investigating Pre-Paid Legal Services about stock trades in advance of an announcement this month that knocked 25 percent off the price of the company's shares. The Ada-based company reported Thursday it received a subpoena this week from the U.S. attorney general for New York's Southern District requesting information about trades preceding a Jan. 3 announcement on Pre-Paid's sagging fourth-quarter recruiting and membership production. The Securities and Exchange Commission notified the company it is conducting an informal inquiry into those trades, the company said. The company, in a statement, said it is cooperating with the requests. Pre-Paid declined to make any officers available for interviews Thursday. The company's public relations firm said Chief Executive Harland Stonecipher was out of town and other officers did not wish to comment. Randy Harp, Pre-Paid's chief operating officer, earned more than $1.5 million when he sold 55,000 shares Dec. 4, a month before Pre-Paid reported that its membership fell for the first time in nearly 10 years. Pre-Paid's stock dropped 25 percent on the next day of trading after the membership announcement. The company also announced Jan. 3 that Stonecipher succeeded Wilburn Smith as president. At that time, Smith told Bloomberg News that company officers knew by early December the company would break its streak of 38 consecutive quarterly membership increases. "In early December, we saw growth wasn't" sufficient to have another quarterly rise, Smith said in a Jan. 3 interview. The day before Harp's sale, Pre-Paid announced he would sell shares in December to repay $1.3 million of personal loans from the company. Pre-Paid sells a package of legal services for a monthly fee through multilevel marketing, with many members who double as sales associates to earn commissions. The firm's plans provide legal consultation ranging from drawing up a will to traffic violation defense. Stonecipher said last week that Harp couldn't have known membership numbers were going to fall. "At that time (when Harp sold his shares), we were probably running ahead. The slowdown came right at the last part of the month, which is normally a good time for us," Stonecipher said. "Even though I had some concern about how big of a month we were going to close out, I never actually thought we were going to close out below what we did a year ago." At odds with his contention that Harp couldn't have known that membership numbers would fall are Stonecipher's statements of Jan. 6 when he granted numerous media interviews in an attempt to temper the market's reaction to the news of membership slippage. Stonecipher said then that the company anticipated that new, more restrictive policies for business submitted by its associates likely would cause a reduction in memberships in the fourth quarter. "We made that change knowing that it would probably cause some blip," Stonecipher said Jan. 6. The company reported the number of new sales associates slid 24 percent in the fourth quarter while new memberships fell 6 percent. In the month preceding Harp's sale, shares rose 27 percent, boosted by a glowing report on the company's prospects by one of the largest shareholders. On Nov. 22, hedge fund operator Gotham Partners Management Co. issued a news release touting Pre-Paid's shares as an investment. The hedge fund also published a report on its Web site setting a target price of up to $67. Stonecipher said the company provided information to Gotham Partners for the report, but "we didn't write it." The Gotham Partners Web site has since been taken down. Gotham Partners, which owned 1 million Pre- Paid shares in September, sold more than 200,000 shares after its recommendation at prices between $27 and $30, according to The New York Times. Gotham Partners wrote a letter to its clients disclosing that it is under investigation by the SEC and the New York attorney general. Stonecipher last week said he supports New York's investigation of Gotham Partners, which also issued negative reports on companies that it was betting would suffer stock price losses. Pre- Paid has long battled such short sellers, who borrow shares and sell them in the hope they can replace the shares later when the price falls. In November, Oklahoma Attorney General Drew Edmondson wrote a letter on Pre-Paid's behalf to the SEC seeking an investigation into alleged manipulation by investors who profit when the company's stock price falls. More than half of Pre- Paid's stock is in the hands of short sellers. The news of the Pre-Paid probes was issued after the market closed Thursday. Shares of Pre-Paid fell 14 percent to $15.69 in after-hours trading before the stock became unavailable for trading. During regular trading Thursday, the shares dipped 27 cents. Pre-Paid shares are off 40 percent since Jan. 1. Jake Dollarhide, chief operating officer for Tulsa's Fredric E. Russell Investment Management Co., said Wall Street likely will drive the price even lower although speculation about investigations involving the company already had reduced the stock price. "This announcement certainly doesn't help any publicly traded company, especially when the backdrop of 2003 is corporate scandal after corporate scandal after corporate scandal," said Dollarhide, whose firm is a former shareholder and analyst of Pre-Paid. SEC investigations are conducted privately. An informal inquiry involves interviews, examination of brokerage records, reviews of trading data and other methods. Once the commission issues a formal order of investigation, it may subpoena witnesses and documents. Archives: More information on this topic from The Oklahoman. Subscribe to The Oklahoman.

To: mmmary who wrote (11017)	1/31/2003 3:19:34 PM
From: StockDung	Read Replies (1) \| Respond to of 19428

TOO FUNNY, MAYBE DONALDSON IS MONICA LEWINSKY'S DAD? POOR GARY CONLIT NOT GETTING A PIECE OF THE ACTION. =========================================== SEC NOMINEE MAY BE GRILLED ON LOVE CHILD By BETH PISKORA BILL DONALDSON Has president's support. Getty Images January 31, 2003 -- President Bush's nominee for SEC Chairman, William Donaldson, had a child out of wedlock - and will probably have to answer questions about it at his Senate confirmation hearings. The president, meanwhile, remains firmly behind his choice regardless. "We were aware of this before the president nominated Donaldson," said Claire Buchan, a spokeswoman for the White House. "The President believes William Donaldson is highly qualified to be SEC chairman." Donaldson had a long affair with the wife of a congressman, and a child was born to the couple 12 years ago, according to the bombshell report on Fortune.com. While married to his wife of 34 years, Donaldson started an affair with a woman, Jane Morrison, in the late 1980s. She was, at the time, the wife of Rep. Bruce Morrison (D-Conn.). The Morrisons subsequently separated and divorced in 1990, but Donaldson remained married until his first wife died of a cerebral hemorrhage in 1994. He then married Jane Morrison in 1995. However, the baby was born in 1990 - while Donaldson was still married to his first wife. Donaldson did not return a call from The Post for comment. A spokesman for the Securities and Exchange Commission referred The Post to the White House, which said Bush backs his nominee. The Senate is expected to begin confirmation hearings on Donaldson's nomination next week. An unidentified source told Fortune that this mat^^^^^^^^^^^^^^^^^^^^^^^^^ter, while personal, should come up, since it is behavior that "calls his character into question, and character is an important thing for the next head of the SEC to have." Donaldson's nomination thus becomes the second embarrassment for the supposedly family-friendly Bush administration as it attempts to remake the country's economic team. Bush's nominee for Treasury Secretary, John Snow, was arrested, though never charged, for drunk driving in 1982. Snow's ex-wife sued in 1988 for non-payment of child support over a 19-month period.