BALA CYNWYD, Pa., March 13, 2002 (PRIMEZONE) -- The following statement was issued today by the law firm of Schiffrin & Barroway, LLP:
A securities class action lawsuit pending in the U.S. District Court for the District of New Jersey claims that Medi-Hut Co., Inc. ("Medi-Hut" or the "Company") (Nasdaq:MHUT) misled shareholders about its business and financial condition.
Plaintiff seeks damages for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of all investors who bought Medi-Hut Co., Inc. securities between April 4, 2000 through February 4, 2002 (the "Class Period"). The defendants are Medi-Hut; Joseph A. Sanpietro, Medi-Hut's President and Chief Executive Officer; Laurence M. Simon, Chief Financial Officer of the Company; Robert Russo, Treasurer of Medi-Hut; Vincent Sanpietro, Secretary of Medi-Hut; and James G. Aaron and James S. Vacarro, both members of the Company's Board of Directors.
Schiffrin & Barroway, LLP has prosecuted shareholder class actions for over fourteen years and has recovered more than $1 billion for investors. If you are a shareholder of Medi-Hut Co., Inc. and want to learn more about this lawsuit and about becoming a lead plaintiff, you may visit our Website at www.sbclasslaw.com.
The complaint alleges that the defendants knowingly and recklessly disseminated materially false and misleading statements and omissions that misrepresented the Company's business, operations and financial performance. As stated in plaintiff's complaint, Medi-Hut misled the investing public by failing to disclose that a Medi-Hut vice president had a controlling interest in Larval Corp. ("Larval"), the Company's largest customer. Specifically, Medi-Hut failed to disclose that Lawrence Marasco, Medi-Hut's Vice President for Sales and Marketing, had a controlling interest in Larval. During fiscal year 2001, sales to Larval accounted for 62% of Medi-Hut's revenues.
Because Lawrence Marasco had a controlling interest in one of Medi-Hut's customers, generally accepted accounting principles dictated that Medi-Hut identify sales to that customer as related party transactions. The Company, however, failed to disclose the true nature of its sales to Larval. Indeed, each report Medi-Hut filed with the Securities and Exchange Commission during the Class Period, including quarterly and annual reports, was devoid of any reference to the fact that one of its largest customers was controlled by a Company employee. These reports were disseminated to shareholders and/or were publicly available to potential investors.
Plaintiff alleges that the misrepresentations and omissions by defendants influenced the views of stock market analysts and the investing public and brought about an unrealistic assessment of the Company's performance and prospects; and that, as a result, Medi-Hut's stock traded at artificially inflated prices throughout the Class Period.
On February 4, 2002, the nature of the relationship between Medi-Hut, Lawrence Marasco and Larval Corp. was revealed. The market, recognizing that a majority of the Company's revenues in fiscal year 2001 were generated via sales to a related party, reacted swiftly and severely. By the close of business on February 4, shares of Medi-Hut had lost 51% of their value, falling $3.41 to $3.29 in unusually heavy trading. Four days later, Grant Thorton LLP ("Grant Thorton") resigned its position as Medi-Hut's independent auditor after only two weeks. Grant Thorton served as the Company's auditors from January 24, 2002 through February 8, 2002.
If you purchased Medi-Hut Co., Inc. securities between April 4, 2000 and February 4, 2002, you may be a member of the class and have until April 29, 2002 to move the court to become a lead plaintiff. In order to serve as lead plaintiff, however, you must meet certain legal requirements. To be a member of the class, however, you do not need to take any action at this time. Should you decide to seek appointment as a lead plaintiff, you may retain Schiffrin & Barroway, or retain counsel of your choice.
To learn more about your rights and interests in this case and your ability to potentially recoup your losses, please contact Schiffrin & Barroway (Marc A. Topaz, Esq. or Stuart L. Berman, Esq.) directly at 888-299-7706 (toll free) or 610-822-2221, fax number 610-822-0002, e-mail at info@sbclasslaw.com or visit our Website at www.sbclasslaw.com.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca