LV firm accuses investors of short-selling

Friday, April 5, 2002 | 11:04 a.m.

World Homes Inc. of Las Vegas, which itself was accused last June of violating federal securities laws by the Securities and Exchange Commission, sued Thursday to recover $202.5 million in damages from several businesses and securities dealers, alleging they violated federal racketeering statutes by "engaging in fraudulent and illegal sales" of World Homes stock.

The small Las Vegas building materials company, now renamed Composite Industries of America Inc., sued the defendants in U.S. District Court.

The defendants are Cayman Islands-based investors Lenore Avenue LLC and Navigator Management Ltd., British Virgin Islands-based Burlington Street LLC, Atlantic Capital LLC and Hyperion Holdings LLC of Atlanta, Boca Raton, Fla.-based vFinance.com and Southridge Capital Management of Ridgefield, Conn.

Also sued were three Georgia men, Paul Mannion, Andrew Reckles and Vincent Sbarra and two Connecticut residents, Steve Hicks and Christy Constabile.

The suit said Lenore and Navigator, on April 5, 2001, agreed to buy $1 million of World Homes' 6 percent convertible debenture (a bond) and allegedly received a pledge of 2 million World Homes shares as collateral for repayment of the debenture that is due April 5, 2002.

Lenore and Navigator were accused of conspiring with the other defendants to short sell "substantial amounts" of World Homes stock, which "caused a significant depression" in the stock price, and allowed the defendants to "reap significant additional profits" by forcing World Homes to give them substantially more stock or cash to pay off the debt.

The defendants could not be reached for comment on World Homes' allegations.