The Honorable Beverly R. O’Connell, United States District Judge for the Central District of California, recently granted final approval of a settlement in Crystal v. Medbox, Inc., No. 2:15-CV- 00426-BRO (JEMx) (C.D. Cal.), a class action alleging securities fraud against Medbox, Inc. and certain of its executives. Johnson & Weaver represents lead plaintiffs and serves as sole lead counsel in the action. Attorneys Frank J. Johnson, Michael I. Fistel, Jr., and Phong L. Tran were lead counsel in the case for plaintiffs.
Plaintiffs claimed that, during the class period—April 2, 2013 through December 29, 2014—defendants issued materially false and misleading statements regarding Medbox’s financial results. Specifically, plaintiffs alleged that defendants overstated Medbox’s revenues by recognizing revenue on customer contracts before it had been earned.
As a result of these allegedly false statements, as well as other misrepresentations and omissions, Medbox’s stock traded at artificially inflated prices during the class period, reaching an intraday high of $93.50 per share on January 8, 2014, and continuing to trade at inflated levels throughout the class period.
Through several partial disclosures, the truth about Medbox’s revenues began to emerge. As a result, Medbox had to restate 11 consecutive quarters of accounting statements. When these revelations surfaced, Medbox’s stock price plummeted, dropping more than 95% off its previous high to trade as low as $4.50 per share on December 30, 2014.
Following extensive, hard-fought litigation, the parties reached a settlement, which provides for the payment of $1,850,000 in cash and 2,300,000 shares of Medbox stock into a common fund for the class.
Pursuant to the court’s preliminary approval order, plaintiffs’ claims administrator sent notices and claim forms to potential class members. More information about the settlement or the claims process can be seen on the settlement administrator’s website: http://www.strategicclaims.net/medbox-inc-securities-litigation.