Valley Forge Composite Technologies Inc.
Period: Jan 1, 2009 to Feb 6, 2013
Lead Plaintiff Deadline: Nov 25, 2013 + Deadline passed
Summary of Case:
A securities class action has been filed against Valley Forge Composite Technologies Inc. ("VLYF") on behalf of all persons who purchased the common stock of VLYF between January 1, 2009, and February 6, 2013. This case has been filed in the USDC - Southern District of California.
The complaint alleges that Valley Forge and co-founders Louis J. Brothers and Larry K. Wilhide represented to investors that all the company's revenues were derived from the sale of aerospace devices known as momentum wheels, which store energy. In reality, Valley Forge's revenues were largely derived from its illegal exports of semiconductors to Hong Kong, in violation of U.S. International Traffic in Arms Regulations, the complaint said.
Valley Forge's sales of momentum wheels had been "limited, sporadic and unreliable" for years and that the company had failed to find a market for its new counter-terrorism devices. In 2009, for instance, the company reported selling just $132,000 worth of momentum wheels, the complaint said.
But in 2009, Valley Forge started exporting semiconductors to Hong Kong, and revenues "exploded," according to the complaint. In 2010, the company reported about $3.2 million in revenue, and that number climbed to about $18.7 million in 2011, court documents said. Valley Forge explained the profit spikes to investors and in government filings by indicating it had experienced an uptick in momentum wheel sales, the complaint said.
However, on Feb. 6, Valley Forge announced in a press release that the U.S. Attorney for the Eastern District of Kentucky was investigating the company for the allegedly illegal sale of $37 million of semiconductors to Hong Kong and said a company bank account containing $1.5 million had been seized.
In the release, Valley Forge said the vast majority of its exports involved semiconductors not subject to arms trafficking laws, the complaint said. Neborsky called the company's statements in the release "revealing," noting Valley Forge did not deny it exported semiconductors despite never disclosing the exports to investors.
The day of the U.S. attorney's announcement, Valley Forge stock dropped from 14.9 cents per share to 5.7 cents per share, according to court documents. A week later, Brothers resigned as the company's president, CEO, CFO and board chairman.
If you purchased this company's shares during the Class Period and suffered a loss or for further information about the case, please review the links below.