
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, February 19, 1991                   TAG: 9102190074
SECTION: VIRGINIA                    PAGE: B1   EDITION: METRO 
SOURCE: LESLIE TAYLOR STAFF WRITER
DATELINE:                                 LENGTH: Medium

BANK: DISMISS SUITS

Trying to prove that Dominion Bankshares Corp. was fraudulent in not revealing its financial problems to investors would be like arguing that a house fire after the San Francisco earthquake was caused by arson, the company's attorney said Monday.

Attorneys for Dominion argued in U.S. District Court in Roanoke for dismissal of two Dominion stockholders' lawsuits against the company that alleged it overstated its earnings by failing to take into account the true nature of problem loans.

Elliott Dubowski, of New York, and Raymond Scher, of Roanoke County, claimed in separate suits that those who bought Dominion stock between Jan. 18, 1989, and May 10, 1990, paid artificially high prices.

Those prices, said Leonard Barrack, a Philadelphia lawyer representing Dubowski and Scher, were caused by the bank's alleged failure to disclose facts to shareholders. Dominion officials "intentionally painted an optimistic portrait of Dominion to deceive the investing public," Barrack said.

But Dominion's attorney, William Poff of Roanoke, said "many banks are in trouble but it certainly does not show that the problems that Dominion had were due to fraud."

Any problems "reflect the economic climate of the day, regulatory problems affecting the banking industry and the economic deterioration reflected in the country as a whole," he said.

Dominion argued in its motion for dismissal that the lawsuits were deficient under Federal Rules of Civil Procedure, which require that allegations of fraud, such as securities fraud, be specific.

The company also argued that the federal court did not have jurisdiction because claims made by Dubowski and Scher do not violate federal securities laws or any other federal law or statute. Dominion also claimed that the complaints failed to state a cause of action for which relief could be granted.

To let the suits go any further "would give license for plaintiffs to inflict additional damage on the economic and banking condition," Poff said. And it would "put us at an enormous expense at a time when we're trying to work through these problems," he said.

Poff called the suits "groundless" action that could result in a "blackmail-type" settlement.

The lawsuits were filed last fall, after the company recorded a $14.7 million loss for the third quarter and announced plans for a major restructuring including a 10 percent reduction in staffing. Dubowski is a plaintiff in lawsuits against several other banks as well, including the Bank of New England.

U.S. District Judge James Turk withheld ruling on Dominion's motion Monday.

But, Turk said to Barrack, "I don't want you to go forward and get a settlement you're not entitled to because of what the bank will have to face."

by CNB