Class Action Lawsuit Filed Against Venture Capital Corporation.

Business Editors & High-Tech/Legal Writers

LOS ANGELES--(BUSINESS WIRE)--April 24, 2002

In what's believed to be the first such action in U.S. high-tech history, investors in a venture capital company have filed a class-action lawsuit for fraud and are seeking to recover the entire amount raised by the venture capital company in 2000.

The suit highlights the increasingly robust efforts by investors in U.S. venture capital companies to recover money they lost during the internet boom of the late 1990s.

The class action lawsuit, filed in Los Angeles County Superior Court, alleges that investors in San Vicente Group (www.sanvicentegroup.com) were defrauded out of over $46 million by the former board and management of this Los Angeles-based venture capital company. The lawsuit states that the former board and management knowingly engaged in fraud, negligent misrepresentations and securities violations. The lawsuit seeks the recovery of the $46 million invested with the company, together with punitive damages. This could significantly increase the amount awarded to the shareholders.

San Vicente Group was established in January 2000 to invest in promising high-tech companies. Instead, the investors found that San Vicente Group wracked up losses by investing in a junk-bond fund and a series of internet companies that have already failed or are on the brink of doing so. The former board and management of San Vicente Group are also accused, in a separate lawsuit brought by the company, of breaches of fiduciary duty, entrenchment, waste of corporate assets and making grossly negligent investments.

San Vicente Groups' investors include large European and American institutional investors.

Those named as defendants in the lawsuit include the former Co-CEOs of San Vicente Group, Jay Matulich and Christopher Jennings. The former chairman, Stanley Hollander, is named as well, along with the British internet incubator New Media Spark, which is a listed company on the London AIM market. Jennings, Matulich and Hollander were all at one time board members or senior executives at a sister company, GlobalNet Financial.com, formerly listed on NASDAQ. New Media Spark acquired GlobalNet Financial.com, which racked up losses of over $120 million in its two years of operations and whose market value collapsed in 18 months from $700 million to under $10 million, in a friendly deal last year.

The lawsuit states that Globalnet Financial.com transferred investments of its own into San Vicente Group, and did so without disclosure to investors, or any outside financial valuation. In a separate deal, Globalnet Financial was given for no consideration a $240,000 stake in a company bought by San Vicente Group.

The lawsuit further states that the former board and management failed to tell investors they would establish a lavish and risk-free profit-sharing plan that was well beyond what is normal and customary in the venture capital industry. The effect of this was to restrict San Vicente's ability to sell its investments and generate unreasonable, wasteful and windfall profit distributions to the former board and management.