NEW YORK, June 9, 2006 (PRIMEZONE) -- Because of the number of inquiries it has received regarding the class action lawsuit filed against Escala Group, Inc. (Nasdaq:ESCL) and the recent announcement that the Company is now under formal SEC Investigation, the Rosen Law Firm P.A. is issuing this notice to update investors.
On May 9, 2006, the Rosen Law Firm filed an action on behalf of Escala shareholders alleging violations of the federal securities laws as a result of defendants issuing material misstatements regarding the true nature of Escala's financial performance and business prospects. The complaint filed by the Rosen Law Firm specifically alleges that the Company misrepresented the true value of transactions with its affiliate and controlling shareholder Afinsa Bienes Tangibles, S.A. The Complaint alleges that these transactions were in furtherance of a Ponzi scheme orchestrated by Afinsa in Spain and constituted the primary source of the Company's purported operating profits. The Complaint further alleges that the Company misrepresented its business prospects by failing to disclose that the Company's profitability was tied to the ability of Afinsa to sustain business practices that required widespread deception and fraud, as was the recoverability of a substantial portion of Escala's receivables.
On May 23, 2006, the Company held a conference call in which it informed investors that without the Afinsa relationship the Company would have reported a quarterly net loss of $1.7 million rather than the reported operating income of $16.6 million. On June 5, 2006, Escala announced that it had received notification of a formal order of investigation from the Securities and Exchange Commission which Escala believes is related primarily to Escala Group's transactions with Afinsa.
As featured on the Fox News Network, and various other local and international media regarding the Escala class action, The Rosen Law Firm is pleased to answer any questions investors may have concerning the lead plaintiff process and how it may affect their interests. You may contact Laurence Rosen, Esq. or Phillip Kim, Esq. toll free at 866-767-3653 or by email at lrosen@rosenlegal.com or pkim@rosenlegal.com.
The deadline for seeking appointment as lead plaintiff is July 10, 2006. Investors who have suffered large losses in Escala stock during the Class Period (September 5, 2003 through May 8, 2006) are encouraged to seek appointment as lead plaintiffs in the litigation. Further information concerning the class action filed against Escala can be obtained at www.rosenlegal.com. Investors are permitted to remain absent class members or may retain counsel of their choice. Investors are also welcome to submit questions or complete a certification form to seek appointment as lead plaintiff online at www.rosenlegal.com.
The Rosen Law Firm has expertise in prosecuting investor securities litigation and extensive experience in actions involving financial fraud. The Rosen Law Firm represents investors throughout the nation, concentrating its practice in securities class actions.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca