For the third time in as many weeks, Irvine-based 2TheMart.com Inc. has been slapped with a shareholder lawsuit accusing the company of making misleading statements about the readiness of its online auction.
The company, which repeatedly touted in press releases earlier this year that it would soon launch an online auction site to rival the likes of eBay Inc., ran into financial troubles and delayed the launch of its site until the end of this year. It also has failed to make promised regulatory filings.
The most recent lawsuit, filed in federal district court on Wednesday, claims that Steven Rebeil, the company's chairman and chief executive, and Dominic Magliarditi, 2TheMart's president, intentionally misrepresented or omitted facts about the company's plans. As a result, the company's stock price was artificially inflated, the lawsuits contended.
On at least four occasions from January to March, the company issued press releases stating that its Web site was "currently in its final development," even though it wasn't until late May that the company signed a contract with IBM Corp. to begin developing the site, the lawsuit said.
The suit is almost identical to two other lawsuits filed against the company.
Company officials declined to comment on any of the suits.
The company's stock in January soared from $2 to as high as $50 on news that the firm was developing an online auction site, even though its founders had checkered business pasts and no history in technology.
Since then, the company's stock has fallen with each bad-news revelation.
Last month, the Nasdaq market said it may remove the stock from trading on the OTC Bulletin Board because the company had failed to meet its filing requirements.
At the end of August, Rebeil said he would lend the company $2 million after its efforts to raise $10 million in private stock had netted just $530,000.
In July, the accounting firm Deloitte & Touche, without explanation, severed its ties with the company.
The company's stock on Thursday fell 81 cents, or 12%, to close at $5.94. With 25 million shares outstanding, the company, with no revenue or products, is valued at nearly $150 million. Most of the shares are owned by Rebeil and Magliarditi.