THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Wednesday, October 30, 1996 TAG: 9610300458
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER
DATELINE: NORFOLK LENGTH: 49 lines
AppleTree Cos. Inc., a Norfolk-based sandwich distributor has been booted off the Nasdaq stock market and is being sued by the federal government.
Market officials yanked AppleTree's listing last Tuesday in part because the company did not have enough capital, said Stephan Beauchesne, a Nasdaq spokesman in Washington.
Executives with AppleTree, which recently moved its headquarters from Boca Raton, Fla., to Norfolk, did not return telephone calls. But in a prepared statement, the company said its stock will trade on the OTC Bulletin while it appeals the Nasdaq decision.
Nasdaq's action last week is the latest in a series of controversies, lawsuits and corporate firings that have plagued the company since it went public in 1992.
Last month, federal regulatorsaccused AppleTree and three former executives of fraud in a lawsuit filed in U.S. District Court in West Palm Beach, Fla. It's not clear whether the lawsuit played any role in the Nasdaq decision.
The Securities and Exchange Commission, which filed the civil suit on Sept. 30, said AppleTree has been misrepresenting itself in financial documents meant for its investors. In one example, the SEC said AppleTree took $250,000 from a 1992 public stock offering and loaned it to a casino company without telling investors, said Chuck Senatore, director of the SEC's Southeast region.
Investors had thought the public offering would be used to fund other business ventures, including a powdered yogurt product the company was promoting, Senatore said. ``If they're raising money and loaning it out, that's fine,'' he said. ``But they have to tell investors.''
The lawsuit also accuses AppleTree of claiming to own assets that it did not have and misrepresenting its relationship with a supplier in Israel. Accused of fraud are Paul Kravitz, AppleTree's former chief executive and now a consultant to the company; Michael Salit, co-founder and ex-chairman; and David Lobel, co-founder and former chief financial officer. Salit was fired two years ago, while Lobel left the company.
W. Scott Long, an underwriter from Minnesota who handled AppleTree's 1992 stock offering, is also accused of failing to disclose items in SEC filings, Senatore said.
No court dates have been set, according to the court clerk's office.
AppleTree purchased Stewart Foods Inc., now known as Stewart Sandwiches, out of bankruptcy in December 1993.
AppleTree has continued to lose money. Last year, the company lost $12.4 million. In the meantime, shareholder equity had a negative net worth in the fiscal year that ended in August 1995. by CNB