PHILADELPHIA, April 19, 2002 (PRIMEZONE) -- Berger & Montague, P.C. filed a class action against Medi-Hut Co. (Nasdaq:MHUT) and certain of its officers and directors in the United States District Court for the District of New Jersey, on behalf of all persons or entities who purchased MHUT common stock during the period from April 4, 2000 through February 4, 2002.
The complaint seeks damages for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. 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.
Plaintiff has alleged that 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, Lawrence Marasco had a controlling interest in Larval Corp. ("Larval"), the Company's largest customer. Specifically, Medi-Hut failed to disclose that 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 ("GAAP") 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 to the market. The investing public, 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 per share to $3.29 in unusually heavy trading. Four days later, Grant Thornton LLP ("Grant Thornton") resigned its position as Medi-Hut's independent auditor after only two weeks. Grant Thornton served as the Company's auditors from January 24, 2002 through February 8, 2002.
If you purchased Medi-Hut common stock during the period from April 4, 2000 through February 4, 2002, inclusive, you may, no later than April 29, 2002, move to be appointed lead plaintiff. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery, is not, however, affected by the decision whether or not to serve as a lead plaintiff.
For more information on this class action or to sign-up to participate this action online please visit our Website at www.bergermontague.com.
Darin R. Morgan, Esquire
Kimberly A. Walker, Investor Relations Manager
Berger & Montague, P.C.
1622 Locust Street
Philadelphia, PA 19103
Phone: 888-891-2289 or 215-875-3000
Fax: 215-875-5715
Website: http://www.bergermontague.com
e-mail: InvestorProtect@bm.net
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca