Executive denies LV firm’s charges

Thursday, May 23, 2002 | 11:20 a.m.

Andrew Reckles of Atlanta, who along with several investors and securities dealers were accused by World Homes Inc. of Las Vegas in April of violating federal racketeering statutes, denied the allegations Wednesday.

The small building materials company, now renamed Composite Industries of America Inc., sued in U.S. District Court to recover $202.5 million from several investors and securities dealers, alleging they engaged in "fraudulent and illegal sales" of World Homes stock.

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

Also sued were Reckles and his partners Paul Mannion and Vincent Sbarra and two Southridge executives Steve Hicks and Christy Constabile.

But Reckles, who said he was a partner of Hyperion, now renamed HPC Capital, said he didn't engage in any sales of World Homes stock and "acted only as an intermediary to help World Homes raise capital to facilitate the launch of World Homes' Z Mix Program housing project."

World Homes markets Z Mix -- a building material similar to cement made of clay, pulverized soft rock and shredded tires -- as a method for reducing the time and cost of building homes.

"World Homes told us of their plans to build homes in India and several other third world nations. But its business plans changed repeatedly and it never built any homes," Reckles said.

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 was 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 allegedly 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.

But Reckles disagreed. "The investors didn't break any securities laws. If the investors really did what World Homes claimed ... like manipulating its stock, why would World Homes go back to the same investors and take an additional $750,000 in funds from them?"