Investor Group Files Counterclaim Against Restaurant Teams International.NEW YORK--(BUSINESS WIRE)--Jan. 11, 1999-- Counterclaim A claim by a defendant opposing the claim of the plaintiff and seeking some relief from the plaintiff for the defendant. A counterclaim contains assertions that the defendant could have made by starting a lawsuit if the plaintiff had not already begun the action. Alleges Fraud, Breach of Contract and Violation of Blue Sky Laws blue sky laws n. laws intended to protect the public from purchasing stock in fraudulent companies that lack substance, such as those selling swamp land, non-existent gold strikes and dry oil wells, or who have no assets besides a post office box. ; Investors Consider Further Legal Action Against Restaurant Teams and its CFO See Chief Financial Officer. , Curtis Swanson Dominion Capital Fund, Ltd., Sovereign Partners, L.P. and Canadian Advantage, L.P. (the "Investors") announced today that they have filed counterclaims against Restaurant Teams International, Inc. (OTC OTC See: Over-the-counter. OTC See over-the-counter market (OTC). BB: RTIN) alleging fraud, breach of contract and violation of Texas Blue Sky laws. The counterclaim was filed in U.S. District Court for the Eastern District of Texas in connection with a lawsuit brought by Restaurant Teams against the Investors. The Investors believe that the Restaurant Teams' lawsuit is totally without merit. The counterclaims arise from Restaurant Teams' obligations under the terms of convertible debenture Convertible Debenture Any type of debenture that can be converted into some other security. Notes: For example, a convertible bond can be converted into stock. agreements pursuant to which the Investors loaned an aggregate amount of $3,000,000 to Restaurant Teams. The counterclaims allege that Restaurant Teams refused to honor conversion notices from the Investors, failed to register the common stock to be received upon such conversions and made false and misleading representations to the Investors to induce them to make the loan. More specifically, the counterclaims allege that Restaurant Teams violated state and federal securities laws and committed common law fraud by knowingly filing financial statements that materially misstated its financial condition. The counterclaims further allege that Restaurant Teams falsely represented to the Investors that it had complied with such state and federal securities laws and that its financial reports were true and not misleading. Some of the allegations in the counterclaims are based upon the comments of the Securities and Exchange Commission to the registration statement filed by Restaurant Teams in connection with the shares to be issued pursuant to the debentures. In its comment letter of August 4, 1998 to Restaurant Teams, the Commission criticized Restaurant Teams' financial statements for several failures to comply with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). and SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System accounting principles, including Restaurant Teams' presentation of gross profits, which the Commission termed "misleading and inconsistent with industry practice." The counterclaims allege that Restaurant Teams failed to respond to the Commission's comments regarding the registration statement and that as a result the registration statement never became effective. The Investors are considering further legal action against Restaurant Teams, affiliated persons Affiliated Person An individual who is in a position to influence the actions of a corporation. This includes people such as directors, executives, and owners. Notes: Depending on the context, an affiliated person might be referred to simply as an "affiliate. , including its chief financial officer, Curtis Swanson, and others. The Investors believe that various statements both in Restaurant Teams' press release, dated November 9, 1998 and postings on the Internet, are false and defamatory. |
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