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-PILED
CHARLOTTE, 1410• UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NORTH CAROLINA af) j 0_CHARLOTTE DIVISION
X U.S, STR I CT COURTBRIAN WILCOX, individually and on behalf : 3:98 CV 46,5--17W LAIL OF N.C.
of all others similarly situated,
Plaintiff,CLASS ACTION
-against- • COMPLAINT• FOR VIOLATIONS
SWISHER INTERNATIONAL, INC., OF FEDERALPATRICK L. SWISHER, D. CHRIS SECURITIES LAW LAZENBY, GARNETT R. MUCHA, W.TOM REEDER, Ill, and CHARLES H.CENDROWSKI, PLAINTIFF DEMANDS
• TRIAL BY JURY
Defendants. X
NATURE OF THE ACTION
1. Plaintiff brings this action as a class action on behalf of himself and all
other persons or entities who purchased or otherwise acquired the common stock of
Swisher International, Inc. ("Swisher" or the "Company") during the period March 18,
1996, through March 2, 1998, inclusive (the "Class Period"), to recover damages caused
to the class by Defendants' violations of federal securities law.
2. Defendants violated federal securities law by engaging in a conspiracy
and course of conduct pursuant to which they made a series of materially false and
misleading statements concerning the business and financial operations of Swisher with the
intent and having the effect of substantially inflating the trading price of Swisher.
Specifically, Defendants materially overstated the Company's results for 1996 and the first
•
three quarters of 1997. Swisher stock has subsequently been delisted for failure to file the
appropriate regulatory filings with the SEC.
JURISDICTION AND VENUE
3. This action arises under sections 10(b) and 20(a) of the Exchange Act,
15 U.S.C. §§ 78j(b), 780 .); and SEC Rule 10b-5, 17 C.F.R. § 140.10b-5. The
jurisdiction of this Court is based on section 27 of the Exchange Act, 15 U.S.C. § 78aa;
and on sections 1331 and 1337 of the Judicial Code, 28 U.S.C. §§ 1331, 1337.
4. Venue is proper in this District under section 27 of the Exchange Ad, 15
U.S.C. § 7 gaa, and section 1391(h) of the Judicial Code, 28 U.S.C. § 1391(b). The
wrongs alleged herein occurred in substantial part in this District, including the
preparation and dissemination to the investing public of false and misleading information.
5. In connection with the acts and conduct alleged herein, Defendants,
directly and indirectly, used the means and instrumentalities of interstate commerce,
including the United States mails and the facilities of the national securities exchanges.
PARTIES
6. Plaintiff Brian Wilcox purchased shares of Swisher common stock during
the Class Period, as set forth in the accompanying certification, and was damaged thereby.
7. Defendant Swisher is a Nevada corporation with its principal corporate
offices located at 6849 Fairview Road, Charlotte, North Carolina 28210.
8. Defendant Patrick L. Swisher was, at all times relevant hereto, Chief
Executive Officer and President of the Company. Defendant Swisher signed the
Company's Form 10-K for the fiscal year ended October 31, 1996 and Form 10-Qs for
the quarters ended January 31, April 30, and July 31, 1996, and January 31, April 30,
and July 31, 1997,
9. Defendant D. Chris Lazenby was Chief Accountant of the Company
during fiscal 1996. Defendant Lazenby signed the Company's Form 10-Qs for the
quarters ended January 31, April 30, and July 31, 1996.
10. Defendant Garnett R. Mucha was Chief Accountant of the Company
during fiscal 1997. Defendant Mucha signed the Company's Form 10-Q for the quarter
ended January 31, 1997.
11. Defendant W. Tom Reeder, III was, at all times relevant hereto, Vice
President, Secretary, and a Director of the Company. Defendant Reeder signed the
Company's Form 10-K for the fiscal year ended October 31, 1996.
12. Defendant Charles H. Cendrowski was Corporate Controller of the
Company during fiscal 1997 and fiscal 1998. Defendant Cendrowski signed the
Company's Form 10-Qs for the quarters ended April 30 and July 31, 1997.
13. Defendants Patrick L. Swisher, D. Chris Lazenby, Garnett R. Mucha,
W. Tom Reeder, 111, and Charles H. Cendrowski are collectively referred to herein as the
"Individual Defendants." By reason of their positions with the Company, Individual
3
Defendants had access to the material adverse non-public information about its business,
finances, products, markets and present and future business prospects via access to
internal corporate documents (including the Company's operating plans, budgets, and
forecasts and reports of actual operations compared thereto), conversations and
connections with other corporate officers and employees, attendance at management and
Board of Directors' meetings and committees thereof and via reports and other
information provided to them in connection therewith.
14. Individual Defendants, by reason of their positions with Swisher, were
controlling persons of the Company and had the power and influence, and exercised the
same, to cause Swisher to engage in the conduct complained of herein.
15. During the Class Period, each of the Individual Defendants occupied
positions that made them privy to non-public information concerning Swisher. Because
of their pbsitions and access, each of these defendants knew that the material adverse facts
specified herein were being concealed from the public.
16. As officers, directors, and/or controlling persons of a publicly-held
company whose common stock was actively traded on the Nasdaq National Market
System, Defendants had a duty to disseminate accurate and truthful information promptly
with regard to Swisher's operations, business, relationships with customers, finances,
markets, management, earnings, and future business prospects, to correct any previously
issued statements that had become untrue and to disclose any adverse trends that would
4
.„
materially affect the present and future operating results of the Company, so that the
market price of the Company's stock would be based upon truthful and accurate
information.
17. Individual Defendants controlled and/or possessed the power and
authority to control the contents of the Company's quarterly and year end reports, press
releases, and presentations to securities analysts and thereby the investing public. Each
Individual Defendant participated in the dissemination of the Company's filings, reports,
and press releases alleged herein to be misleading and had the ability and opportunity to
prevent their issuance or cause them to be corrected. Because of their positions and
access to material non-public information available to diem, each of these defendants
knew Of recklessly disregarded that the material adverse facts specified herein had not
been disclosed to and were being concealed from the public and that the positive
representations which were being made were then materially false and misleading. As a
result, each of the Defendants is responsible for the accuracy of the public reports and
releases and is liable for the representations contained therein,
18. Each of the defendants is liable as a participant in a fraudulent scheme
and course of business that operated as a fraud or deceit on purchases of Swisher stock,
including making materially false and misleading statements. The scheme (I) deceived the
investing public regarding Swisher; (ii) artificially inflated the price of Swisher stock; and
(di) caused plaintiff and the Class to purchase Swisher stock at artificially inflated prices.
5
PLAINTIFF'S CLASS ACTION ALLEGATIONS
19. Plaintiff brings this action as a class action pursuant to Federal Rule of
Civil Procedure 23(a) and (b)(3) on behalf of a Class, which consists of all persons who
purchased or otherwise acquired shares of Swisher common stock during the Class Period.
Excluded from the Class are Defendants, members of the immediate family of the
Individual Defendants, any entity in which any Defendant has or had a controlling
interest, and the legal representatives, heirs, successors, or assigns of any Defendant.
20. As of May 31, 1998, there were 2,222,271 shares of Swisher common
stock outstanding in an actively traded and efficient market in which millions of shares
were traded during the Class Period. The members of the Class are so numerous that
joinder of all members is impracticable. Class members are located throughout the United
States. While the exact number of Class members is unknown to Plaintiff at this time,
Plaintiff believes that there are thousands of members of the Class. Record owners and
members of the Class may be identified from records maintained by Swisher or its transfer
agent and may be notified of the pendency of this action by mail, using the form of notice
similar to that customarily used in securities actions.
21. Plaintiff's claims are typical of the claims of the members of the Class
in that Plaintiff and each Class member purchased shares of common stock of Swisher
during the Class Period in an artificially inflated market and sustained injury as a result.
6
Plaintiff and each Class member relied on the integrity of the market for Swisher common
stock in making those purchases.
22. Plaintiff will fairly and adequately protect the interests of the members
of the Class and has retained counsel competent and experienced in class action and
securities litigation.
23. A class action is superior to other available methods for the fair and
efficient adjudication of this controversy since joinder of all Class members is
impracticable. Furthermore, as the damages suffered by individual Class members may
be relatively small, the expense and burden of individual litigation make it impossible for
the Class members to seek redress individually for the wrongs done to them. There will
be no difficulty in the management of this action as a class action.
24. Common questions of law and fact exist as to all members of the Class
and predominate over ally questions affecting solely individual members of the Class.
Among the questions of law and fact common to the Class are:
(a) whether federal securities law was violated by Defendants' acts as
alleged herein;
(b) whether statements made by Defendants to the investing public and the
shareholders during the Class Period omitted and/or misrepresented material facts;
(c) whether Defendants pursued the fraudulent scheme and course of
business complained of herein;
7
_
(d) whether Defendants acted wilfully or recklessly in omitting to state
and/or misrepresenting material facts;
(e) whether the market price of Swisher common stock during the Class
Period was artificially inflated due to nondisclosures and misrepresentations
complained of herein; and
(f) whether Plaintiff and the other members of the class were damaged, and
if so, the proper measure thereof.
FACTS
25. Swisher franchises hygiene services and products. The Company
markets its hygiene services and products, as well as maids, pest control, remodeling, and
resurfacing services in the United States and Canada. Swisher. also has master license
operations and licensees internationally.
26. On March 18, 1996, the beginning of the Class Period, the Company
announced, in a press release disseminated over PR NEWSWIRE, its financial results for the
first fiscal quarter of 19%, ended January 31, 1996. For the quarter, the Company
reported revenues of $2,267,000 and net income of $87,669, or $0.05 per share.
27. On March 18, 1996, Swisher filed its Form 10-Q with the SEC for the
first quarter 1996. It was signed by Defendants Patrick Swisher and Lazenby. It repeated
the financial results reported above. The Form 10-Q represented that the financial
information contained therein presented "fairly the financial position of the Company at
8
January 31, 1996 and 1995, and the results of its operations and its cash flows for the
three months periods then ended."
28. On June 13, 1996, in a press release disseminated over PR NEWSWIRE,
the Company announced its financial results for the second fiscal quarter ended April 30,
1996. For the quarter, the Company reported revenues of $2.409,000 and net income of
$101,445, or $0.06 per share. Commenting on these results, defendant Patrick Swisher
stated:
We expect our growth trend in annuity revenues and totalrevenues to continue.
29. On June 13, 1996, the Company filed its Form 10-Q for the second
fiscal quarter ended April 30, 1996 with the SEC. It repeated the financial results set
forth above and was signed by defendants Patrick Swisher and Lazenby. The Form 10-Q
represented that the financial information contained therein presented "fairly the financial
position of the Company at April 30, 1996 and 1995, and the results of its operations and
its cash flows for the three months periods then ended."
30. On June 19, 1996, Swisher announced the acquisition of Surface
Doctor, Inc. Swisher financed the transaction using 200,000 shares of Swisher stock for
payment. On July 31, 1996, Swisher announced the transaction was complete.
31. On September 16, 1996, the Company filed its Form 10-Q for the third
fiscal quarter ended July 31, 1996 with the SEC. For the quarter, the Company reported
revenues of S2,795,466 and net income of $163,886 or $0.09 per share and was signed by
9
defendants Patrick Swisher and Lazenby. The Form 10-Q represented that the financial
information contained therein "present fairly the tinancial position of the Company at July
31, 1996 and 1995, and the results of its operations and its cash flows for the three and
nine months periods then ended." The reported third quarter results included $284,017
in revenue for the sale of a franchise in Houston. Texas.
32. On September 18, 1996, in a press release disseminated over PR
NEWSWIRE, the Company announced its financial results for the third fiscal quarter ended
July 31, 1996. It repeated the financial results set forth above.
33. On October 28, 1996, Swisher announced the sale of a Swisher Hygiene
franchise to Patrick Lee of Dublin, Ireland. The franchise was reportedly sold for
$60,000 and 1% of the monthly gross sales.
34. On February 18, 1997, the Company filed its Form 10-K for the fiscal
year ended October 31, 1996 with the SEC. It was signed by Defendants Patrick Swisher
and Reeder. For fiscal 1996, the Company reported revenues of $10,661,000 and net
income of $381,000 or $0.20 per share. Receivables from officers and other receivables
were reported to be S112,838 and $382,292, respectively. Notes receivables were
reported to be $3,097,027.
35. The reported 1996 revenues included the $284,017 for the sale of the
Houston franchise and the $60,000 for the sale of the Dublin franchise.
10
36. On February 21, 1997, in a press release disseminated over PR
NEWSWIRE, the Company announced its financial results for the fiscal year ended October
31, 1996. It repeated the financial results set forth above. Commenting on these results,
defendant Patrick Swisher stated:
Our revenue growth trend continues to be very strong not onlywith Swisher Hygiene, but also with our new Surface Doctordivision.
37. On February 26, 1997, in a press release disseminated over PR
NEWSWIRE, the Company announced its financial results for the first fiscal quarter ended
January 31, 1997. For the quarter, the Company reported revenues of $2,888,220 and
earnings of $0.08 per share.
38. On February 26, 1997, the Company also filed its Form 10-Q for the
first fiscal quarter ended January 31, 1997 with the SEC. It repeated the financial results
set forth -above and was signed by defendants Patrick Swisher and Mucha. The Form
10-Q represented that the financial information contained therein "present fairly the
financial position of the Company at January 31, 1997 and 1996, and the results of its
operations and its cash flows for the three months then ended."
39. On June 12, 1997, in a press release disseminated over PR NEWSWIRE,
the Company announced its financial results for the second fiscal quarter ended April 30,
1997. For the quarter, the Company reported revenues of $3,096,652 and earnings of
$0.07 per share.
11
40. On June 12, 1997, the Company's filed its Form 10-Q for the second
fiscal quarter ended April 30, 1997 with the SEC. II. repeated the financial results set
forth above and was signed by defendants Patrick Swisher and Cendrowski. The Form
10-Q represented that the financial information contained therein "present fairly the
financial position of the Company at April 30, 1997 and 1996, and the results of its
operations and its cash flows for the six-month periods then ended."
41. On September 15, 1997, in a press release disseminated over PR
NEWSWIRE, the Company announced its financial results for the third fiscal quarter ended
July 31, 1997. For the quarter. the Company reported revenues of $3,658,091 and
earnings of $0.11 per share. The reported revenue included $381,000 for the sale of a
franchise to Charlotte Hygiene Associates.
42. On September 15, 1997, the Company filed its Form 10-Q for the third
fiscal quarter ended July 31, 1997 with the SEC. It repeated the financial results set forth
above and was signed by defendants Patrick Swisher and Cendrowski. The Form 10-Q
represented that the financial information contained therein "present fairly the financial
position of the Company at July 31, 1997 and 1996, and the results of its operations and
its cash flows for the nine-month period then ended."
43. On January 29, 1998, the Company filed a Form NT 10-K disclosing
that it could not file its 10-KSB within the prescribed time period. The Form NT 10-K
states:
12
THE COMPANY HAS NOT BEEN ABLE TO FINALIZETHE FORM 10-KSB REPORT AND COMPLETE THEMANAGEMENT AND BOARD OF DIRECTOR REVIEWOF THE REPORT PRIOR TO THE ORIGINAL FILINGDEADLINE. AS A RESULT, THE REGISTRANT IS NOTABLE TO FILE ITS FORM 10-KSB WITHIN THEPRESCRIBED TIME WITHOUT UNREASONABLEEFFORT AND EXPENSE.
THE TRUTH BEGINS TO EMERGE
44. On February 27, 1998, Swisher filed a Form 8 -K with the SEC.
Swisher reported that McGladrey & Pullen LLP had resigned as the Company's public
auditor and had withdrawn its report on the Company's 1996 financial statements. The
8-K included a letter from McGladrey & Pullen, which detailed the items which
McGladrey found to be improper. In particular, McGladrey found that the Dublin
franchise sale was not complete even as of October 31, 1997, that the IIouston and
Charlotte franchise sales were actually related party transactions and should not have been
recorded, that the Company recorded $138,000 in receivables from certain management
employees in 1996 and was not repaid through the end of 1997, that the Company
overstated a notes receivable by $75,000 due to an undisclosed side agreement whereby
the Company agreed to pay the obligor $80,000 for a consulting contract, that the
Company overstated notes receivables and certain other repurchased franchise assets by
stating a franchise in Mobile Alabama was operational when it in fact was not, causing a
$45,000 receivable to be recorded in 1996 when it should not have been, and that the
Company represented a Scottsdale franchise had operating revenue of $200,000 when it
13
in fact had only $80,000 in revenue, eaus'ng a subsequent impairment in value of the asset
of $53,000, which should have been recorded in 1996.
45. As a result of these fraudulent transactions, revenues were overstated
by $344,017 in 1996 and at least $381,000 in 1997, notes receivables were overstated by
$45,000 in 1996, accounts receivables were overstated by $75,000 in 1996, receivables
from management were overstated by $138,000 in 1996, and assets were overstated by
$53,000 in 1996.
46. On March 2, 1998, the end of the Class Period, in a press release
disseminated over PR Newswire, the Company announced the filing of the 8-K noted
above, the resignation of its former auditors, the appointment of a special committee to
look into pending audit issues, and that it was seeking to hire new auditors.
47. On May 12, 1998 the Company was delisted from Nasdaq.
48. Swisher belatedly filed its Form 1997 10-K on July 1, 1998. The
financial results included in the 1997 10-K for 1996 bear little resemblance to the results
originally reported for 1996 in the 1996 10-K. Revenue from company-owned hygiene
operations were initially reported as $1,884,475 and were reported as $1,672,947 in the
1997 10-K. Expenses, originally reported as $4,059,568, were now reported as
$4,823,427. Costs related to Company-owned maids operations, originally $641,974,
were now $991,059. Total expenses increased from the $9,961,980 to $10,674,724.
14
Most importantly, net income, reported as $380,918 in the original 1996 10-K, was now
restated as a net loss of $154,541 in the 1997 10-K.
49. During the Class Period, Defendants materially misled the investing
public, thereby inflating the price of Swisher stock, by publicly issuing false and
misleading statements and omitting to disclose material facts necessary to make
Defendants' statements, as set forth herein, not false and misleading. Said statements and
omissions were materially false and misleading in that they failed to disclose material
adverse information and misrepresented the truth about the Company, its business,
finances, and operations, including, inter alia:
(a) that the Company's financial statements were not prepared in accordance
with generally accepted accounting principles and in accordance with the federal
securities laws and SEC regulations concerning fair reporting;
• (b) that the Company falsely overstated its financial condition and
materially overstated income and earnings per share;
(c) that the Company had violated GAAP and its own accounting policies
by improperly recording income and earnings; and
(d) that the Company's seeming growth was the result of fictitious and
improper accounting entries.
50. As a result of defendants' materially misleading statements and failures
to disclose the truth about Swisher and its true financial and operating results. Swisher
15
common stock traded at artificially inflated prices during the entire Class Period until the
Lime the adverse information described above was finally provided to and digested by the
securities markets. Plaintiff and other members of the Class purchased or otherwise
acquired Swisher common stock relying upon the integrity of the market price of Swisher
stock and market information relating to Swisher, or in the alternative, upon defendants'
misleading statements, and in ignorance of the adverse, undisclosed information known to
defendants, and have been damaged thereby.
51. During the Class Period, defendants materially misled the investing
public thereby inflating the price of Swisher stock, by publicly issuing false and
misleading statements and omitting to disclose material facts necessary to make
defendants' statements, as set forth herein, not false and misleading. Said statements and
omissions were materially false and misleading in that they failed to disclose material
adverse information and misrepresented the truth about Swisher's financial results and
operations.
THE FALSE AND MISLEADING NATURE OF THEFINANCIAL STATEMENTS AND PRESS RELEASES
52. During the Class Period, defendants materially misled the investing
public, thereby inflating the price of Swisher securities by publicly issuing false and
misleading statements and omitting to disclose material facts necessary to make
defendants' statements, as set forth herein, not false and misleading. Said statements and
omissions were materially false and misleading in that they failed to disclose material
16
adverse information and misrepresented the truth about the Company, its financial
performance, accounting, reporting and condition, including, inter alia:
(a) During the Class Period, the Company's reported revenues, net income,
and earnings were materially misstated;
(b) The Company's financial statements did not present, in all material
respects, the Company's true financial condition, and did not reflect all adjustments
which were necessary for a fair statement of the interim and full year periods
presented;
(c) The Company's internal controls were inadequate and, as a result, the
Company improperly recognized earnings and income from fictitious entries; and
(d) The Company's interim financial statements for each quarterly period
reported during the Class Period were not presented in conformity with GAAP or
principles of fair reporting.
VIOLATIONS OF GAAP
53. As a result of its accounting improprieties, particularly with respect to
the Company's recognition of earnings and income during the Class Period, the
Company's reported financial results (and all defendants) also violated at least the
following provisions of GAAP:
(a) The principle that financial reporting should provide information that is
useful to present to potential investors and creditors and other users in making
17
rational investment, credit and similar decisions was violated (FASB Statement of
Concepts No. 1, 34);
(b) The principle that financial reporting should provide information about
the economic resources of an enterprise, the claims to those resources, and the
effects of transactions, events and circumstances that change resources and claims
to those resources was violated (FASB Statement of Concepts No. 1, 40);
(c) The principle that financial reporting should provide information about
how management of an enterprise has discharged its stewardship responsibility to
owners (stockholders) for the use of enterprise resources entrusted to it was
violated. To the extent that management offers securities of the enterprise to the
public, it voluntarily accepts wider responsibilities for accountability to prospective
investors and to the public in general (FASB Statement of Concepts No. 1, If 50);
(d) The principle that financial reporting should provide information about
an enterprise's financial performance during a period was violated. Investors and
creditors often use information about the past to help in assessing the prospects of
an enterprise. Thus, although investment and credit decisions reflect investors'
expectations about future enterprise performance, those expectations are commonly
based at least partly on evaluations of past enterprise performance (FASB
Statement of Concepts No. 1, 42);
18
(e) The principle that financial reportin g should be reliable in that it
represents what it purports to represent was violated. That information should be
reliable as well as relevant to a notion that is central to accounting (FASB
Statement of Concepts No. 2, Vg 58-59);
(f) The principle of completeness, which means that nothing is left out of
the information that may be necessary to ensure that it validly represents
underlying events and conditions, was violated (FASB Statement of Concepts No.
2, If 79); and
(g) The principle that conservatism he used as a prudent reaction to
uncertainty to try to ensure that uncertainties and risks inherent in business
situations are adequately considered was violated. The best way to avoid injury to
investors is to try to ensure that what is reported represents what it purports to
represent (FASB Statement of Concepts No. 2, trl 95, 97).
SC1ENTER
54. As alleged herein, defendants acted with scienter in that defendants had
actual knowledge of the misrepresentations and omissions of material facts set forth
herein, or acted with reckless disregard Ibr the truth in that they failed to ascertain and to
disclose such facts, even though such facts were available to them. Such defendants'
material misrepresentations and/or omissions were done knowingly or recklessly and for
the purpose and effect of concealing Swisher's operations and business affairs from the
19
investing public and supporting the artificially inflated price of its stock. Defendants
knew or were reckless in not knowing that the public documents and statements issued or
disseminated in the name of the Company were materially false and misleading; knew or
were reckless in not knowing that such statements or documents would be issued or
disseminated to the investing public; and knowingly and substantially participated or
acquiesced in the issuance or dissemination of such statements or documents as primary
violations of the federal securities laws. As demonstrated by defendants' statements
throughout the Class Period, if they did not have actual knowledge of the
misrepresentations and omissions alleged, defendants were reckless in failing to obtain
such knowledge by deliberately refraining from taking those steps necessary to discover
whether those statements were false or misleading. As set forth elsewhere herein in
detail, defendants, by virtue of their receipt of information reflecting the true facts
regarding Swisher, their control over, and/or receipt and/or modification of Swisher's
allegedly materially misleading misstatements and/or their associations with the Company
which made them privy to confidential proprietary information concerning Swisher,
participated in the fraudulent scheme alleged herein.
55. Defendants had a motive to inflate the price of Swisher to consummate
the acquisition of Surface Doctor for fewer shares than it otherwise would have had to
use.
20
AS AND FOR AFIRST CLAIM FOR RELIEF(Against All Defendants Under
Section 10(b), Exchange Act)
56. Plaintiff incorporates paragraphs 1 through 55 as if fully set forth
herein.
57. Each Defendant: (a) knew or had access to the material adverse non-
public information about Swisher's financial results and then existing business conditions,
which were not disclosed; and (b) made or participated in drafting, reviewing and/or
approving the misleading statements, releases, reports and other public representations of
and about Swisher.
58. During the Class Period, Defendants, with knowledge of or reckless
disregard for the truth, disseminated or approved that false statements specified above,
which were misleading in that they contained misrepresentations and failed to disclose
material facts necessary in order for the statements made in the circumstances in which
they were made, not misleading.
59. Each of the false and misleading caused the price at which Swisher
common stock traded to be artificially inflated above where it would have traded had the
false statements not been made or had Defendants not omitted to state facts necessary in
order for those statements that were made not to be misleading.
60. By reason of the foregoing, Defendants violated section 10(b) of the
Exchange Act, 15 U.S.C. § 78j(b), and SEC Rule 10b-5 promulgated pursuant thereto.
21
61. The stock was traded in an open and efficient market. In reliance on
the integrity of the market for the stock of Swisher, Plaintiff and the other members of the
Class purchased the stock of the Company at prices that were artificially inflated by
Defendants' statements.
AS AND FOR ASECOND CLAIM FOR RELIEF(Against Individual Defendants
Under Section 20(a), Exchange Act)
62. Plaintiff incorporates paragraphs 1 through 61 as if fully set forth
herein.
63. This claim is asserted against the Individual Defendants and is based on
section 20(a) of the Exchange Act, 15 U.S.C. 780).
64. The Individual Defendants acted as controlling persons of Swisher
within the meaning of section 20(a) of the Exchange Act. By reason of their positions,
Individual Defendants had the power and authority to direct, or cause the direction of, the
management and policies of the Company, and, therefore, to cause or to prevent the
wrongful conduct complained of herein.
65. By reason of such wrongful conduct, the Individual Defendants are
liable pursuant to section 20(a) of the Exchange Act. As a direct and proximate result of
the Individual Defendants' wrongful conduct, Plaintiff and the other members of the Class
were damaged in connection with their purchase of Swisher stock during the Class Period.
66. By reason of the foregoing, the Individual Defendants are liable jointly
and severally with and to the same extent as Swisher for Swisher's violations of section
10(b) of the Exchange Act and SEC Rule 10b-5.
WHEREFORE, Plaintiff, on behalf of himself and the Class, prays for
judgment as follows:
(i) Plaintiff to be a proper class representative, this action to be a proper
class action, and Plaintiff's counsel to be counsel for the Class;
(ii) Awarding Plaintiff and all -members of the Class damages in an amount
to be proven at trial, together with prejudgment interest thereon;
(iii) Awarding Plaintiff the costs and expenses incurred in this action,
including reasonable attorneys', accountants', and experts' fees; and
(iv) Granting Plaintiff and the Class such other and further relief as the
COurt deems just and proper.
23
. ,..
,
DEMAND FOR A JURY TRIAL
Plaintiff hereby demands a trial by jury.
Dated: Charlotte, NCSeptember 9, 1998
DALY & DALY
..,,By: ....n
George Daly (NC Bar No. 107 )Suite 226, 101 N. McDowell StreeCharlotte, NC 28204Telephone: (704) 333-5196Facsimile: (704) 333-4465
kABIN & P 4 KE7 L I
,By: i . ii
Ar, pr . IA na V.v/Trray
Joseph V. McBride275 Madison AvenueNew York, NY 10016Telephone: (212) 682-1818Facsimile: (212) 682-1892
SICHENZIA, ROSS & FRIEDMANMarc Ross135 West 50th Street, 20' FloorNew York, NY 10020Telephone: (212) 261-2010Facsimile: (212) 664-7329
Attorneys for Plaintiff and the Class
24
CERTIFICATION
I, Brian Wilcox, do hereby certify that:
I have reviewed the complaint and have authorized its filing.
I did not purchase the shares of common stock of Swisher International Inc. that arethe subject of the complaint at the direction of my counsel or in order to participate in anyprivate action arising under the Securities Exchange Act of 1934, as amended by thePrivate Securities Litigation Reform Act of 1995.
I am willing to serve as a representative party on behalf of a class, includingproviding testimony at deposition and trial, if necessary.
During the Class Period, I engaged in the following transaction(s) involving thecommon stock of Swisher International Inc.:
TRANSACTION TRADE DATE NO. OF SHARES PRICE/SHARE
AnAetit.4)
I have neither sought to serve nor served as a representative party on behalf of aclass in any action brought under the federal securities laws that was filed during thethree-year period preceding the date of this certification.
I will not accept any payment for serving as a representative party on behalf of theClass beyond my pro rata share of any recovery, except such reasonable costs andexpenses (including lost wages) directly relating to the representation of the Class and myactivities in the lawsuit, as ordered or approved by the Court.
Nothing herein shall be construed to be or constitute a waiver of my attorney-clientprivilege.
I certify under penalty of perjury that the foregoing is true and correct.
Executed on September 4, 1998.
Brian Wilcox
„
three quarters of 1997. Swisher stock has subsequently been delisted for failure to file the
appropriate regulatory filings with the SEC.
JURISDICTION AND VENUE
3. This action arises under sections 10(b) and 20(a) of the Exchange Act,
15 U.S.C. §§ 78j(b), 78t(a); and SEC Rule 10b-5, 17 C.F.R. § 140.10b-5. The
jurisdiction of this Court is based on section 27 of the Exchange Act, 15 U.S.C. § 78aa;
and on sections 1331 and 1337 of the Judicial Code, 28 U.S. C. §§ 1331, 1337.
4. Venue is proper in this District under section 27 of the Exchange Act, 15
U.S . C . § 78aa, and section 1391(b) of die Judicial Code, 28 U.S . C. § 1391(b). The
wrongs alleged herein occurred in substantial part in this District, including the
preparation and dissemination to the investing public of false and misleading information.
5. In connection with the acts and conduct alleged herein, Defendants,
directly and indirectly, used the means and instrumentalities of interstate commerce,
including the United States mails and the facilities of the national securities exchanges.
PARTIES
6. Plaintiff Brian Wilcox purchased shares of Swisher common stock during
the Class Period, as set forth in the accompanying certification, and was damaged thereby.
7. Defendant Swisher is a Nevada corporation with its principal corporate
offices located at 6849 Fairview Road, Charlotte, North Carolina 28210.
2
Swisher I ,•.1JP Turner investment I .
'Converted to base currency: US Dollar 1i .
11
Date Account Investment 1 • • •. Activity Quantity ' Price ' Commission,
7117/971 JP Turner Investment •Swisher International Buy 10,000 8 3/16 15
.. . 7/24/97 JP Turner Investment [Swisher International Buy 15,000 93/8 15
8/11/97 ,JP Turner Investment 1Swisher I nternational Buy 10,000. 8.5 15
913197: JP Turner Investment 1Swisher I nternational Buy 10,000: 8.5 15
10/24/97 JP Turner Investment Swisher I nternational Buy 20,000i 9 3/4 .15_
11/19197. JP Turner Investment Swisher I nternational Sell 20,000: 7114 1984.. 12/19/97 .JP Turner Investment 'Swisher I nternational Buy 40,000. 6 3/4
1/7/98 JP Turner Investment .Swisher International Sell 15,000 61/2 19.25'
2/19/98 JP Turner Investment Swisher international Sell . 10,000 8; 17.67.
3/2/98 JP Turner Investment Swisher International 'Buy 10,000. 7.125! 15
3/4/98 JP Turner Investment Swisher International Sell 10,000. 7 5/8 17.55!
. _.. . .,•
10/20/97' JP Turner Investment Swisher International VVTS :Buy 5,000 2 15.
10/21/97: JP Turner Investment ;Swisher International VVTS I Buy 17,500 1.75 15
11/19/97 JP Turner Investment 1Swisher International VVTS i Sell 22,500 1 5/16 15,99i
3/9/98 JP Turner Investment :Swisher International WTS ! Buy ! 10,000 21/4 15
r
111 4 64111111