COLCHESTER, Conn., May 9, 2006 (PRIMEZONE) -- On May 9, 2006, Scott+Scott, LLC filed a class action lawsuit in the U.S. District Court for the Southern District of Florida against GlobeTel Communications Corp. ("GlobeTel" or the "Company") (AMEX:GTE) and certain officers on behalf of GlobeTel securities purchasers during the period December 22, 2005 through April 11, 2006, inclusive (the "Class Period"), for securities law violations. GlobeTel provides an integrated suite of telecommunications services. The complaint alleges that during the Class Period defendants made false and misleading statements regarding the Company's $600 million deal with Moscow-based LLC Internafta to provide internet services in Russia. As a result, the Company's stock price was artificially inflated, thereby harming Class Period investors.
If you purchased GlobeTel securities during the Class Period and wish to serve as a lead plaintiff in the action, you must move the Court no later than June 27, 2006. Any purported class member may move the Court to serve as lead plaintiff through counsel of its choice, or may choose to do nothing and remain an absent class member. If you wish to discuss this action or have questions concerning this notice or your rights, please contact Scott+Scott partner David R. Scott (drscott@scott-scott.com, 800/404-7770, 860/537-5537) or visit the Scott+Scott website, www.scott-scott.com, for more information. There is no cost or fee to you.
Throughout the Class Period, the complaint alleges, defendants publicly touted the $600 million joint venture with Internafta to install wireless networks in Russia's 30 largest cities. The Company announced the "binding agreement" in a December 30, 2005 press release. CEO Tim Huff stated: "This presents an amazing opportunity for us, for Russia and for our Russian partners. The Russian Internet market is severely limited by a lack of infrastructure and by the high cost to individual users of obtaining high speed internet access, even in those relatively rare cases where it is available. The GlobeTel Wireless network will provide city-wide high speed, wireless connectivity . . ." On this news, GlobeTel's stock price surged from $2.19 to $3.68 per share, an increase of over 75%, on extremely heavy trading volume.
According to the lawsuit, however, the deal in reality was a sham. The complaint alleges that almost immediately after the deal's announcement, in January 2006, Internafta failed to pay GlobeTel the first $150 million installment required under the joint venture agreement. Over the coming months, Internafta repeatedly failed to meet the agreement's payment deadlines. On April 11, 2006, The Motley Fool published a shocking report, revealing that the Company's joint venture with Internafta lacked any real sense of credibility. With this news, the Company's stock price plunged 15%, on unusually high trading volume, falling to $1.78 per share.
The plaintiff is represented by Scott+Scott, a firm with significant experience in prosecuting investor class actions. The firm dedicates itself to client communication and satisfaction and currently is litigating major securities, antitrust and employee retirement plan actions throughout the United States. The firm represents pension funds, charities, foundations, individuals and other entities worldwide.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca