UNITED STATES DISTRICT COURT
SOUTHERN DlSTRICT OF TEXAS
HOUSTON DIVISION
, GRAYDON WILLIAMS, On Behalf of Himself Q Civil Action No,
and All Others Similarly Situated, 8
Plkintiff,
vs.
CORNELL COMPANIES, INC., STEPHI W. I@- 02 - () 8 6 6
LOGAN and JOHN L. HENDRIX, .
DefendeJlts. t QiMAND FOR JURY TRIAI,
COMPLAINT FOR VIOLATION OF THE FEI?ERAL SECURITIES LAWS
NATURE OF THE ACTION
1. This is a securities fraud class action on behalf of purchasers of the cormnon stock
of Cornell Companies, Inc. ("Corneli" or the "Company") between March 6,2001 and March 5,
2002, inclusive (the "Class Period"), seeking to pursue remedies under the Securities Exchange Act
of 1934 (Ihe "Exchange Act"). Defendants are Cornell and certain of its officers and directors.
2. Cornell is a provider of privatized correctional, deteution and pre-release
governmental agencies. The Company provides integrated facility developmem, design,
construction and operational services to government agencies within three operating divisions:
secure institutionalcorrectional and detention services; juvenile treatment, educational and
services; and pTe.-release
correctional and treatment scrviccs. During the Class Period, defendants
issued favorable but false fYnancial statements and made false and misleading staterntints about
Company's business. As a result of these false statements, the Company's stock traded as high as
$18.40. Defend,ants took advantage of this artificial inflation, selling 3.4 million shares of
stock fh proceeds of over $48 million in's November 2001 &&d'&y offering.
SNIPPETS:
This is a securities fraud class action on behalf of purchasers of the cormnon stock
2002, inclusive, seeking to pursue remedies under the Securities Exchange Act
Defendants are Cornell and certain of its officers and directors.
Cornell is a provider of privatized correctional, deteution and pre-release services to
The Company provides integrated facility developmem, design,
construction and operational services to government agencies within three operating divisions:
correctional and treatment scrviccs.
issued favorable but false fYnancial statements and made false and misleading staterntints
Cornell Companies Inc. announced today a Special Committee of its Board of Directors has been
The review is focused on a retainer agreement entered into with an investment bank in
to Cornell.
The salelleaseback nansaction involved a special purpose entity, Municipal Corrections
completed in conjunction with the audit of Cornell's financial statements for fiscal
Cornell also believes that, if consolidation of MCF were required, it would
Municipal Corrections Finance was created to acquire the properties and issued long-term
$9.96 on February 6,2002, some 45% below the Class Period high of $18.40.
The consolidation of t.hc assets and liabilities from the August 2001 sale/leaseback
detention and pre-release services to governmental agencies.
virtue of their high-levelpositions with the Company, directly participatedin the management
As officers and control ting persons of a publicly held company whose common stock
Individual Defendants each had a duty to disseminate promptly accurate and truthful
PLATNTTFF'S CLASS ACTION ALLEGATIONS
year 2001 diluted earnings per share of approximatcfy $0.90."
excluding extraordinary and unusual charges, in a press release which stated in part:
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