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Technical Olympic USA, Inc. may have misled investors by failing to disclose that is was directly responsible under certain guarantees to obligations of certain joint ventures even after those joiunt ventures were in default.
Investigation Source (Case #06-cv-61844)
- Nationwide
Investigation Scope
Category Information
Investigation Topics
- Investments
- False And Misleading Statements
Product or Service
- Investments
Injury Type
- Monetary Loss
Investigation Details
This is a securities fraud class action lawsuit against Technical Olympic USA, Inc. for federal securities violations.
Technical Olympic is a homebuilder that designs, builds, and markets homes and condominiums. Technical Olympic conducts operations in Texas, Florida, the West, and the Mid-Atlantic. It operates largely through joint ventures with other home building companies.
On August 1, 2005, Technical Olympic announced that it had acquired substantially all of the homebuilding assets of Transeastern Properties Inc. ("Transeastern") through a highly-leveraged joint venture, created by Technical Olympic through a wholly-owned subsidiary, TOUSA Homes, L.P. ("TOUSA Homes"), and Falcone/Ritchie, LLC (the "Falcone Group," together with TOUSA Homes, the "Transeastern JV").
The Transeastern JV's assets consisted mostly of real estate in the Florida market and totaled approximately 22,000 home sites. The transaction, costing $857 million, was funded through a combination of equity and debt. Technical Olympic contributed $90 million in equity, and the Falcone Group contributed $75 million. To fund the remainder of the acquisition, the Transeastern JV borrowed $675 million from a consortium of banks. Under the terms of the loan documents, Technical Olympic became a direct obligor under several guarantees.
At the outset of and during the Class Period (August 1, 2005 through March 19, 2007), Technical Olympic failed to disclose that Technical Olympic faced an enormous liability and routinely elected not to tell the investor community of this liability or to mischaracterize the liability. On November 6, 2006, Technical Olympic disclosed for the first time that it could be fully liable for the entire debt, though it still failed to disclose that the Transeastern JV had already acknowledged that it was in default.
This partial revelation caused Technical Olympic shares to decline over 30%, from $10.79 per share to $7.00 per share, wiping out over $225 million in shareholder equity in a single.
Technical Olympic is a homebuilder that designs, builds, and markets homes and condominiums. Technical Olympic conducts operations in Texas, Florida, the West, and the Mid-Atlantic. It operates largely through joint ventures with other home building companies.
On August 1, 2005, Technical Olympic announced that it had acquired substantially all of the homebuilding assets of Transeastern Properties Inc. ("Transeastern") through a highly-leveraged joint venture, created by Technical Olympic through a wholly-owned subsidiary, TOUSA Homes, L.P. ("TOUSA Homes"), and Falcone/Ritchie, LLC (the "Falcone Group," together with TOUSA Homes, the "Transeastern JV").
The Transeastern JV's assets consisted mostly of real estate in the Florida market and totaled approximately 22,000 home sites. The transaction, costing $857 million, was funded through a combination of equity and debt. Technical Olympic contributed $90 million in equity, and the Falcone Group contributed $75 million. To fund the remainder of the acquisition, the Transeastern JV borrowed $675 million from a consortium of banks. Under the terms of the loan documents, Technical Olympic became a direct obligor under several guarantees.
At the outset of and during the Class Period (August 1, 2005 through March 19, 2007), Technical Olympic failed to disclose that Technical Olympic faced an enormous liability and routinely elected not to tell the investor community of this liability or to mischaracterize the liability. On November 6, 2006, Technical Olympic disclosed for the first time that it could be fully liable for the entire debt, though it still failed to disclose that the Transeastern JV had already acknowledged that it was in default.
This partial revelation caused Technical Olympic shares to decline over 30%, from $10.79 per share to $7.00 per share, wiping out over $225 million in shareholder equity in a single.
Defendant Details
| Name (Stock Symbol) | Brief Description |
|---|---|
| Technical Olympic USA, Inc. (TOUSA) (TOUSQ.PK) | Technical Olympic USA, Inc. (TOUSA), through its subsidiaries, designs, builds, and markets detached single-family residences, town homes, and condominiums in the United States. |