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Plane Parts Reseller to Settle Shareholders' Class Actions

April 17, 1998|BARBARA MARSH | TIMES STAFF WRITER

Airplane parts reseller Aviation Distributors Inc. said Thursday that it has agreed to settle three class-action lawsuits over alleged securities violations brought by shareholders last fall.

If approved by a federal court, the settlement would provide a pool of $740,000 in cash and 210,000 shares of company stock to be split among shareholders, the company said.

It also would mark another step the Irvine-based company has taken to resolve a financial mess stemming from its auditor's accusations that the company used phony sales figures to obtain a loan.

The auditor, Arthur Andersen, quit last fall, and the company revealed the internal problems in a document filed with securities regulators. In the uproar that followed, both the company's chairman, founder Osamah S. Bakhit, and its chief financial officer, Mark W. Ashton, resigned.

The accounting firm withdrew its approval of its financial reports for the company's previous three years, a step that led to Nasdaq's delisting of the company's stock.

Two federal shareholder class actions, filed in Santa Ana, allege the company had issued false and misleading statements about its financial results. A third federal suit alleging similar wrongdoing was filed in Los Angeles.

Defendants include Bakhit, who remains as a consultant, and Ashton. Arthur Andersen, Cruttenden Roth Inc., underwriter for the company's initial public offering, and the firm's officers and directors were also named as defendants in one or more suits, said Kenneth Lipinski, Aviation's chief operating officer.

Robert Palmer, a lawyer for Cruttenden Roth, said the underwriter "hasn't been asked or required" to pay. Arthur Andersen wouldn't comment. Lawyers for other defendants couldn't be reached.

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