SOURCE: Vianale & Vianale LLP

February 20, 2008 12:46 ET

Vianale & Vianale LLP Files Shareholder Class Action Lawsuit Against Officers of Charys Holding Company

BOCA RATON, FL--(Marketwire - February 20, 2008) - Vianale & Vianale LLP announces that it filed a class action lawsuit on February 20, 2008 on behalf of purchasers of the securities of Charys Holding Company ("Charys") (PINKSHEETS: CHYS) between March 30, 2006 and August 14, 2007 (the "Class Period"). You can obtain a copy of the complaint by calling our offices or from our website at: www.vianalelaw.com. The action (Case No. 08-CV-0528) was filed in the United States District Court for the Northern District of Georgia.

The complaint charges that Charys' officers, Billy V. Ray, Jr. and Raymond J. Smith violated the Securities Exchange Act of 1934. Charys operates two segments: Remediation and Reconstruction and Wireless Communications and Data Infrastructure. Charys' Remediation segment provides services to respond to catastrophic losses, like hurricanes; its Wireless segment offers telecommunication services to large service providers. According to the complaint, defendants engaged in an elaborate accounting fraud in connection with several companies Charys acquired.

In the closing months of 2005, Charys acquired Viasys Network Services, Inc. and Viasys Services, Inc. ("Viasys"), as well as Method IQ, Inc. ("MIQ"). The sellers of Viasys and MIQ were to receive "earn out" payments if, after the acquisitions, Charys achieved certain goals for revenue and earnings. The complaint alleges that the pre-acquisition revenues of Viasys and MIQ should have been properly recorded on the books of those companies. Instead, they were improperly deferred and recorded on the books of Charys after it acquired those companies. In addition, the post-acquisition expenses of Viasys and MIQ should have been recorded on the books of Charys, but were instead improperly accrued and recorded on the books of Viasys and MIQ. As a result, Charys' revenue and gross profit were overstated during the Class Period, and it expenses were understated.

On June 8, 2006, Charys acquired Crochet & Borel Services, Inc. ("C&B"), using artificially inflated stock as currency. Defendants engaged in the same accounting scheme: the reported C&B revenue and income from operations were materially overstated because Charys had fraudulently included pre-acquisition C&B revenues and had omitted C&B post-acquisition expenses. In addition, during the Class Period, defendants knew or recklessly ignored that C&B's goodwill was materially impaired by well over $100 million, but failed to disclose this fact. Charys, however, continued to request extensions of time from the SEC in which to file its annual report on Form 10-KSB.

On August 14, 2007, the end of the Class Period, when no large catastrophic-loss contracts for C&B were announced, the investment community knew that a large write-down of C&B's goodwill was imminent. The stock price dropped, and continued to decline thereafter. On November 5, 2007, Charys announced a $202.5 million write-down of goodwill attributable to C&B. Charys also finally filed its fiscal 2007 Form 10-KSB on that date, confirming that C&B had been an unprofitable business whose goodwill should have been written down as of October 31, 2006. On February 14, 2008, Charys filed for bankruptcy and announced that defendant Billy V. Ray, Jr. had resigned.

If you bought the securities of Charys between March 30, 2006 and August 14, 2007, no later than April 21, 2008, you may move the court to appoint you as lead plaintiff, a representative party that acts on behalf of other class members. The court must determine whether the class member's claim is typical of other members' claims, and whether the class member will adequately represent the class. Your ability to recover is not affected by the decision whether or not to serve as a lead plaintiff. Vianale & Vianale LLP is active in major litigations pending in federal and state courts. More about the firm is available on its website.

Contact Information

  • If you wish to discuss this case with us, or you have any questions
    concerning this notice, please contact:

    Kenneth J. Vianale, Esq.
    Email Contact
    Julie Prag Vianale, Esq.
    Email Contact
    Vianale & Vianale LLP
    2499 Glades Road, Suite 112
    Boca Raton, FL 33431
    888-657-9960 (Toll Free)
    561-392-4750