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JCPenney and Eckerd sued in $2 billion Federal Lawsuit with claims of Racketeering
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Added: 04/04/2004
Type: Summary
Viewed: 1821 time(s)
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JCPenney and Eckerd sued in $2 billion Federal Lawsuit with claims of Racketeering
A prominent Dallas businessman filed a lawsuit against Plano-based JCPenney's intentional participation in schemes to defraud J.C. Penney's shareholders, Wall Street investors and the SEC of money and property by means of fraud and material misrepresentations using interstate commerce, the mails or wires.
The lawsuit was filed on March 18, 2004 in the United States District Court, Northern District of Texas in Dallas cause number 304CV-577-N. According to court records, JCPenney knowingly falsified sales reports and supplied conflicting statements to shareholders and the media regarding the true profit and losses of JCPenney.
The suit was forced by JCPenney's refusal to correct illegal violations of GAAP (Generally Acceptable Accounting Practices), according to plaintiff Brett Barnes. Senior Executives at JCPenney were sent repeated notices of known sales misreporting within the defendants company. Allen Questrom, Vanessa Castagna, Eli Akresh, Ken Hicks, Nicholas Bomersbach, Charles Lotter, Jeanine Connolly and others ignored the issue of financial misinformation propaganda by JCPenney in its Corporate Fraud conspiracy. Upon JCPenney's refusal to resolve its financial misstatements, the SEC was contacted to investigate.
Nicholas Bomersbach moved to JCPenney from Arthur Andersen around 2001 after Andersen agreed to pay a $7 million civil penalty for allegedly issuing what the SEC called "materially false and misleading audit reports". The lawsuit alleges that Defendant Nicholas Bomersbach perpetrated the same fraud and misleading financial reports at JCPenney.
The court documents compare JCPenney to Enron, WorldCom, Tyco and other Corporate scandals. Allegations include Insider Trading at JCPenney relating to Eckerd and other subsidiaries. JCPenney is accused of defrauding Wall Street investors by fabricated and conflicting sales reports to inflate or tamper with market prices of JCP stock.
According to public court records, there is a pattern of JCPenney failing to pay suppliers to falsely inflate profitability of the company. The lawsuit states, "JCPenney materially underreported its expenses and materially overstated its earnings in its filings with the Securities and Exchange Commission".
The complaint was filed by Brett Barnes, the distinguished behind-the-scenes advertising genius who was primarily responsible for the success of JCPenney.com, which generated approximately $680 million in 2003. According to JCPenney, the role of Mr. Barnes was invaluable since 1997 whereby he was the marketing expert who brought JCPenney.com from "virtually no presence", to becoming a key player in the ecommerce field.
Court records detail that was prior to JCPenney committing theft of trade secrets, whereby the major retailer illegally captured industry secrets and is accused of defrauding and refusal to pay for services.
The suit claims that JCPenney "siphoned trade secrets, techniques, processes and creative from the (6,000) affiliates" of JCPenney.com. The claim states that affiliates were supplied with sales reports materially lower than stated to the shareholders and public, in order to evade paying commissions. According to court records, after JCPenney stole technical processes from the affiliates, contracts were cancelled without payment of commissions.
The original complaint, filed on March 18, 2004 alleges that the defendant's were in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO) and fraud.
In related news, there has been a flurry of recent separate lawsuits and government investigations of JCPenney and Eckerd.
According to inside sources, in 2002 JCPenney CEO Allen Questrom began offering his Senior Management financial incentives to unlawfully breach contracts. JCPenney has reportedly overstated profits by defrauding and evading payments to suppliers for services, while violating contract terms and conditions.
An investigation of court records and Penney's public filings revealed that JCPenney has not disclosed to shareholders, stock brokers and investors the legal risks relating to numerous active lawsuits against JCPenney;
A major class action lawsuit was filed by Houston attorney David Berg. The claim is currently certified in Federal Court and pending against JCPenney for $4.8 Billion alleging fraud in defendant JCPenney's Life Insurance Company scam.
Another multi-million dollar lawsuit was recently amended by Guild against Penney's accusing the struggling retailer of Racketeering (RICO), copyright infringement and breach of contract.
An SEC investigation of JCPenney and Eckerd was requested by the Washington Legal Foundation (WLF) a nonprofit, public interest law and policy center based in Washington, D.C., with supporters nationwide. Since its founding 25 years ago, WLF has advocated free-enterprise principles, responsible government, property rights, a strong national security and defense, and a balanced civil and criminal justice system, all through WLF's Litigation Department, Legal Studies Division, and Civic Communications Program.
One year ago, WLF launched its Investor Protection Program. The goals of WLF's Investor Protection Program are comprehensive: to protect the stock markets from manipulation; to protect employees, consumers, pensioners, and investors from stock losses caused by abusive litigation practices; to encourage congressional and regulatory oversight of the conduct of the plaintiffs' bar with the securities industry; and to restore investor confidence in the financial markets through regulatory and judicial reform measures.
As part of WLF's IPP, WLF filed a Complaint dated January 21, 2003 with the SEC calling on the SEC to conduct to formal investigation into the short-selling of J.C. Penney Co. stock shortly before and after a major class action lawsuit was filed against Eckerd Drug Stores which is owned by J.C. Penney. As more fully described in that complaint, there are serious questions about the selective disclosure of the timing of the lawsuit to short-sellers of J.C. Penney Co. stock that warrant further investigation.
J.C. Penney's attorneys could not be reached for comment. |
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Poster: Curt
Added: 12/03/2004
too bad Brett Barnes is dead. What a looser!
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Poster: Joseph
Added: 08/02/2004
Brett Barnes, the mastermind behind JCPenney.com? Funny.<BR><BR>Talk to the search engine experts and find out how many times his pages have been banned for spamming. You will find out he knows very little about the true search engine world.
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Poster: John Pendalina
Added: 08/02/2004
Crap
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