NEW YORK, Jan. 29, 2015 /PRNewswire/ -- Pomerantz LLP announces that a class action lawsuit has been filed against Medbox, Inc. ("Medbox" or the "Company")(OTC: MDBX) and certain of its officers. The class action, filed in United States District Court, Central District of California, and docketed under 15-cv-00683, is on behalf of a class consisting of all persons or entities who purchased Medbox securities between November 20, 2013 and December 29, 2014, inclusive (the "Class Period"). This class action seeks to recover damages against Defendants for alleged violations of the federal securities laws under the Securities Exchange Act of 1934 (the "Exchange Act").
If you are a shareholder who purchased Medbox securities during the Class Period, you have until March 22, 2015 to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at [email protected] or 888.476.6529 (or 888.4-POMLAW), toll free, x237. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and number of shares purchased.
Medbox, Inc., through its subsidiaries, provides patented biometrically controlled medicine storage and dispensing systems to the medical and retail industries.
The Complaint alleges that during the Class Period, Defendants issued materially false and misleading statements regarding the Company's financial results for the fiscal year ended December 31, 2013 and each of the interim financial periods ended September 30, 2013, December 31, 2013, March 30, 2014, June 30, 2014 and September 30, 2014. Specifically, Defendants overstated Medbox's revenues by recognizing revenue on customer contracts before it had been earned. As a result of these false statements, Medbox's stock traded at artificially inflated prices during the Class Period, reaching an intraday Class Period high of $93.50 on January 8, 2014.
On or about April 10, 2014, Defendant P. Vincent Mehdizadeh resigned as COO and as a director of Medbox, but was appointed as "Senior Strategist and Founder" of Medbox. Thereafter, the price of Medbox stock declined, dropping from a closing price of $17.52 per share on May 16, 2014 to close down at $16.11 per share on May 19, 2014, following the Friday, May 16, 2014 issuance of a report by the SEC warning of "possible scams involving marijuana-related investments" and quoting Elisha Frank, co-chair of the SEC Enforcement Division's Microcap Fraud Task Force as stating "[w]henever we see incomplete or misleading disclosures, we act quickly to protect investors."
On or about October 17, 2014, the Company disclosed that Defendant Mehdizadeh had resigned as an officer of Medbox but that he would continue to serve the Company as a consultant with the title of Founder and Senior Advisor.
Then, on or about October 21, 2014, the Company disclosed that Medbox's Chief Financial Officer ("CFO") Thomas Iwanski ("Iwanski") – who was just hired in that capacity by the Company in February 2014 - was being replaced by Defendant Douglas Mitchell ("Mitchell"), though Iwanski too would stay on as a consultant. Thereafter, on October 31, 2014, the Company disclosed that it had appointed a special board committee to investigate a letter from a former Company employee to the SEC "alleging wrongdoing by a former officer of the Company who [was] a consultant to the Company" and that "a federal grand jury document subpoena [had been] served in August 2014 on the Company's accountants by the U.S. Department of Justice…."
On November 3, 2014, a press release was issued stating it was released by Medbox entitled "Medbox Comments on Recent 8-K Filing" which claimed that the former employee who sent the letter to the SEC had done so in retribution for Medbox's refusal to pay him a cash settlement, quoting Defendant Mehdizadeh, and further stating that "[c]urrent management commented that the Company ha[d] not found any indications that the subject matter contained in the [former employee's] letter [was] true concerning the conduct of prior officers of the company."
Meanwhile, shares of Medbox fell $1.50 per share from their October 31, 2014 closing price of $13.95 per share, or 10.8%, to close at $12.45 on November 3, 2014. Shares fell another $2.75 per share on November 5, 2014 as the financial media reported on the ensuing SEC investigation and the market absorbed the full import of the disclosures.
Then, on November 7, 2014, Medbox filed a Current Report on Form 8-K with the SEC stating the November 3, 2014 press release, which quoted Defendant Mehdizadeh, had not been "authorized by Medbox."
On December 30, 2014, before the opening of trading, Medbox issued a press release disclosing that it would be forced to restate the past five quarters of financial reports and potentially its "financial statements for 2012 and for the first two quarters of 2013 . . . as well." The Company further disclosed that the earnings restatement had triggered a default on its debt covenants that had forced it to seek a forbearance from lenders. The release stated that the "steps [being taken were] part of the continued initiative of [Medbox's] new board of directors and new management team to implement better controls and emphasize transparency."
On this news, shares of Medbox fell $0.81 per share, or approximately 12.67%, to close at $5.58 per share on December 31, 2014.
The Pomerantz Firm, with offices in New York, Chicago, Florida, and San Diego, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 70 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com.
Robert S. Willoughby
SOURCE Pomerantz LLP