united states district court southern district of...

1

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA

CASE NO. 06-61250-HUCK/SIMONTON __________________________________________

) THOMAS HAUGH, on behalf of himself ) and all others similarly situated, )

) Plaintiff, ) ) v. ) ) PARLUX FRAGRANCES INC., ILIA LEKACH ) and FRANK A. BUTTACAVOLI, ) Defendants. ) _________________________________________ )

CONSOLIDATED AMENDED CLASS ACTION COMPLAINT

Lead Plaintiffs make the following allegations, except as to allegations

specifically pertaining to plaintiffS and plaintiffs’ counsel, based upon the investigation

undertaken by plaintiffs’ counsel, which investigation included analysis of publicly

available news articles and reports, public filings, press releases, and other matters of

public record, and interviews of former employees and third parties.

NATURE OF THE ACTION 1. This is a class action on behalf of all purchasers of the common stock of

Parlux Fragrances Incorporated ("Parlux" or the "Company") between November 15,

2005 and August 10, 2006, inclusive, (the "Class Period"), seeking to pursue remedies

under the Securities Exchange Act of 1934 (the "Exchange Act"). During the Class

Period, defendants manipulated the Company’s revenue and earnings in order to meet

Wall Street goals. According to former employees and as detailed below, defendants

falsely inflated revenue and earnings by: (1) invoicing products before they were shipped,

Case 0:06-cv-61250-PCH Document 19 Entered on FLSD Docket 11/08/2006 of 51

2

in violation of Generally Accepted Accounting Principles and the Company’s own stated

accounting policy; (2) invoicing products shipped to a warehouse for later delivery to

customers; and (3) invoicing products shipped to related parties to be “parked” with these

related parties for later delivery to customers. This accounting fraud was facilitated by

the Company’s admitted and material weakness in internal controls.

2. As a result of defendants’ fraudulent practice of prematurely recognizing

revenues, sales in future quarters were negatively impacted because certain related parties

who had been flooded with Parlux products reduced future orders, and certain

international related parties shipped products back into the United States as “grey market

products.” Because Parlux fragrances would appear on the grey market at substantial

discounts, orders from department stores dropped materially during the Class Period,

since these retailers did not want to stock products which were being sold for less

elsewhere.

3. Throughout the Class Period, defendants issued highly positive statements

in an effort to create the impression that Parlux's revenues were growing and the

Company was well positioned to generate strong profits. In response, Parlux stock traded

at over $37 per share (prior to a stock split) during the Class Period. Starting in June

2006, the truth about the Company’s declining sales and accounting issues were revealed

in a series of disclosures indicating that: (1) contrary to prior public statements, Parlux’s

sales were declining materially, including sales to related parties; and (2) the Company

suffered from internal control issues with respect to its financial reporting, causing Parlux

to delay the filing of its Annual Report on Form 10-K for the year ended March 31, 2006,

and its quarterly report on Form 10-Q for the quarter ending June 30, 2006. Prior to


3

revealing this information, the defendants and other Company insiders sold over $16

million of their personally held Parlux stock.

4. On August 10, 2006, the Company issued yet another shocking

announcement, revealing that Parlux’s profit for the quarter ended June 30, 2006, would

be far less than the investing public had been led to believe, due mainly to lower sales to

U.S. department stores and related parties. On this news, the price of Parlux stock

plunged from $8.16 a share to $4.78 (representing a drop of over 40%), on unusually high

volumes of over 5 million shares traded (vastly higher than the Company’s average

trading volume of around 1.1 million shares traded a day).

JURISDICTION AND VENUE 5. This Court has jurisdiction over the subject matter of this action pursuant

to 28 U.S.C. §§1331, 1337 and 1367 and Section 27 of the Exchange Act (15 U.S.C. §

78aa).

6. This action arises under Sections 10(b) and 20(a) of the Exchange Act (15

U.S.C. §§ 78j(b) and 78t(a)) and Rule 10b 5 promulgated thereunder (17 C.F.R. §

240.10b 5).

7. Venue is proper in this District pursuant to Section 27 of the Exchange

Act (15 U.S.C. § 78aa) and 28 U.S.C. § 1391(b) and (c). Substantial acts in furtherance

of the alleged fraud and/or its effects have occurred within this District and Parlux

maintains its corporate headquarters in this District at 3725 S.W. 30th Avenue, Ft.

Lauderdale, FL 33312.

8. In connection with the acts and omissions alleged in this complaint,

defendants, directly or indirectly, used the means and instrumentalities of interstate


4

commerce, including, but not limited to, the mails, interstate telephone communications,

and the facilities of the national securities markets.

PARTIES 9. Plaintiffs Marvin Braun, Thomas Haugh, Arthur Weill, Robert Law and

the Ingleside Select Fund LP purchased Parlux common stock during the Class Period,

and were appointed as lead plaintiffs by the Court on November 1, 2006. (DE#18).

10. Defendant Parlux by its own description:

. . . engages in the creation, design, manufacture, distribution, and sale of fragrances and beauty-related products through specialty stores, department stores, and perfumeries worldwide. The company holds licenses to manufacture and distribute watches, cosmetics and handbags, purses and other small leather goods, and sunglasses, as well as to manufacture and sell fragrances and grooming items of PERRY ELLIS, PARIS HILTON, OCEAN PACIFIC, XOXO, GUESS?, and MARIA SHARAPOVA. It also has license agreements with GUND, Inc. to develop, manufacture, and distribute children’s fragrances and related products on a worldwide basis under the babyGund trademark. In addition, Parlux’s beauty-related products include body lotions, creams, shower gels, deodorants, soaps, and dusting powders. The company was incorporated in 1984 and is headquartered in Fort Lauderdale, Florida.

Name Position

ILIA LEKACH Chairman, CEO and President

FRANK BUTTACAVOLI CFO, COO, Executive Vice President

11. Defendant Lekach also served as Chairman and CEO of Perfumania, a

specialty retailer of fragrances until Perfumania became a wholly owned subsidiary of E


5

Com Ventures Inc. (“ECMV”). Perfumania is Parlux’s largest customer. After February

2000, Lekach served as CEO of both Parlux and ECMV.

12. In addition to his base salary and options, Lekach received lavish personal

loans from Parlux. These loans were regularly renegotiated to progressively more

favorable rates. In fact, between 1999 and 2003, Parlux “loaned” Lekach money which

amounted to over $742,884. At the time, these personal loans amounted to over 2.5% of

the value of the Company.

13. Lekach’s rampant borrowings came to an end in 2002 with the passage of

the Sarbanes-Oxley Act. According to the Company’s March 31, 2003 Form 10-K:

[Lekach’s] loans, which were consolidated into one note agreement on April 1, 2002, became due on March 31, 2003 in accordance with the note’s terms. On March 31, 2003, Mr. Lekach repaid $46,854 in principal and $71,364 of accrued interest, through that date. The repayment was affected via an offset of amounts due Mr. Lekach under his regular compensation arrangement. Sarbanes-Oxley prohibits the Company from renewing or amending the loan, as well as issuing new loans to Company officers and directors.

14. Defendant Buttacavoli is a Certified Public Accountant, and served as

CFO since 1993.

15. Under the terms of their compensation agreements, the Individual

defendants were entitled to bonuses up to 50% of their base salaries, based upon specific

goals such as sales or pretax income. In addition, in the event of a change of control, the

agreements provide for all remaining monies due, plus the doubling of unexercised

warrants.

16. The Individual Defendants, as senior officers and/or directors of Parlux

were controlling persons of the Company and were aware of the Company’s actual and

projected sales figures, and closely monitored the Company’s operations. According to a


6

former Order Entry Clerk, Buttacavoli and Lekach paid close attention to detail and

reviewed and approved orders themselves. A former Account Executive confirmed that

Buttacavoli and Lekach were “very active managers” and received weekly sales numbers.

These sales numbers were tracked by an auditing service called “Cognos.” According to

a former Operations Department employee, Parlux executives were also privy to actual

and forecasted sales numbers by attendance at quarterly Forecast Meetings in which they

reviewed reports of sales versus last year’s sales and compared them to forecasts for each

department. The attendees always included Lekach and Buttacavoli, and included a

review of each brand and sku number. Each exercised his power and influence to cause

Parlux to engage in the fraudulent practices complained of herein.

17. Each of the defendants is liable as a participant in a fraudulent scheme and

course of business that operated as a fraud or deceit on purchasers of Parlux common

stock, by disseminating materially false and misleading statements and/or concealing

material adverse facts.

DEFENDANTS’ FRAUDULENT SCHEME

18. During the Class Period, as detailed below, defendants used certain related

party relationships to generate fictitious revenues. Defendants accomplished this by

invoicing for products before they were shipped in violation of GAAP, shipping products

to a warehouse before they were ordered or scheduled for delivery, and “parking”

products with related parties for later delivery to customers. The defendants used related

parties Grupo Tulin, Sarpres, and Perfumes Frances to facilitate this fraud through a

series of prearranged transactions. Grupo Tulin is an international distributor for Parlux

in Puerto Rico, owned by Lekach’s brother, Zalman Lekach. Sarpres distributes Parlux


7

products in Mexico and is owned by another Lekach brother, Rachmil Lekach. Perfumes

Frances is a Venezuelan distributor which is not described as a related party in Parlux’s

SEC filings, but is controlled by former Parlux Vice President of Sales, Ruben Lisman.

19. According to a former Order Entry Clerk employed at Parlux during the

Class Period, one day at the end of September 2005, this former employee was directed

by among others, defendant Buttacavoli, to generate a huge amount of invoices to certain

related parties for the sole purpose of meeting Parlux’s month-end goals. The former

employee was asked to generate invoices to Grupo Tulin, Sarpres, and Perfumes Frances

that were not scheduled to ship until a much later date if at all. The former employee was

directed to prepare millions of dollars worth of invoices for related parties when the

merchandise was not going to be shipped until the next quarter, or was not going to be

shipped at all. The amount of these invoices was significant and the former Order Entry

Clerk estimates, based on firsthand knowledge, that they could have reached $3 million

on that one day alone in September 2005.

20. A former Traffic Department Employee confirmed that there was a “big

push in September 2005 to get sales out” with many sales going to a warehouse in New

Jersey owned by a Company called “Genco,” rather than being shipped to customers.

This employee asked a supervisor why there was such a sudden spike in sales in

September 2005, but did not receive an answer and “decided not to push it.” This former

employee also asked why product was being shipped to the Genco warehouse, but again

did not receive an answer.

21. According to the former Order Entry Clerk, on this particular date in

September 2005, Buvel (a former Vice President of Operations) Buttacavoli and Roner


8

(Worldwide Director of Sales) all approached the former employee and told the employee

that Parlux “had to have a certain amount invoiced for their accounting.” The former

employee was pressured to prepare an enormous dollar value of invoices to meet the

Company’s “accounting” needs. “They were extremely stressed,” were pressuring the

former employee and were very “pushy, pushy.” They were pressing the former

employee to invoice several million dollars on that one day. Buvel told the former

employee that “our goal is this many million dollars, we’re at such and such, so bill this,

bill that, drop ship this, drop ship that.” This level of orders dwarfed any prior day. The

former employee had the CFO [Buttacavoli] and Operations Manager [Buvel] “on top of

me until 5:00 p.m. when the [month-end] report posts.” Buttacavoli, Buvel and Roner

had the former employee invoice orders that were not going to ship until the middle of

the following month, when typical Parlux procedures required that the Company “ship

products within a couple days of preparing the invoice.”

22. At the end of the day, Buttacavoli came up to the former employee, shook

the employee’s hand and said “I appreciate your hard work today.” That was the first and

only time in three years at Parlux that the CFO thanked this former employee or

addressed the employee in this way. According to the former employee, “that day was

the craziest day in three years.” Buttacavoli and Buvel said “they had a goal.” “This is

the number we have to hit.”

23. The orders that Buttacavoli, Buvel and Roner instructed the former

employee to enter on this occasion were almost exclusively from Grupo Tulin, Sarpres

and Perfumes Franceses. The unusually large number of orders that the former employee

was told to invoice on this day were almost exclusively “Drop Shipments.” A Drop


9

Shipment or “Drop Ship” was the term Parlux used to describe orders for products that

Parlux did not have in their Florida distribution center, but supposedly had instead in a

New Jersey distribution center or possibly another distribution center elsewhere. The

former employee found the orders “suspicious” and had no way to verify that the

products were actually in stock in any other distribution center.

24. On this day the former employee was only presented with “Pro Forma”

orders from Buvel, Buttacavoli and Roner to enter into the JD Edwards accounting

system that Parlux used. Pro Forma orders include just the customer name, billing

address, shipping address, invoice number, customer number, date, customer purchase

order number, the quantities and descriptions of items being purchased and the price for

those items. Since the Pro Forma orders are preliminary orders, they lack the supporting

signatures and paperwork that the former employee normally had when preparing

legitimate invoices. The usual non-Pro Forma orders were signed and approved then sent

to the Warehouse and more paperwork was generated when the order was packed. On

this day, Buvel and Butacavoli presented the former employee with Pro Forma orders that

made it seem like there were orders to support all the invoices the former employee was

told to create. Even though the orders were only Pro Forma, the Company recognized

revenue on these contrived related party transactions.

Defendants Fail to Reveal a Known Material Adverse Trend

25. While the generation of these fictitious invoices enabled the Company to

falsely and prematurely recognize revenue, defendants sacrificed earnings in future

quarters in order to receive this short-term boost. Specifically, sales in future quarters

were adversely impacted because: (1) products sold to related parties reentered the United


10

States and were sold at discounts which devalued the brands, resulting in materially lower

sales to domestic department stores; and (2) because of the second quarter 2005 flood of

products to these related parties, legitimate orders from these parties were reduced going

forward.

26. According to a former Account Executive, department stores such as

Dillards began discontinuing their orders from Parlux because they were upset about the

grey market for Parlux products impacting their profits. According to this former

employee, the impact of the “grey market” on Parlux products amounted to several

million dollars per year. Because of what the former employee described as “under the

table dealings” with related parties who would ship the product right back to the United

States, which would cause the fragrances to appear “everywhere” including “swap meets

and grocery stores” and significantly devalued the products. According to this former

employee, it was clear that a significant portion of international sales to related parties

“go right back in to the United States.” The fact that sales to these related parties was

causing a decline in sales to department stores, a high margin portion of the Company’s

business, was a material adverse trend which was required to be disclosed under SEC

rules.

Defendants’ Financial Statements Violated GAAP

27. Generally accepted accounting principles ("GAAP") defines related party

transactions (Statement Of Financial Accounting Standards No. 57, Related Party

Disclosures -- "FASB No. 57"), as "transactions between (a) a parent company and its

subsidiaries; (b) subsidiaries of a common parent; (c) an enterprise and trusts for the

benefit of employees, such as pension and profit sharing trusts that are managed by or


11

under the trusteeship of the enterprise's management; (d) an enterprise and its principal

owners, management, or members of their immediate families; and (e) affiliates."

(Emphasis Added). During the Class Period, related parties Sarpres and Grupo Tulin

were two of Parlux's largest international customers.

28. As defined by GAAP, Grupo Tulin, and Sarpres were Parlux related

parties.

29. Further, as stated in paragraph 15 of FASB No. 57:

Reliability of financial information involves "assurance that accounting measures represent what they purport to represent." Without disclosure to the contrary, there is a general presumption that transactions reflected in financial statements have been consummated on an arms-length basis between independent parties. However, that presumption is not justified when related party transactions exist because the requisite conditions of competitive, free-market dealings may not exist. Because it is possible for related party transactions to be arranged to obtain certain results desired by the related parties, the resulting accounting measures may not represent what they usually would be expected to represent

30. Accordingly, FASB No. 57 requires full disclosure of relevant aspects of

related party transactions and GAAP requires accounting for substance over form. In this

regard, Statement of Financial Accounting Concepts No. 2 states (in paragraph 160) that:

The principle that the quality of reliability and, in particular, of representational faithfulness leaves no room for accounting representations that subordinate substance to form.

31. Elaborating on the issue of accounting for substance over form, the SEC

(in the introductory portion of Accounting Series Release 173) made the following

comments pertaining to economic substance:

Another problem. . .is the need for emphasizing the importance of substance over form in determining accounting principles to be applied to particular transactions and situations. In addition to considering substance over form in particular transactions, it is important that the overall


12

impression created by the financial statements be consistent with the business realities of the company's financial position and operations.

32. As noted by the SEC in its Accounting And Auditing Enforcement

Release No. 817 (September 19, 1996 -- In the Matter of Cypress Bioscience Inc. and

Alex P. De Soto, CPA):

It is a well established tenet of GAAP that transactions must be accounted for in accordance with their substance rather than their form.

33. Transactions between Parlux and Grupo Tulin, and Sarpres (hereinafter

"The Related Parties") were arranged to obtain the financial reporting results which were

desired by Parlux. As discussed above, when Parlux needed additional sales revenue in

order to meet analysts' expectations, it would invoice The Related Parties irrespective of

whether The Related Parties needed or wanted additional products and irrespective of

whether or not products were actually shipped to The Related Parties.

34. In accounting for these transactions, the accounting measures did not

represent what they usually would be expected to represent because the economic

substance of the transactions (either the non-shipment of products or the "parking" of

products at a related party's warehouse) were ignored for financial accounting purposes.

Consequently, the overall impression created by the financial statements were

inconsistent with the business realities of the Company's financial position and operations

and the financial statements of the Company were not presented fairly in conformity with

GAAP because:

a) The accounting principles selected and applied did not have general acceptance.

b) The accounting principles were not appropriate in the circumstances.


13

c) The financial statements, including the related notes, were not informative of matters

that affected their use, understanding, and interpretation.

d) The financial statements did not reflect the underlying events and transactions in a

manner that presented the financial position and the results of operations within a range

of acceptable limits that were reasonable and practicable to attain in financial statements.

35. Furthermore, as confirmed by the former employees detailed above,

Parlux systematically recorded material amounts of "sales" to non-related parties

although products had either not been shipped or had been shipped to a warehouse; not to

a customer. These recordations were contrived, wholly fictitious sales transactions,

intended to artificially inflate revenue and earnings.

36. The existence of the wholly fictitious sales transactions between Parlux

and The Related Parties were knowingly or recklessly concealed from the investing

public through a failure to comply with GAAP (FASB No. 57) which states that:

Information about transactions with related parties is useful to users of financial statements in attempting to compare an enterprise's results of operations and financial position with those of prior periods and with those of other enterprises. It helps them to detect and explain possible differences. Therefore, information about transactions with related parties that would make a difference in decision making should be disclosed so that users of the financial statements can evaluate their significance. 37. In addition to causing the above violations of GAAP, Defendants also

caused the Company's financial statements to ignore the FASB No. 57 mandate that:

"financial statements shall include disclosures of material related party transactions" and

that disclosures "shall" include:

a) The nature of the relationship(s) involved.


14

b) A description of the transactions, including transactions in which no amounts or

nominal amounts were ascribed, for each of the periods for which income statements

are presented, and such other information deemed necessary to an understanding of

the effects of the transactions on the financial statements. (Emphasis Added)

c) The dollar amounts of transactions for each of the periods for which income

statements are presented and the effects of any change in the method of establishing

the terms from that used in the preceding period.

d) Amounts due from or to related parties as of the date of each balance sheet presented

and, if not otherwise apparent, the terms and the manner of settlement.

38. The financial statements of the Company, which were disseminated to the

investing public during the Class Period, were not in compliance with GAAP, at least in

part, because they failed to disclose the foregoing.

39. By failing to provide the GAAP-required disclosures concerning Parlux's

relationship with Grupo Tulin and Sarpres and its improper recognition of revenue on

transactions with these business entities, Defendants also violated the disclosure rules of

the SEC (including S-X Rule 4-08). Moreover, defendants violated GAAP (APB

Opinion No. 28) which provides that, "management should provide commentary relating

to the effects of significant events upon the interim financial results."

Defendants’ Improper Revenue Recognition

40. As stated in the Company's fiscal 2005 and fiscal 2006 year end financial

statements under the caption, Summary of Significant Accounting Policies, "Revenue is

recognized when the product is shipped to a customer, or in the limited circumstances, at


15

destination, when terms provide that title passes at destination." This representation was

also incorporated by reference in the Company's interim financial statements, which were

disseminated to the investing public, via inclusion of the following representation in

notes to these financial statements:

The financial information presented herein. . . , which is not necessarily indicative of results to be expected for the current fiscal year, reflects all adjustments (consisting only of normal recurring accruals), which, in the opinion of management, are necessary for a fair presentation of the interim unaudited condensed consolidated financial statements. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10 K. . .

41. By recognizing revenue and a related receivable on the date of invoicing

when no product shipments occurred or when products were shipped to a warehouse,

each of the Company's financial statements which were included in the Company's filings

with the SEC and which were disseminated to the investing public during the Class

Period violated the following GAAP, among others. The principle that:

a) Profit is deemed to be realized when a sale in the ordinary course of business is

effected. (Chapter 1A of Accounting Research Bulletin No. 43, Paragraph 1)

b) Revenues should ordinarily be accounted for at the time a transaction is completed.

(Accounting Principles Board Opinion No. 10, Paragraph 12)

c) Revenues and gains generally are not recognized until realized or realizable, and

revenues are considered to have been earned when the entity has substantially

accomplished what it must do to be entitled to the benefits represented by the

revenues. (Statement Of Financial Accounting Concepts No. 5, Paragraph 83)


16

d) The quality of reliability and, in particular, of representational faithfulness leaves no

room for accounting representations that subordinate substance to form. (Statement

Of Financial Accounting Concepts No. 2, Paragraph 160)

e) Contingencies that might result in gains usually are not reflected in the accounts since

to do so might recognize revenue prior to its realization. (Statement of Financial

Accounting Standards No. 5, Paragraph 17)

f) Revenue generally is realized or realizable and earned when delivery has occurred.

(SEC Staff Accounting Bulletin No. 104)

42. The doctrine that revenues is to be accounted for at the time that the

earnings process is complete is a well established principle of GAAP and it has been

reaffirmed by the SEC on numerous occasions. For example, it was reaffirmed by the

SEC in:

a) Accounting And Auditing Enforcement Release No. 817 (September 19, 1996) which

states: "Under APB Statement No. 4, which was rescinded in March 1993, revenue

was generally recognized when (1) the earnings process was complete or virtually

complete, and (2) an exchange had taken place. This revenue recognition concept has

been carried forward in FASB Statement of Financial Accounting Concepts No. 5,

para. 83 84, and in other authoritative literature and continues to provide the

foundation for revenue recognition in accordance with GAAP."

b) Accounting And Auditing Enforcement Release No. 812 (September 5, 1996) which

states: "Generally Accepted Accounting Principles ("GAAP") provide that revenue

should not be recognized until an exchange has occurred, the earnings process is


17

complete, and the collection of the sales price is reasonably assured. These

conditions ordinarily are met when products are exchanged for cash or claims to cash,

and when the entity has substantially performed the obligations which entitle it to the

benefits represented by the revenue."

43. Each of the Company's financial statements which were disseminated to

the investing public during the Class Period, were not presented in accordance with

GAAP in that neither the financial statements nor the notes thereto contained any

disclosure of the fact that:

a) The Company falsely and misleadingly recognized revenue on shipments of product

to The Related Parties when such shipments were, in fact, transfers of inventory to be

"parked" by The Related Parties.

b) The Company falsely and misleadingly recognized revenue on shipments of product

to The Related Parties and third parties when, in fact, no products had been shipped.

c) The Company falsely and misleadingly recognized revenue on shipments of product

to a warehouse, not to a customer.

44. Parlux's September 30, 2005 financial statements, as presented in the

September 30, 2005 Form 10-Q, improperly reflected millions of dollars of sales that had

not occurred either because no products had been shipped; because products had been

shipped to a warehouse for storage and not to a customer; because products had been

shipped to The Related Parties for storage (i.e. "parked" with affiliates).


18

45. Parlux's December 31, 2005 financial statements, as presented in the

December 31, 2005 Form 10-Q, improperly reflected millions of dollars of sales that had

not occurred either because no products had been shipped, because products had been

shipped to a warehouse for storage and not to a customer, or because products had been

shipped to The Related Parties for storage (i.e. "parked" with affiliates).

46. Parlux's March 31, 2006 financial statements, as presented in the fiscal

2006 Form 10-K, improperly reflected millions of dollars of sales that had not occurred

either because no products had been shipped, because products had been shipped to a

warehouse for storage and not to a customer, or because products had been shipped to

The Related Parties for storage (i.e. "parked" with affiliates).

47. Due to the pervasiveness of the Company's fraudulent accounting

activities and the magnitude of the amounts involved, the director and officer defendants

could not avoid knowing of them, as well as the fact that they were concealed. Indeed, as

stated by the witnesses detailed above,, Buttacavoli knew of and/or participated in the

Company's fraudulent accounting activities.

Defendants’ Failed to Comply With SEC Rules

48. SEC Staff Accounting Bulletin No. 104, Revenue Recognition in

Financial Statements, states:

MD&A requires a discussion of liquidity, capital resources, results of operations and other information necessary to an understanding of a registrant's financial condition, changes in financial condition and results of operations This includes unusual or infrequent transactions, known trends or uncertainties that have had, or might reasonably be expected to have, a favorable or unfavorable material effect on revenue, operating income or net income and the relationship between revenue and the costs of the revenue. Changes in revenue should not be evaluated solely in terms of volume and price changes, but should also include an analysis of the


19

reasons and factors contributing to the increase or decrease. The Commission stated in FRR 36 that MD&A should "give investors an opportunity to look at the registrant through the eyes of management by providing a historical and prospective analysis of the registrant's financial condition and results of operations, with a particular emphasis on the registrant's prospects for the future." (Emphasis Added) 49. Item 7 of Form 10-K and Item 2 of Form 10-Q, requires the issuer to

furnish information required by Item 303 of Regulation S-K [17 C.F.R. § 229.303]. In

discussing results of operations, Item 303 of Regulation S-K requires the registrant to

"[d]escribe any known trends or uncertainties that have had or that the registrant

reasonably expects will have a material favorable or unfavorable or unfavorable impact

on net sales or revenues or income from continuing operations."

50. The Instructions to Paragraph 303(a) further state, "[t]he discussion and

analysis shall focus specifically on material events and uncertainties known to

management that would cause reported financial information not to be necessarily

indicative of future operating results."

51. Thus, under these standards, the management of a public corporation must

disclose in its periodic reports filed with the SEC, "known trends or any known demands,

commitments, events or uncertainties" that are reasonably likely to have a material

impact on a company's sales revenues, income or liquidity, or cause previously reported

financial information not to be indicative of future operating results. 17 C.F.R. §

229.303(a)(l)-(3) and Instruction 3.

52. On May 18, 1989, the SEC issued an interpretive release (Securities Act

Release No. 6835) which stated, in relevant part:


20

The MD&A requirements are intended to provide, in one section of a filing, material historical and prospective textual disclosure enabling investors and other users to assess the financial condition and results of operations of the registrant, with particular emphasis on the registrant's prospects for the future. 53. The Commission has long recognized the need for a narrative explanation

of the financial statements, because a numerical presentation and brief accompanying

footnotes alone may be insufficient for an investor to judge the quality of earnings and

the likelihood that past performance is indicative of future performance. MD&A is

intended to give the investor an opportunity to look at the company through the eyes of

management by providing both a short and long term analysis of the business of the

company. The Item asks management to discuss the dynamics of the business and to

analyze the financials.

54. As the Commission has stated, "[i]t is the responsibility of management to

identify and address those key variables and other qualitative and quantitative factors

which are peculiar to and necessary for an understanding and evaluation of the individual

company."

55. For the reasons described above, Parlux's periodic filings with the SEC

during the Class Period failed to comply with MD&A disclosure requirements.

56. Defendants were required to cause Parlux's SEC filings and the financials

statements contained therein to disclose the existence of the material facts described

herein and to appropriately recognize and report revenues and expenses in conformity

with GAAP. Defendants failed to cause the Company to make such disclosures and to

account for and to report revenue and expenses in conformity with GAAP.


21

57. Due to the pervasive mosaic of non-disclosures, deceptive disclosures, and

non-GAAP accounting, the Forms 10-K and 10-Q (and the financial statements contained

therein) which defendants caused the Company to file with the SEC during the Class

Period were materially false and misleading.

58. Defendants knew and ignored, or were severely reckless in not knowing,

the facts which indicated that the above specified Parlux filings with the SEC, financial

statements, press releases, and public statements were materially false and misleading for

the reasons set forth above.

FALSE AND MISLEADING STATEMENTS DURING THE CLASS PERIOD

Defendants Issue False Financial Results for 2Q05

59. The Class Period begins on November 14, 2005. On that date, defendants

announced financial results for the second quarter of 2005, the three months ended

September 30, 2005. The press release stated:

Parlux Fragrances, Inc. (NASDAQ:PARL) announced today its results for the three months ended September 30, 2005. Net sales were $39,328,298 compared to $22,723,357 in the same period of the prior year, an increase of 73%. Net income was $4,439,870 compared to $2,375,971 in the same period of the prior year, an increase of 87%. Earnings per share on a diluted basis were $0.42 compared to prior-year earnings of $0.23 per share, an increase of 83%. For the six-month period ended September 30, 2005, net sales were $73,145,627 compared to $45,684,560 in the prior period, an increase of 60%. Net income was $8,251,493 ($0.78 per share on a diluted basis) compared to $4,565,813 ($0.43 per share on a diluted basis) in the same period of the prior year, an increase of 81%. 60. Commenting on the results, Ilia Lekach, Chairman and CEO said, “We

have again achieved record results and are on track to achieve our full year estimates as

long as the economy remains stable. We have recently commenced shipments of our


22

second Paris Hilton fragrance “Just Me”, and our Limited Edition Paris Hilton watches

are being launched this month through Tourneau, the preeminent fine watch retailer.”

Mr. Lekach continued, “The successful launch of GUESS? women’s fragrance earlier

this year continues to fuel our growth. We are grateful to our Perry Ellis licensor for their

continued marketing efforts, and look forward to the launch of Perry Ellis 18 in 2006.”

61. On November 15, 2005, defendants filed a quarterly report on Form 10-Q

for the period ended September 30, 2005. The 10-Q was signed by Buttacavoli and

Lekach. The 10-Q included certifications signed by Lekach and Buttacavoli certifying

that Parlux had no internal control issues with respect to its financial reporting. The

certifications stated:

I, Ilia Lekach, certify that: 1. I have reviewed this report on Form 10-Q of Parlux Fragrances, Inc. 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. Registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant, and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


23

b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Defendants Statements Regarding 2Q05 Results Were False

62. The statements detailed above regarding second quarter 2005 results were

materially false and misleading because (a) Parlux suffered from material weaknesses in

its internal controls; and (b) the reported financial results included millions of dollars

generated from fictitious invoices to related parties Grupo Tulin, Sarpres and to Pefumes

Frances.


24

Defendants Issue False Statements During Q305

63. On January 9, 2006, defendants issued a press release reporting

preliminary results for the third quarter of 2005. The press release stated:

Parlux Fragrances, Inc. (Nasdaq: PARL) announced today that based upon preliminary information, Parlux anticipates reporting record total revenues and record fully diluted earnings per share for the quarter ended December 31, 2005, exceeding analysts’ estimates. Revenues for the third quarter are expected to be in the range of $56 to $57 million, compared to $28.7 million in the prior year, an increase of over 95%. Fully diluted earnings per share for the quarter are expected to be in the range of $0.55 to $0.57 compared to $0.27, an increase of over 100%. Commenting upon the results, Mr. Ilia Lekach, Chairman and Chief Executive Officer, said: “We experienced an outstanding quarter despite the obstacles created early-on by Hurricane Wilma. Paris Hilton fragrances achieved another stellar holiday season and our Guess fragrance sales helped to fuel top line growth. Perry Ellis fragrance products remain an important part of our business and we will be introducing a new Perry Ellis 18 fragrance in summer 2006. It is important to note that our Guess, Paris Hilton and Maria Sharapova fragrances continue to be launched in a number of international markets and, that new offerings for our other product lines are planned for the near future.” Mr. Lekach added, “I am especially pleased that our earnings growth has increased at an even faster pace and continue to be optimistic that, assuming the continued acceptance of our products and stable economic conditions, our previous earnings guidance of $2.00 to $2.20 per share for the fiscal year ending March 31, 2006 will be achieved.” 64. On February 6, 2006, Defendants announced financial results for the third

quarter ended December 31, 2005. The press release stated:

Net sales were $56,412,315 compared to $28,748,499 in the same period of the prior year, an increase of 96%. Net income more than doubled to $5,996,089 compared to $2,867,746 in the same period of the prior year. Earnings per share on a diluted basis were $0.57 compared to prior-year earnings of $0.27 per share, an increase of 111%. For the nine-month period ended December 31, 2005, net sales were $129,557,942 compared to $74,433,059 in the prior period, an increase of 74%. Net income was $14,247,582 ($1.35 per share on a diluted basis)


25

compared to $7,433,559 ($0.70 per share on a diluted basis) in the same period of the prior year, an increase of 92%. Commenting upon the results, Mr. Ilia Lekach, Chairman and Chief Executive Officer, said: “Paris Hilton fragrances continued to achieve strong consumer demand. Our GUESS? women’s fragrance established a strong sales base in its first holiday season, which will be expanded with the launch of the GUESS? men’s fragrance this spring. Perry Ellis fragrance products retain their strength. Perry Ellis remains our largest brand, representing almost half of our total business and we will be introducing a new “Perry Ellis 18”fragrance in summer 2006. It is important to note that our GUESS?, Paris Hilton and Maria Sharapova fragrances continue to be launched in a number of international markets. We anticipate shipping Paris Hilton watches and handbags during our fourth quarter, and development for Paris Hilton cosmetics and a babyGund fragrance are on schedule for holiday 2006.”Mr. Lekach continued, “I am especially pleased that our earnings growth has accelerated. Assuming the acceptance of our new product introductions remain on course and economic conditions stay stable, our previous earnings guidance of $2.00 to $2.20 per share on revenues of approximately $190 million for the fiscal year ending March 31, 2006 should be achieved.”Mr. Lekach added, “Based on the continued strength of our brands and the planned new product introductions, our preliminary guidance for fiscal 2007 is for sales to exceed $300 million, with earnings in the range of $3.00 to $3.25 per share.” 65. On February 9, 2006, defendants filed a quarterly report on Form 10-Q for

the period ending December 31, 2005. The 10-Q repeated the financial results detailed

in the press release above, and particularly emphasized the strong sales to related parties.

With respect to related party transactions, the 10-Q stated:

The Company had net sales of $18,648,334 and $30,403,037 during the nine-month periods ended December 31, 2005 and 2004 ($6,502,845 and $9,486,314 during the three months ended December 31, 2005 and 2004), respectively, to Perfumania, Inc. (“Perfumania”), a wholly-owned subsidiary of E Com Ventures, Inc. (“ECMV”), a company in which the Company’s Chairman and Chief Executive Officer has an ownership interest and held identical management positions until February 2004. Perfumania is one of the Company’s largest customers, and transactions with them are closely monitored by the Company’s Audit Committee and Board of Directors. Perfumania offers the Company the opportunity to distribute its products in approximately 240 retail outlets and its terms


26

with Perfumania take into consideration the companies’ over 15 year relationship. Pricing and terms with Perfumania reflect (a) the volume of Perfumania’s purchases, (b) a policy of no returns from Perfumania, (c) minimal spending for advertising and promotion, (d) exposure of the Company’s products provided in Perfumania’s store windows and (e) minimal distribution costs to fulfill Perfumania orders shipped directly to their distribution center. In addition to Perfumania, during the nine months ended December 31, 2005 and 2004, the Company had net sales of $30,582,084 and $12,029,395 ($12,844,799 and $4,298,684 during the three months ended December 31, 2005 and 2004), respectively, to fragrance distributors owned/operated by individuals related to the Company’s Chairman/CEO, including a distributorship for the Mexican market. These sales are included as related party sales in the accompanying condensed consolidated statements of income and are closely monitored by the Company’s Audit Committee and Board of Directors. As of December 31, 2005 and March 31, 2005, trade receivables from related parties include $4,552,288 and $13,154, respectively, from these customers, which were current in accordance with their sixty or ninety day terms.

66. In response to the announcements of seemingly stellar financial results,

Parlux stock price increased dramatically, trading at as much as over $38 per share during

February 2006.

Defendants 3Q05 Statements Were Materially False and Misleading

67. Defendants statements concerning related parties, the financial results

achieved during the third quarter, and the Company’s projections for future results were

false and misleading. In violation of GAAP, defendants’ disclosures regarding related

party transactions failed to discuss the existence of the arrangements with Grupo Tulin

and Sarpres. In addition, defendants knew that product was reentering the United States

from these related parties, which was devaluing Parlux brands and causing a decline in

sales to department stores.


27

Defendants Unload Millions of Dollars Worth Of Parlux Stock Prior to Disclosure of the Company’s Earnings Miss

68. During the Class Period, when the stock was at or near its high, defendants

sold millions of dollars worth of their Parlux stock. These sales were unusual in both

timing and amount, they far exceeded defendants' previous sales, and preceded

defendants' announcements that Parlux would not meet its earnings expectations. The

suspicious nature of the insider selling was noted in a June 13, 2006 Miami Herald

article, which stated:

Parlux Fragrances' stock has plummeted by more than half this year. But six of its seven directors sold shares -- three cashing out their holdings entirely -- at or near its peak. The stock of the Fort Lauderdale perfume distributor hit an all-time high of $38.48 on Feb. 22. Over the course of just two weeks in mid-to-late February, directors sold roughly $16 million worth of stock, according to financial documents. Four months later, CEO Ilia Lekach offered to buy the company for $29 a share -- less than he or the other directors got for their own stock. He withdrew that offer Wednesday. The reasons the directors gave for their sales ranged from needing the money for family reasons to wanting to diversify. David Wong, a founder of Form 4 Oracle, a Boston area company that tracks insider trading, said the trades could be a "red flag.'' ‘SOMETHING HAPPENED' 'It doesn't seem like there has been a regular pattern of selling, so it certainly is an event,'' he said. “Something happened in mid-February . . . One could easily be convinced that there is something unusual going on.'' Insider trading is illegal if the insiders sell based on private knowledge of events that could send the stock down. The sales made up about 5 percent of the company's market value at the time. Here were the trades: Frank Buttacavoli, chief financial officer, sold $2.5 million worth of shares on Feb. 13 and 14 for an average $33 a share. Lekach sold $11.7 million worth of shares through a firm he controls on Feb. 15 and Feb. 16,


28

also at about $33 a share. He still owns about 26 percent of the firm. His son, Isaac Lekach, who sings for an indie band in Los Angeles and sits on the board of directors for Parlux, sold all his stock -- worth about $650,000 -- at about $36 a share, two days after its peak. Esther Choukroun, CFO of real estate firm PIX Group, sold all her shares for $1.1 million on Feb. 22. Glenn Gopman, a Miami accountant, sold about $190,000 of stock at the all-time high. None of the directors had made any market sales or purchases in the previous nine months. However, some of them could not have sold earlier because of a financial regulation that requires directors to hold onto stock for a year before selling. 69. As detailed in the chart below, Defendants sold significant portions of

their Parlux holdings during the Class Period, and three directors sold all of their Parlux

holdings.

Summary of Parlux Insiders' Class Period Sales

Insider Position Date Shares Sold Price Proceeds

F. Buttacavoli CO,CFO,OD,EVP 2/13/2006 10,296 $16.76 $172,561 2/13/2006 9,834 $16.78 $164,965 2/13/2006 9,400 $16.81 $157,967 2/13/2006 9,298 $16.77 $155,927 2/13/2006 5,600 $16.75 $93,800 2/13/2006 5,000 $16.82 $84,075 2/13/2006 4,894 $16.80 $82,219 2/13/2006 4,800 $16.79 $80,568 2/13/2006 4,398 $16.81 $73,930 2/13/2006 4,382 $16.51 $72,347 2/13/2006 4,000 $16.56 $66,240 2/13/2006 3,960 $16.82 $66,607 2/13/2006 3,800 $16.64 $63,213 2/13/2006 3,600 $16.70 $60,120 2/13/2006 3,018 $16.76 $50,567 2/13/2006 2,990 $16.72 $49,978 2/13/2006 2,586 $16.87 $43,626 2/13/2006 2,200 $16.83 $37,015 2/13/2006 2,106 $16.68 $35,128


29


Buttacavoli (cont.) 2/13/2006 2,200 $16.78 $36,916 2/13/2006 2,000 $16.52 $33,030 2/13/2006 1,826 $16.85 $30,768 2/13/2006 1,798 $16.54 $29,739 2/13/2006 1,400 $16.79 $23,506 2/13/2006 1,000 $16.55 $16,545 2/13/2006 800 $16.58 $13,260 2/13/2006 800 $16.64 $13,312 2/13/2006 800 $16.69 $13,352 2/13/2006 800 $16.71 $13,368 2/13/2006 800 $16.77 $13,412 2/13/2006 800 $16.80 $13,436 2/13/2006 600 $16.63 $9,975 2/13/2006 600 $16.86 $10,116 2/13/2006 598 $16.58 $9,915 2/13/2006 400 $16.57 $6,626 2/13/2006 400 $16.68 $6,670 2/13/2006 320 $16.71 $5,346 2/13/2006 202 $16.61 $3,354 2/13/2006 200 $16.53 $3,305 2/13/2006 200 $16.63 $3,326 2/13/2006 198 $16.59 $3,284 2/13/2006 198 $16.59 $3,285 2/13/2006 198 $16.60 $3,286 2/13/2006 100 $16.84 $1,684 2/14/2006 7,234 $16.54 $119,650 2/14/2006 5,900 $16.55 $97,645 2/14/2006 3,000 $16.63 $49,875 2/14/2006 2,600 $16.65 $43,290 2/14/2006 2,398 $16.55 $39,675 2/14/2006 2,000 $16.64 $33,280 2/14/2006 1,600 $16.75 $26,800 2/14/2006 1,400 $16.61 $23,254 2/14/2006 1,400 $16.72 $23,408 2/14/2006 1,200 $16.56 $19,866 2/14/2006 1,000 $16.60 $16,600 2/14/2006 600 $16.61 $9,963 2/14/2006 406 $16.54 $6,713


30


Buttacavoli (cont.) 2/14/2006 698 $16.65 $11,618 2/14/2006 400 $16.63 $6,652 2/14/2006 400 $16.66 $6,662 2/14/2006 400 $16.67 $6,668 2/14/2006 400 $16.69 $6,676 2/14/2006 400 $16.73 $6,690 2/14/2006 366 $16.68 $6,105 2/14/2006 200 $16.53 $3,306 2/14/2006 200 $16.70 $3,340 2/14/2006 200 $16.72 $3,343 2/14/2006 198 $16.57 $3,280 Buttacavoli Class Period Totals: 150,000 $2,506,028 E. Choukroun D 2/22/2006 8,628 $18.93 $163,285 2/22/2006 7,000 $18.90 $132,300 2/22/2006 6,960 $18.92 $131,648 2/22/2006 6,200 $18.95 $117,490 2/22/2006 5,218 $18.93 $98,777 2/22/2006 3,200 $18.90 $60,464 2/22/2006 2,800 $18.95 $53,046 2/22/2006 2,600 $18.92 $49,192 2/22/2006 2,412 $18.91 $45,611 2/22/2006 2,400 $18.86 $45,264 2/22/2006 2,000 $18.98 $37,950 2/22/2006 2,000 $18.96 $37,920 2/22/2006 2,000 $18.94 $37,880 2/22/2006 1,600 $18.94 $30,296 2/22/2006 1,400 $18.89 $26,446 2/22/2006 800 $18.88 $15,104 2/22/2006 600 $18.99 $11,394 2/22/2006 600 $18.91 $11,343 2/22/2006 582 $19.01 $11,064 2/22/2006 400 $18.88 $7,550 2/22/2006 200 $18.98 $3,796 2/22/2006 200 $18.89 $3,777 2/22/2006 200 $18.84 $3,768 E. Choukroun Class Period Totals: 60,000 $1,135,365


31


G. Gopman D 2/22/2006 10,000 $19.00 $190,000 Ilia Lekach 1 CEO,CB,H 2/15/2006 172,000 $16.63 $2,859,500 2/15/2006 100,000 $17.00 $1,700,000 2/15/2006 30,000 $16.66 $499,800 2/15/2006 8,000 $16.66 $133,240 2/15/2006 5,000 $16.95 $84,725 2/15/2006 5,000 $16.75 $83,750 2/15/2006 4,000 $16.91 $67,620 2/15/2006 4,000 $16.68 $66,700 2/15/2006 3,000 $16.72 $50,160 2/15/2006 2,000 $16.85 $33,700 2/15/2006 2,000 $16.78 $33,560 2/16/2006 226,000 $16.60 $3,751,600 2/16/2006 91,000 $16.63 $1,512,875 2/16/2006 20,000 $16.65 $333,000 2/16/2006 10,000 $16.61 $166,050 2/16/2006 8,000 $16.66 $133,240 2/16/2006 6,000 $16.63 $99,780 2/16/2006 4,000 $16.74 $66,960 Ilia Lekach Class Period Totals: 700,000 $11,676,260 Isaac LEKACH D 2/24/2006 20,000 $18.05 $361,000 2/24/2006 10,000 $17.88 $178,750 2/24/2006 5,800 $18.13 $105,125 2/24/2006 200 $18.11 $3,621 2/24/2006 200 $18.10 $3,620 2/24/2006 200 $18.09 $3,618 Isaac Lekach Class Period Totals: 36,400 $655,734 D. Stone D 3/24/2006 20,000 $15.80 $316,000 Grand Totals: 976,400 $16,479,387

1 Source: Form 4 dated 2/17/06. Represents shares owned by Pacific Investment Group, Inc. a corporation in which the Reporting Person owns a controlling interest.


32

70. Also suspicious is the fact that when comparing pre-Class period sales to

Class Period sales, defendants sold a huge percentage of their stock during the Class

Period, as detailed in the chart below:

Defendants’ False Statements Continue

71. On May 9, 2006, defendants issued a press release reporting “record”

revenues for the fiscal year ended March 31, 2006. The press release stated:

Parlux Fragrances, Inc. (NASDAQ:PARL) announced today that based upon preliminary unaudited information, the Company anticipates reporting record total revenues and record fully diluted earnings per share for the fiscal year ended March 31, 2006.


33

Revenues for the fiscal year are expected to approximate $183 million, an increase of 82% over the prior fiscal year ended March 31, 2005. Fully diluted earnings per share for the fiscal year ended March 31, 2006 are expected to more than double and be in the range of $2.05 to $2.10 per share compared to $1.02 per share for the prior fiscal year. 72. Commenting on the results, Ilia Lekach, Chairman and Chief Executive

Officer, said:

“Our excellent results were attributable to the continuing solid performance of our Perry Ellis fragrances combined with the stellar growth of Paris Hilton fragrances and the successful launch of our GUESS fragrances. We recently initiated the sale of Paris Hilton watches and handbags and expect to introduce Paris Hilton cosmetics and sunglasses during fiscal 2007.” Mr. Lekach continued, “I remain optimistic for fiscal 2007 and anticipate revenues in the range of $270-$280 million and earnings in the range of $2.80-$2.90 per share assuming the successful implementation of our anticipated new launches and stable economic conditions.” 73. On May 17, 2006, defendants announced a 2-for-1 split of the Company’s

common stock effected in the form of a stock dividend. Commenting on the stock split,

defendant Lekach stated:

The stock split is a result of the Company’s solid growth and price performance. Over the past three fiscal years our significant growth in revenues has provided increased earnings per share of over 300% and the market price of our stock has almost tripled. We believe that this stock split, combined with our plans for continuing growth, will increase retail ownership and provide pricing levels that are accessible to a broader group of investors. 74. The statements detailed above in Parlux’s SEC filings and press releases

were materially false and misleading, because at the time these statements were made: (a)

defendants were well aware that due to their board positions and/or supervision over

related parties that sales to these related parties had declined and were continuing to

materially decline; (b) defendants knew that sales to domestic department stores had


34

declined because of the flooding of products from related parties into the grey market; (c)

defendants had generated fictitious invoices and recognized revenue in violation of

GAAP with respect to certain related party transactions detailed above which caused a

reduction in future orders to related parties; and (d) the Company had material internal

control issues which impacted the quality of its financial reporting.

The Truth Begins to Emerge

75. Between June 8, 2006 and August 10, 2006, material adverse information

about the Company was slowly revealed. On June 8, 2006, Parlux stock dropped 13%

after two analysts downgraded the stock due to disappointing distribution and sales of

Paris Hilton-branded products. According to an article published on that date:

Stock of the Fort Lauderdale, Fla.-based company fell $3.04, or 13 percent, to $21.06 in early afternoon trading on the Nasdaq Stock Market. Thursday's weakest level of $20.18, on heavy volume, was a 52-week low surpassing the prior low on Oct. 27 of $21.97. There was a 52-week high of $38.48 on Feb. 22. Parlux makes and markets fragrances and accessories through brands such as Perry Ellis, Ocean Pacific, Paris Hilton, XOXO, Guess, Maria Sharapova and Andy Roddick. Feltl & Co. cut its rating of Parlux shares to "buy" from "strong buy," while Wedbush Morgan Securities downgraded the stock to "hold" from "strong buy" -- both citing the recent launch of Paris Hilton-branded accessories. "After conducting a wide round of channel checks from specialty retailers to major department store chains, we have not seen the newly launched watches and handbags in nearly as many retail doors as we had earlier thought they would be in by this point," said Wedbush analyst Rommel Dionisio, who expressed concern about Parlux's ability to hit the firm's previous near-term revenue and earnings forecasts, which he lowered. 76. Despite the fact that analysts were beginning to independently uncover the

fact that Parlux’s sales had declined materially, the Company continued to hide the truth


35

from the investing public. On June 13, defendants issued the below press release

announcing strong sales growth.

77. On June 13, 2006, defendants issued a press release announcing that the

Company would be forced to delay the filing of its Annual Report on Form 10-K for the

year ended March 31, 2006. The press release stated:

Parlux Fragrances, Inc. (NASDAQ:PARL) announced its unaudited fiscal 2006 results reflecting sales of $182,236,594 compared to its prior year of $100,360,981, an increase of 82%. Unaudited net income was $22,483,263, or $2.13 per diluted share compared to prior year net income of $10,824,256, or $1.02 per share, an increase of 109%, exceeding previous estimates. On June 9, 2006, the Company filed a Form 12b-25, requesting an extension for filing its Annual Report on Form 10-K for the fiscal year ended March 31, 2006. Due to the increase in the Company’s market capitalization as measured on September 30, 2005, the Company became an accelerated filer under the Sarbanes-Oxley Act of 2002 (“SOX”). While reducing the year-end filing requirement from 90 to 75 days, SOX also required the Company to assess its internal controls and report on their effectiveness as of March 31, 2006. In spite of its best efforts and significant expense, the Company will be unable to complete certain of these new requirements by the initial filing due date of June 14, 2006. While the Company has grown rapidly, it has not significantly expanded its administrative staff to assist with the preparation of its financial statements, nor modified major systems/applications for recording of transactions. Management’s review, testing and assessment of its internal control procedures required by SOX has identified certain documentation, design and operating deficiencies, some of which management believes will be categorized as material weaknesses. Accordingly, we anticipate that management’s report on the effectiveness of internal controls will conclude that certain internal controls were not operating effectively as of and during the year ended March 31, 2006. The Company is taking immediate action to address and remediate these control deficiencies. 78. Thereafter, defendant Lekach offered to acquire the outstanding stock of

the Company. As noted in a June 14, 2006 press release:

Parlux Fragrances, Inc. (NASDAQ:PARL) announced today that its Board of Directors had received an unsolicited letter from its Chairman and CEO, Mr. Ilia Lekach, representing PF Acquisition of Florida LLC,


36

pertaining to the possible acquisition of all of the outstanding common stock of the Company at a proposed price of $29.00 per share in cash, representing a premium of 55% over the closing price of the common stock of the Company on June 13, 2006. 79. The Company noted, with respect to Lekach’s offer:

Through their legal counsel, the Committee responded (the “Response”) to the offer by stating that the Committee does not believe it is prudent for Parlux to move forward to consider the transaction with the significant financial and other contingencies contained in the Proposal. Further, the Committee questions the propriety of a proposed break up fee. The Committee believes that if Parlux proceeds with the Proposal and the transaction does not close, it may have a very negative effect on Parlux. In order to protect Parlux and its shareholders, the Committee believes that the closing contingencies should be removed from the Proposal and Acquisition Co. should provide a deposit to the Company as evidence of Acquisition Co.’s ability to proceed and in recognition of the significant cost Parlux will incur in considering the Proposal. The Committee continues to state that, in the event that the transaction cannot be completed due to an inability by Acquisition Co. to obtain financing, the deposit would be used to reimburse Parlux for its costs and expenses in connection with the consideration of the Proposal. 80. After receiving the Response, Acquisition Co. sent a follow-up letter (the

“Follow-up Letter”). The Follow-up Letter stated that Acquisition Co. does not expect

the Committee to incur any expense until Acquisition Co. has obtained its financing

commitments and when Acquisition Co. completes that task, it would expect to proceed

in a customary fashion without any deposit or waiver of the financial and other

contingencies and with a break up fee.

81. On June 29, 2006, defendants revealed that the 10-K would continue to be

delayed due to defendants’ failure to assess Parlux’s internal controls. In a press release

issued that date, defendants stated:

Parlux Fragrances, Inc. (NASDAQ: PARL) announced today that the filing of its Form 10-K would be delayed as a result of management not yet completing its assessment of the internal controls and reporting


37

requirements under Section 404 of the Sarbanes-Oxley Act of 2002 (SOX). The Company became obligated to comply with the quicker implementation schedule under Section 404 when it became an accelerated filer on September 30, 2005, the end of its second quarter. Management completed its testing and has concluded that its internal control procedures contain material weakness in areas such as access to certain computer master files, segregation of duties, processing of certain adjustments to accounts payable and accounts receivable, and management overrides, despite the fact that the Company’s testing did not disclose any improprieties. The Company is completing the assessment and reporting process involved in complying with its SOX obligations. The Company will issue its Form 10-K after the assessment and reporting processes, including those of the Company’s independent auditors, are completed. This delay in the Company’s SOX procedures is not expected to affect the Company’s previous announcement that net sales for the fiscal year ended March 31, 2006 will approximate $182 million and net earnings per share will reach $2.13 ($1.07 post common stock split) per share. Parlux will request a hearing before the Nasdaq Listing Qualifications Panel, thereby automatically deferring the delisting of its common stock pending the Panel’s review and determination. Until the Panel issues a determination and the expiration of any exception granted by the Panel, Parlux’s common stock will continue to be traded on The Nasdaq National Market. However, as a result of the delayed filing of its Form 10-K, the trading symbol for the Company’s common stock will be changed from PARL to PARLE. As announced on June 29, 2006, Parlux has delayed filing its Annual Report on Form 10-K until completion of management’s assessment of the internal controls and reporting requirements under Section 404 of the Sarbanes-Oxley Act of 2002 (“SOX”). Parlux intends to file its Form 10-K for the fiscal year ended March 31, 2006 as soon as practicable following completion of the SOX assessment and reporting processes, including those of the Company’s independent auditors. 82. On July 13, 2006, defendant Lekach announced he was withdrawing his

offer to acquire the Company.


38

Additional Information Regarding Parlux’s Problems Is Belatedly Revealed

83. On August 10, 2006, defendants finally revealed that sales for the quarter

ended June 30, 2006 had declined materially. According to an article released on August

11, 2006:

Shares of perfume and accessories maker Parlux Fragrances Inc. sank to a new 52-week low on Friday after the company said it would not file its quarterly report on time and quarterly results would fall well below Wall Street expectations. Shares of Fort Lauderdale, Fla.-based Parlux, which holds the license to Paris Hilton's line of accessories, dropped $3.06, or 37.5 percent, to $5.10 on the Nasdaq in morning trading. Earlier in the session, the shares hit a new low of $4.95. The previous 52-week range was from $7.64 to $19.24. In a filing on Thursday with the Securities and Exchange Commission, Parlux said its report for the quarter ending June 30 would be late because the company was working to complete its delayed annual 10-K report for fiscal 2006, which it eventually did in July. Parlux said it would file its quarterly report by Aug. 14 or shortly afterward. For the quarter ending June 30, the company said it expects earnings in the range of 4 cents to 5 cents per share -- well below the 22 cents per share forecast by analysts, according to a Thomson Financial poll. "The reduction is mainly attributable to the decrease in sales to U.S. department stores due to the acquisitions and consolidations in this sector, and a reduction in sales to related parties," the company said in the filing. 84. In response to the adverse news which was belatedly revealed about the

Company, Parlux stock dropped by over 40% on unusually high trading volumes, trading

at slightly over $4 per share on August 11, 2006, a far cry from the Class Period high at

which defendants sold huge quantities of their Parlux holdings.

CLASS ACTION ALLEGATIONS

85. Plaintiff brings this action as a class action pursuant to Federal Rule of

Civil Procedure 23(a) and (b)(3) on behalf of a Class, consisting of all persons who

purchased or otherwise acquired Parlux common stock between November 15, 2006 and


39

August 10, 2006, inclusive (the "Class Period"), and who were damaged thereby.

Excluded from the Class are defendants, members of the immediate family of each of the

Individual Defendants, any subsidiary or affiliate of Parlux and the directors, officers

and employees of Parlux or its subsidiaries or affiliates, or any entity in which any

excluded person has a controlling interest, and the legal representatives, heirs, successors

and assigns of any excluded person.

86. The members of the Class are so numerous that joinder of all members is

impracticable. While the exact number of Class members is unknown to plaintiff at this

time and can only be ascertained through appropriate discovery, plaintiff believes that

there are thousands of members of the Class located throughout the United States.

Throughout the Class Period, Parlux common stock was actively traded on the NASDAQ

(an open and efficient market) under the symbol “PARL”. Record owners and other

members of the Class may be identified from records maintained by Parlux and/or its

transfer agents and may be notified of the pendency of this action by mail, using a form

of notice similar to that customarily used in securities class actions.

87. Plaintiffs’ claims are typical of the claims of the other members of the

Class as all members of the Class were similarly affected by defendants' wrongful

conduct in violation of federal law that is complained of herein.

88. Plaintiffs will fairly and adequately protect the interests of the members of

the Class and have retained counsel competent and experienced in class and securities

litigation.


40

89. Common questions of law and fact exist as to all members of the Class

and predominate over any questions solely affecting individual members of the Class.

Among the questions of law and fact common to the Class are:

a) whether the federal securities laws were violated by defendants' acts and omissions as

alleged herein;

b) whether defendants participated in and pursued the common course of conduct

complained of herein;

c) whether documents, press releases, and other statements disseminated to the investing

public and the Company's shareholders during the Class Period misrepresented

material facts about the business, finances, financial condition and prospects of

Parlux ;

d) whether statements made by defendants to the investing public during the Class

Period misrepresented and/or omitted to disclose material facts about the business,

finances, value, performance and prospects of Parlux;

e) whether the market price of Parlux common stock during the Class Period was

artificially inflated due to the material misrepresentations and failures to correct the

material misrepresentations complained of herein; and

f) the extent to which the members of the Class have sustained damages and the proper

measure of damages.


41

90. A class action is superior to all other available methods for the fair and

efficient adjudication of this controversy since joinder of all members is impracticable.

Furthermore, as the damages suffered by individual Class members may be relatively

small, the expense and burden of individual litigation make it impossible for members of

the Class to individually redress the wrongs done to them. There will be no difficulty in

the management of this suit as a class action.

UNDISCLOSED ADVERSE INFORMATION 91. The market for Parlux securities was open, well-developed and efficient at

all relevant times. As a result of these materially false and misleading statements and

failures to disclose, Parlux securities traded at artificially inflated prices during the Class

Period. The artificial inflation continued until the time Parlux admitted that it was

experiencing declining sales and these admissions were communicated to, and/or

digested by, the securities markets. Plaintiffs and other members of the Class purchased

or otherwise acquired Parlux securities relying upon the integrity of the market price of

Parlux securities and market information relating to Parlux , and have been damaged

thereby.

92. During the Class Period, defendants materially misled the investing

public, thereby inflating the price of Parlux securities, by publicly issuing false and

misleading statements and omitting to disclose material facts necessary to make

defendants' statements, as set forth herein, not false and misleading. Said statements and

omissions were materially false and misleading in that they failed to disclose material

adverse information and misrepresented the truth about the Company, its business and

operations.


42

93. At all relevant times, the material misrepresentations and omissions

particularized in this Complaint directly or proximately caused or were a substantial

contributing cause of the damages sustained by plaintiffs and other members of the Class.

As described herein, during the Class Period, defendants made or caused to be made a

series of materially false or misleading statements about Parlux's business, prospects and

operations. These material misstatements and omissions had the cause and effect of

creating in the market an unrealistically positive assessment of Parlux and its business,

prospects and operations, thus causing the Company's securities to be overvalued and

artificially inflated at all relevant times. Defendants' materially false and misleading

statements during the Class Period resulted in plaintiffs and other members of the Class

purchasing the Company's securities at artificially inflated prices, thus causing the

damages complained of herein.

APPLICABILITY OF PRESUMPTION OF RELIANCE: FRAUD ON THE MARKET DOCTRINE

94. At all relevant times, the market for Parlux stock was an efficient market

for the following reasons, among others:

a) Parlux stock met the requirements for listing, and was listed and actively traded, on

the NASDAQ, a highly efficient market;

b) As a regulated issuer, Parlux filed periodic public reports with the SEC and the

NASD;

c) Parlux stock was followed by securities analysts employed by major brokerage firms

who wrote reports which were distributed to the sales force and certain customers of


43

their respective brokerage firms. Each of these reports was publicly available and

entered the public marketplace; and

d) Parlux regularly issued press releases which were carried by national newswires.

Each of these releases was publicly available and entered the public marketplace.

95. As a result, the market for Parlux securities promptly digested current

information with respect to Parlux from all publicly-available sources and reflected such

information in Parlux 's stock price. Under these circumstances, all purchasers of Parlux

securities during the Class Period suffered similar injury through their purchase of stock

at artificially inflated prices and a presumption of reliance applies.

COUNT I For Violations Of Section 10(b) Of The 1934 Act And Rule 10b-5 Promulgated Thereunder Against All Defendants

96. Plaintiffs repeat and reallege the allegations set forth in paragraphs 1

through 95 above as though fully set forth herein. This claim is asserted against all

defendants.

97. During the Class Period, Parlux and the Individual Defendants, and each

of them, carried out a plan, scheme and course of conduct which was intended to and,

throughout the Class Period, did: (i) deceive the investing public, including plaintiff and

other Class members, as alleged herein; (ii) artificially inflate and maintain the market

price of Parlux common stock; and (iii) cause plaintiff and other members of the Class to

purchase Parlux stock at artificially inflated prices. In furtherance of this unlawful

scheme, plan and course of conduct, defendants Parlux and the Individual Defendants,

and each of them, took the actions set forth herein.


44

98. These defendants: (a) employed devices, schemes, and artifices to defraud;

(b) made untrue statements of material fact and/or omitted to state material facts

necessary to make the statements not misleading; and (c) engaged in acts, practices and a

course of business which operated as a fraud and deceit upon the purchasers of the

Company's securities in an effort to maintain artificially high market prices for Parlux

securities in violation of Section 10(b) of the Exchange Act and Rule 10b-5. These

defendants are sued as primary participants in the wrongful and illegal conduct charged

herein. The Individual Defendants are also sued herein as controlling persons of Parlux ,

as alleged below.

99. In addition to the duties of full disclosure imposed on defendants as a

result of their making of affirmative statements and reports, or participation in the making

of affirmative statements and reports to the investing public, they each had a duty to

promptly disseminate truthful information that would be material to investors in

compliance with the integrated disclosure provisions of the SEC as embodied in SEC

Regulation S X (17 C.F.R. § 210.01 et seq.) and S-K (17 C.F.R. § 229.10 et seq.) and

other SEC regulations, including accurate and truthful information with respect to the

Company's operations, financial condition and performance so that the market prices of

the Company's publicly traded securities would be based on truthful, complete and

accurate information.

100. Parlux and the Individual Defendants, individually and in concert, directly

and indirectly, by the use of means or instrumentalities of interstate commerce and/or of

the mails, engaged and participated in a continuous course of conduct to conceal adverse

material information about the business, business practices, performance, operations and


45

future prospects of Parlux as specified herein. These defendants employed devices,

schemes and artifices to defraud, while in possession of material adverse non-public

information and engaged in acts, practices, and a course of conduct as alleged herein in

an effort to assure investors of Parlux's value and performance and substantial growth,

which included the making of, or the participation in the making of, untrue statements of

material facts and omitting to state material facts necessary in order to make the

statements made about Parlux and its business, operations and future prospects in the

light of the circumstances under which they were made, not misleading, as set forth more

particularly herein, and engaged in transactions, practices and a course of business which

operated as a fraud and deceit upon the purchasers of Parlux securities during the Class

Period.

101. Each of the Individual Defendants' primary liability, and controlling

person liability, arises from the following facts: (i) each of the Individual Defendants was

a high-level executive and/or director at the Company during the Class Period; (ii) each

of the Individual Defendants, by virtue of his responsibilities and activities as a senior

executive officer and/or director of the Company, was privy to and participated in the

creation, development and reporting of the Company's internal budgets, plans, projections

and/or reports; (iii) the Individual Defendants enjoyed significant personal contact and

familiarity with each other and were advised of and had access to other members of the

Company's management team, internal reports, and other data and information about the

Company's financial condition and performance at all relevant times; and (iv) the

Individual Defendants were aware of the Company's dissemination of information to the


46

investing public which they knew or recklessly disregarded was materially false and

misleading.

102. These defendants had actual knowledge of the misrepresentations and

omissions of material facts set forth herein, or acted with reckless disregard for the truth

in that they failed to ascertain and to disclose such facts, even though such facts were

readily available to them. Such defendants' material misrepresentations and/or omissions

were done knowingly or recklessly and for the purpose and effect of concealing Parlux's

operating condition, business practices and future business prospects from the investing

public and supporting the artificially inflated price of its stock. As demonstrated by their

overstatements and misstatements of the Company's financial condition and performance

throughout the Class Period, the Individual Defendants, if they did not have actual

knowledge of the misrepresentations and omissions alleged, were reckless in failing to

obtain such knowledge by deliberately refraining from taking those steps necessary to

discover whether those statements were false or misleading.

103. As a result of the dissemination of the materially false and misleading

information and failure to disclose material facts, as set forth above, the market price of

Parlux ' securities was artificially inflated during the Class Period. In ignorance of the

fact that the market price of Parlux's shares was artificially inflated, and relying directly

or indirectly on the false and misleading statements made by defendants, or upon the

integrity of the market in which the securities trade, and/or on the absence of material

adverse information that was known to or recklessly disregarded by defendants but not

disclosed in public statements by defendants during the Class Period, plaintiffs and the


47

other members of the Class acquired Parlux securities during the Class Period at

artificially inflated high prices and were damaged thereby.

104. At the time of said misrepresentations and omissions, plaintiffs and other

members of the Class were ignorant of their falsity, and believed them to be true. Had

plaintiffs and the other members of the Class and the marketplace known of the true

performance, business practices, future prospects and intrinsic value of Parlux , which

were not disclosed by defendants, plaintiffs and other members of the Class would not

have purchased or otherwise acquired their Parlux securities during the Class Period, or,

if they had acquired such securities during the Class Period, they would not have done so

at the artificially inflated prices which they paid.

105. By virtue of the foregoing, Parlux and the Individual Defendants each

violated Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder.

106. As a direct and proximate result of defendants' wrongful conduct,

plaintiffs and the other members of the Class suffered damages in connection with their

purchases of the Company's securities during the Class Period.

COUNT II For Violations Of Section 20(a) Of The 1934 Act Against Individual Defendants

107. Plaintiffs repeat and reallege the allegations set forth in paragraphs 1

through 106 above as if set forth fully herein. This claim is asserted against the

Individual Defendants.

108. The Individual Defendants were and acted as controlling persons of Parlux

within the meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of

their high-level positions with the Company, participation in and/or awareness of the


48

Company's operations and/or intimate knowledge of the Company's actual performance,

the Individual Defendants had the power to influence and control and did influence and

control, directly or indirectly, the decision-making of the Company, including the content

and dissemination of the various statements which plaintiff contends are false and

misleading. Each of the Individual Defendants was provided with or had unlimited

access to copies of the Company's reports, press releases, public filings and other

statements alleged by plaintiff to be misleading prior to and/or shortly after these

statements were issued and had the ability to prevent the issuance of the statements or

cause the statements to be corrected.

109. In addition, each of the Individual Defendants had direct involvement in

the day-to-day operations of the Company and, therefore, is presumed to have had the

power to control or influence the particular transactions giving rise to the securities

violations as alleged herein, and exercised the same.

110. As set forth above, Parlux and the Individual Defendants each violated

Section 10(b) and Rule 10b-5 by their acts and omissions as alleged in this Complaint.

By virtue of their controlling positions, the Individual Defendants are liable pursuant to

Section 20(a) of the Exchange Act. As a direct and proximate result of defendants'

wrongful conduct, plaintiffs and other members of the Class suffered damages in

connection with their purchases of the Company's securities during the Class Period.

PRAYER FOR RELIEF

WHEREFORE, plaintiffs on their own behalf and on behalf of the Class, pray for

judgment as follows:


49

a) (Declaring this action to be a class action pursuant to Rule 23(a) and (b)(3) of the

Federal Rules of Civil Procedure on behalf of the Class defined herein;

b) (Awarding plaintiffs and the other members of the Class damages in an amount which

may be proven at trial, together with interest thereon;

c) Awarding plaintiffs and the members of the Class pre-judgment and post-judgment

interest, as well as their reasonable attorneys' and experts' witness fees and other

costs; and

d) Such other relief as this Court deems appropriate.

JURY DEMAND

Plaintiffs demand a trial by jury

Dated: November 8, 2006

.

By:__/s/ Maya Saxena__________

SAXENA WHITE P.A Maya Saxena (Fla Bar. No. 0095494) [email protected] Joseph E. White III (Fla Bar. No. 0621064) [email protected] 2424 North Federal Highway Suite 257 Boca Raton, FL 33431 Main 561.394.3399 Fax: 561.394.5082

Lead Counsel for Plaintiffs


50

CERTIFICATE OF SERVICE I HEREBY certify that on the 8th day of November 2006, I presented the

foregoing to the Clerk of the Court for filing and uploading to the CM/ECF system, which will automatically effect service on counsel of record identified below.

/s/ Maya Saxena

Alvin B. Davis, P.A. Richard E. Brodsky Squire, Sanders & Dempsey L.L.P. 200 South Biscayne Blvd., Suite 4100 Miami, FL 33131 Tel: 305 577-7028 Fax: 305 577-7001 Counsel for Defendants

Lewis Kahn Michael A. Swick Kahn Gauthier Swick, LLC 650 Poydras Street, Suite 2150 New Orleans, LA 70130 Tel: 504 455-1400 Fax: 504 455-1498 Counsel for Plaintiff Thomas Haugh

Wayne H. Schwartz [email protected] Eric Lee [email protected] Lee & Amtzis, P.L. 5550 Glades Road, Suite 401 Boca Raton, FL 33431 Tel: 561 981-9988 Fax: 561 981-9980 Counsel for Plaintiffs Mark W. Byers and Brad Bogue William B. Federman [email protected] Federman & Sherwood 120 N. Robinson, Suite 2720 Oklahoma City, OK 73102 Tel: 405 235-1560 Fax: 405 239-2112

Alison K. Clark Marc A. Topaz Richard A. Maniskas Schiffrin & Barroway, LLP 280 King of Prussia Road Radnor, PA 19087 Tel: 610 667-7706 Fax: 610 667-7056 Counsel for Plaintiff Brad Bogue Charles J. Piven Brower Piven A Professional Corporation 401 East Pratt Street Suite 2525 Baltimore, MD 21202 Tel: 410 332-0030 Fax: 410 685-1300


51

Counsel for Plaintiff Mark W. Byers Counsel for Plaintiff Can T. Duong

Steven J. Toll Daniel S. Sommers Joseph P. Helm, III Cohen, Milstein, Hausfeld & Toll, P.L.L.C. 1100 New York Avenue, NW Suite 500 – West Tower Washington , D.C. 20005 Tel: 202 408-4600 Fax: 202 408-4699 Counsel for Plaintiff John H. Spooner


united states district court southern district of...

Documents