1 James C. Krause, Esq., SBN 66,478 Patrick N. Keegan, Esq...

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James C. Krause, Esq ., SBN 66,478Patrick N. Keegan, Esq ., SBN 167,698KRAUSE & KALFAYAN1010 Second Avenue, Suite 1750San Diego, CA 9210 1Tel: (619) 232-0331Fax : (619) 232-4019

Burton H. Finkelstein, Esq .Donald J . Enright, Esq .FINKELSTEIN, THOMPSON & LOUGHRAN1055 Thomas Jefferson Street, NW, Suite 601Washington, DC 20007Tel : (202) 337-8000Fax : (202) 337-8090

Lead Counsel for Lead Plaintiffs(Additional Counsel on Signature Page)

03 ~` .' :! 1 ~3 ['M W : 2 3

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

In re EN POINTE TECHNOLOGIES, INC .SECURITIES LITIGATION

This Document Relates To :

ALL ACTIONS

Master Case No. O1-CV-0205 L (CGA)

CONSOLIDATED AMENDED CLASSACTION COMPLAINT FORVIOLATIONS OF THE FEDERALSECURITIES LAW S

JURY TRIAL DEMANDED

Consolidated Amended Class Action Complaint 1 Master Case No. 01-CV-0205 I, (CGA)

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TABLE OF CONTENTS

INTRODUCTION AND OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

JURISDICTION AND VENUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

CLASS ACTION ALLEGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

SUBSTANTIVE ALLEGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1

Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I I

The Hampton -Porter/En Pointe Connection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2

Defendants Prepare Their Fraudulent Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . l 5

Laurienti ' s First Union Securities, Inc . Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 8

Defendants Begin the Manipulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 9

Post-Class Period Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 7

CAUSATION ALLEGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 8

ADDITIONAL SCIENTER ALLEGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 9

FRAUD ON THE MARKET ALLEGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 5

FIRST CLAIM FOR RELIEF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 6Violations of Section 10(b) of The Securities Exchange Act of 1934and Rule IOb -5 Promulgated thereunder

SECOND CLAIM FOR RELIEF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 7Violations of Section 20(a) of The Securities Exchange Act of 1934

THIRD CLAIM FOR RELIEF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 8For Violations of Sections 10(b) and 20A of The Securities Exchange Act of 193 4

PRAYER FOR RELIEF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

DEMAND FOR JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

I Consolidated Amended Class Action Complaint ii Master Case No . 01-CV-0205 L (CGA)

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Appointed Lead Plaintiffs Robert Flamberg, Wilford Gentry, Robert Mayer, Dennis Pasko ,

and Richard Tavano (hereafter collectively referred to as the "Lead Plaintiffs"), by their appointed

Lead Counsel, bring this action on behalf of themselves and all others similarly situated, and allege

the following upon personal knowledge as to themselves and their own activities, and based on

investigation conducted by Lead Counsel for all other matters . That investigation has included the

thorough review and analysis of public documents, Securities and Exchange Commission ("SEC")

filings, press releases, news articles, and arbitration pleadings concerning the matters set forth herein .

The arbitration pleadings upon which some of the allegations of this Complaint are based include

an arbitration complaint styled Crosby v. Hampton-Porter Investment Banking, LLC, filed with the

National Association of Securities Dealers, and an arbitration complaint styled First Union

Securities, Inc, v. John [W.] Laurienti, filed with the New York Stock Exchange .

INTRODUCTION AND OVERVIE W

1 . This is a class action on behalf of Lead Plaintiffs and all others who purchased E n

Pointe Technologies, Inc . common stock (ENPT) on the NASDAQ NMS between December 7, 1999

and April 13, 2000, inclusive (the "Class Period"), and who have suffered damages as the result of

the alleged price manipulation scheme set forth below. Lead Plaintiffs allege violations of the

federal securities laws against En Pointe Technologies, Inc . (hereinafter "En Pointe" or the

"Company"), ten of its officers and directors,1 and against several other co-conspirators who

knowingly participated in manipulating the price of En Pointe's common stock .

2 . Throughout the Class Period, En Pointe held itself out as a national Business t o

Business (`'132B") c-commerce provider of information technology products and value-added

services, using proprietary and non-proprietary software and systems to drop-ship maintenance,

repair, and operation ("MRO") products to its customers through an electronically linked network

of allied distributors in the United States .

III

I Defendants Attiazaz "Bob" Din, Javed Latif, Naureen Din, Zubair Ahmed, Ellis Posner, Mark Briggs,

Verdell Garroutte, Jacob Stetton, Eric Keating and Robert Mercer hereinafter are collectively referred to as the"Insiders" .

Consolidated Amended Class Action Complaint I Master Case No . OI-CV-0205 L (C(iA)

1 3. Defendants' misconduct in connection with this fraudulent scheme and the material

2 misstatements and omissions regarding En Pointe's subsidiary, Supply Access, Inc ., enabled the

3 Insiders of En Pointe to abscond with proceeds of at least $35 million by selling approximately

4 700,000 insider shares to the unsuspecting public . Defendants engaged in this illegal scheme and

5 caused material false and misleading statements to be issued in order to create high demand for En

6 Pointe stock and artificially inflate the price of En Pointe stock, thereby allowing the Insiders to sell

7 their En Pointe shares at all-time high prices between $40 .59-$51 .15 a share .

8 4. During the relevant period, the Insiders conspired with a small investment bank,

9 Hampton-Porter Investment Bankers LLC (hereinafter "Hampton-Porter"), and its brokers,

10 management, and control persons to orchestrate a price manipulation scheme that allowed Hampton-

11 Porter's brokers to receive illegal "kickback" or "concessions" incentives paid by En Pointe, receive

12 commissions on sales of En Pointe common stock for their customers accounts at artificially inflated

13 prices, and sell shares of En Pointe common stock for their accounts at artificially inflated prices .

14 This scheme included Hampton-Porter's participation by : 1) parking excessive amounts of investors'

15 portfolios in En Pointe common stock; 2) refusing to execute sell orders ; 3) the use of illegal above

16 market buy-ins to dissuade potential short sellers from selling En Pointe common stock short ; and

17 4) the dissemination of materially false and misleading statements about En Pointe's ownership

18 interest in its subsidiary SupplyAccess, Inc . and its future prospects .

19 5. Hampton-Porter is awholly owned sub-entity of H-P Holdings, LLC (hereinafter "H-

20 P"). Gregory Walker holds an ownership interest in H-P and is a control person of both entities .

21 Time Holdings, LLC, JSL Enterprises, LLC, and JSL Holdings LP, LLC are all entities controlled

22 by John William Laurienti (hereinafter "Laurienti") . Laurienti and Gregory Walker orchestrated the

23 pump and dump scheme in conjunction with the Insiders of En Pointe and used these various entities

24 as conduits for their scheme .

25 6. Laurienti was an interested owner/member of H-P, which in turn has 100% ownership

26 interest in Hampton-Porter . Laurienti is the alter ego of Hampton-Porter and essentially directs its

27 activities. As such, Laurienti is a control person with regard to Hampton-Porter . Laurienti is a

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Consolidated Amended Class Action Complaint 2 Master Case No, 01-CV-0205 L (CGA)

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recidivist stock manipulator . For example, in October of 1995, the SEC found that Laurienti failed

to properly discharge his supervisory duties while acting as branch manager for Dickinson & Co. and

in connection with an unregistered stock offering masterminded by Laurienti . As a result, Laurienti

was barred from acting in a proprietary or supervisory capacity with any broker dealer, municipal

securities dealer, investment advisor or investment company. In complete disregard of that order,

Laurienti has attempted to conceal his involvement with Hampton-Porter (a registered broker-dealer)

through his former ownership of H-P, which in turn owns 100% of Hampton-Porter . Moreover,

Laurienti has participated in this price manipulation scheme despite the SEC injunction barring him

from future violations of the securities laws .

JURISDICTION AND VENU E

7. This action arises under Sections 10(b), 20(a) and 20A ofthe Securities Exchange Act

I of 1934, as amended (the "Exchange Act"), 15 U .S .C . §§ 78j(b), 78t(a) and 78, and SEC Rule lOb-5 ,

17 C .F.R. § 240.10b-5, promulgated thereunder .

8 . This Court has jurisdiction over this subject matter pursuant to 28 U.S .C . §§ 1331 and

1 1337, and Section 27 of the Exchange Act, 15 U .S.C. § 78aa .

9. Venue is proper in this district pursuant to Section 27 of the Exchange Act and 28

U.S .C. § 1391 (b) . Defendants Hampton -Porter Investment Bankers LLC , H-P Holdings , LLC, Time

Holdings, LLC, JSL Enterprises , LLC, JSL Enterprises , LLC and Laurienti are located in this

Judicial District , and significant sales of En Pointe securities took place in this Judicial District

during the Class Period .

10. In connection with the acts alleged in this complaint, the defendants, directly o r

indirectly, used means and instrumentalities of interstate commerce, including but not limited to th e

mails , interstate telephone and Internet communications , and the facilities of the NASDAQ NMS .

PARTIES

11 . Plaintiff Robert Flamberg purchased a total of 26,000 shares of En Point e

'I Technologies, Inc . common stock (ENPT) on the NASDAQ NMS during the Class Period and ha s

suffered realized and market losses of $265,882 .

Consolidated Amended Class Action Complaint 3 Master Case No . Ol-CV-0205 L (CGA)

1 12. Plaintiff Wilford Gentry, through Astro Corporation, purchased a total of 5,000 shares

2 of En Pointe Technologies, Inc . common stock (ENPT) on the NASDAQ NMS during the Class

3 Period and has suffered realized and market losses of $160,000 .

4 13. Plaintiff Robert Mayer purchased atotal of 27,700 shares of En Pointe Technologies,

5 Inc. common stock (ENPT) on the NASDAQ NMS during the Class Period and has suffered realized

6 and market losses of $88,639 .

7 14. Plaintiff Dennis Pasko purchased a total of 6,400 shares of En Pointe Technologies,

8 Inc. common stock (ENPT) on the NASDAQ NMS during the Class Period and has suffered realized

9 and market losses of $199,767 .

10 15. Plaintiff Richard Tavano purchased a total of 19,506 shares of En Pointe

11 Technologies, Inc . common stock (ENPT) on the NASDAQ NMS during the Class Period and has

12 suffered realized and market losses of $496,518 .46 .

13 16. Defendant En Pointe Technologies, Inc . (hereinafter "En Pointe" or the "Company")

14 is corporation organized and existing under the laws of the State of Delaware . En Pointe's principal

15 place of business and headquarters located at 100 N . Sepulveda Blvd ., 19th Floor, El Segundo, CA

16 90245 . En Pointe currently has 6 .53 million shares outstanding .

17 17. Defendant Attiazaz "Bob" Din (hereinafter "Bob Din") , the co-founder of En Pointe,

18 has served as Chairman of the Board of Directors, Chief Executive Officer and President of En

19 Pointe . According to En Pointe's proxy statement dated February 14, 2000, Bob Din was the

20 beneficial owner of 653,702 shares of En Pointe . Between February 28, 2000 and March 15, 2000,

21 Bob Din directly and indirectly sold 402,000 shares of En Pointe for approximately $18 million in

22 proceeds . His sales, during the Class Period, amounted to 61 .5% of his ownership position .

23 18. Defendant Javed Latif (hereinafter "Latif") was, at all relevant times, the Chief

24 Financial Officer of En Pointe . Latif is the brother-in-law of Bob Din and was appointed by Bob Din

25 on January 1, 1999 . On July 26, 2000, En Pointe announced Latif was stepping down to pursue

26 "personal interests ." According to En Pointe's proxy statement dated February 14, 2000, Latif was

27 the beneficial owner of 52,860 shares of En Pointe . Between February 28, 2000 and March 15,

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Consolidated Amended Class Action Complaint 4 Master Case No . 01-CV-0205 L (CGA)

1 2000, Latif sold 47,185 shares of En Pointe for $2,154,902 in proceeds . His sales, during the Class

2 Period, amounted to 89.3% of his ownership position .

3 19. Defendant Naureen Din was and is En Pointe's Secretary and a Director . Naureen

4 Din is also the wife of Bob Din . According to En Pointe's proxy statement dated February 14, 2000,

5 Naureen Din was the beneficial owner of 653,702 shares of En Pointe . Between February 28, 2000

6 and March 15, 2000, Naureen Din directly and indirectly sold 402,000 shares of En Pointe for

7 $17,691 .491 in proceeds . Her sales, during the Class Period, amounted to 61 .5% of her ownership

8 position .

9 20. Defendant Zubair Ahmed (hereinafter "Ahmed") was during the relevant time period

10 and is now a director of En Pointe . According to En Pointe's proxy statement dated February 14,

11 2000, Ahmed was the beneficial owner of 807,396 shares of En pointe . Between March 1, 2000 and

12 March 15, 2000, Ahmed sold 165,000 shares of En Pointe for $7,660,537 in proceeds . His sales,

13 during the Class Period, amounted to 20% of his ownership position .

14 21. Defendant Ellis Posner (hereinafter "Posner") was during the relevant time period and

15 is now the Vice-President of Sales at En Pointe . According to En Pointe's proxy statement dated

16 February 14, 2000, Posner was the beneficial owner of 48,220 shares of En Pointe . Between

17 February 28, 2000 and March 14, 2000, Posner sold 33,000 shares of En Pointe for $1,506,583 in

18 proceeds. His sales, during the Class Period, amounted to 68 .4% of his ownership position.

19 22. Defendant Mark Briggs (hereinafter "Briggs") was during the relevant time period

20 a director of En Pointe and the Chair of the Company's Compensation Committee . According to

21 En Pointe's proxy statement dated February 14, 2000, Briggs was the beneficial owner of 14,667

22 shares of En Pointe . Between February 28, 2000 and February 29, 2000, Briggs sold 18,000 shares

23 of En Pointe for $869,250 in proceeds . His sales, during the Class Period, amounted to 100% of his

24 ownership position .

25 23. Defendant Verdell Garroutte (hereinafter "Garroutte") was during the relevant time

26 period a director of En Pointe . Garroutte is also on the Compensation Committee of En Pointe .

27 According to En Pointe's proxy statement dated February 14, 2000, Garroutte was the beneficial

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1 owner of 8,334 shares of En Pointe . Between February 28, 2000 and February 29, 2000, Garroutte

2 sold 10,000 shares of En Pointe for $463,730 . His sales, during the Class Period, amounted to 100%

3 of his ownership position .

4 24. Defendant Jacob Stetton (hereinafter "Stetton") was during the relevant time period

5 a Senior Vice President and the General Counsel. According to En Pointe's proxy statement dated

6 February 14, 2000, Stetton was the beneficial owner of 17,377 shares of En Pointe, Between

7 February 28, 2000 and February 29, 2000, Stetton sold 10,000 shares of En Pointe for $463,730 in

8 proceeds. His sales, during the Class Period, amounted to 58% of his ownership position .

9 25. Defendant Eric Keating (hereinafter "Keating") was during the relevant time period

10 an officer of En Pointe with the title "Director of National Services" . Between February 28, 2000

11 and February 29, 2000, Keating sold 5,600 shares of En Pointe for 262 i 83 . His sales, during the

12 Class Period, amounted to 100% of his ownership position .

13 26. Defendant Robert Mercer (hereinafter "Mercer") was during the relevant time period

14 a Vice President with En Pointe . Between February 28, 2000 and February 29, 2000, Mercer sold

15 7,322 shares of En Pointe for $339-543, His sales, during the Class Period, amounted to 100% of

16 his ownership position .

17 27. Defendant Hampton-Porter Investment Bankers LLC (hereinafter "Hampton-Porter")

18 is a limited liability company organized and existing under the laws of the State of California with

19 its principal place of business 600 West Broadway, 14" Floor, San Diego, California . Hampton-

20 Porter is an investment banking and brokerage company, and a member of the National Association

21 of Securities Dealers . Hampton-Porter was the conduit through which the Defendants pursued their

22 scheme, by causing it to publish false and misleading statements regarding En Pointe, and by

23 otherwise manipulating the market for En Pointe stock . Specifically, Hampton-Porter was controlled

24 by Defendants Laurienti, Gregory Walker and H-P .

25 28. Defendant H-P Holdings, LLC (hereinafter "H-P") is a limited liability company

26 organized and existing under the laws of the State of California with its principal place of business

27 600 West Broadway, 14" Floor, San Diego, California . H-P, by and for its members, maintains a

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100% ownership interest in Hampton -Porter .

29. Defendant Time Holdings , LLC (hereinafter "Time Holdings ") is a limited liability

company organized and existing under the laws of the State of California with its principal place of

business 600 West Broadway , 14th Floor , San Diego , California. Time Holdings is a holding

company used as an alter ego for its sole members, Laurienti and Walker . Time Holdings, at the

time of the allegations contained herein , held approximately 522,700 shares of En Pointe (ENPT) .

Time Holdings also received hundreds of thousands of dollars from Hampton -Porter labeled as

"consulting fees ." Time Holdings principle place of business is located at 600 W . Broadway, 14th

Floor , San Diego , CA 92101 .

30. Defendant JSL Holdings LP (hereinafter "JSL Holdings") is a limited partnership

organized and existing under the laws of the State of Califo rn ia with its principal place of business

12626 High Bluff Drive , Suite 350, San Diego, California. Laurienti controlled JSL and maintained

an account at Merrill Lynch with at least 65,000 shares of En Pointe in JSL's name .

31 . Defendant JSL Enterprises, LLC (hereinafter "JSL Enterprises") is a limited liability

company organized and existing under the laws of the State of California with its principal place of

business 12626 High Bluff Drive, Suite 350, San Diego, California . JSL Enterprises, LLC is the sole

general partner of JSL Holdings, LP, and is controlled by Laurienti .

32. Defendant John William Laurienti (hereinafter "Laurienti") resides in California

within this Judicial District . Laurienti was an interested owner/member of H-P, which in turn ha s

100% ownership interest in Hampton-Porter . Laurienti is the alter ego of Hampton-Porter and

essentially directs its activities . As such, Laurienti is a control person with regard to Hampton-

Porter.

33. Defendant Gregory Walker (hereinafter "Walker") holds an ownership interest in H-P,

which in turn has 100% ownership interest in Hampton-Porter . Walker was also the President of

Hampton-Porter at all relevant times . As such, Walker is a control person with regard to Hampton-

Porter and H-P .

Il l

Consolidated Amended Class Action Complaint 7 Master Case No . 01-CV-0205 I. (CGA)

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34 . Defendant Mark Bergman ("Bergman") was hired as Hampton-Porter's Director o f

Research on or about June 23, 1999, and served as such at all relevant times . In this capacity,

Bergman authored certain false and misleading analyst reports concerning En Pointe . (See ¶¶ 76-77,

infra) . Furthermore, Bergman served as a primary liaison between En Pointe and Hampton-Porter,

as he had had a long standing relationship with En Pointe's senior management, including Defendant

Bob Din. Bergman had been employed with the Boston Group when that company managed En

Pointe's 1996 Initial Public Offering, and had been part of the selling group responsible for attracting

investor interest . Bergman continued his relationship with En Pointe's senior management

thereafter . While he was a Vice President at Xybernaut Corp ., that company published a press

release on May 21, 1998 announcing a so-called marketing and distribution agreement with En

Pointe. This release quoted Bergman as stating, inter alia, that "En Pointe has been growing rapidly

by providing its customers with quality products, expertise and service ." Finally, in Bergman's

capacity as founder and President of Access 1 Financial .eom, Bergman was compensated by En Pointe

to initiate and maintain positive coverage of En Pointe throughout the Class Period .

35. During the Class Period, the defendants, individually and in concert, directly and

indirectly, engaged and willfully participated in a continuous course of conduct to misrepresent and

conceal material information regarding En Pointe's subsidiary SupplyAccess, Inc . and the scheme

to artificially inflate En Pointe's stock price as specified herein in order to sell at least $35 million

worth of En Pointe shares on the open market . Defendants employed devices, schemes, and artifices

to defraud, and engaged in acts, practices, and a course of conduct as herein alleged in an effort to

increase and maintain an artificially high market price for En Pointe shares . This included the

formulation of, making, and/or participation in the making of untrue statements of material facts, and

the omission to state material facts necessary in order to make the statements made, in Iight of the

circumstances under which they were made, not misleading, which operated as a fraud and deceit

upon Lead Plaintiffs and the Class . In addition, each of the Insiders, due to their attendance at

management and/or Board of Director meetings, were informed by defendant Bob Din about the

scheme to artificially inflate En Pointe's stock price, and each of the Insiders knew that the schem e

Consolidated Amended Class Action Complaint 8 Master Case No . 0l-CV-0205 L (CGA)

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had not been disclosed to, and was being concealed from, the public . Despite the Insiders' duty no t

to sell their En Pointe stock under such circumstances, they nonetheless did so in violation of th e

federal securities laws .

CLASS ACTION ALLEGATION S

36. Lead Plaintiffs bring this class action under Rules 23(a) and 23(b)(3) of the Federal

Rules of Civil Procedure, on behalf of a class of persons who bought or otherwise acquired En

Pointe common stock during the Class Period (or their successors in interest) and who suffered

damages thereby ("the Class") . Lead Plaintiffs also assert Count III on behalf of a subsclass

consisting of all purchasers of En Pointe stock who purchased such stock contemporaneously with

the Insider sales on February 28 and March 13, 2000 (the "Subclass") . Excluded from the Class and

Subclass are the Defendants named herein, members of the immediate families of the Defendants,

any firm, trust, partnership, corporation, officer, director or other individual or entity in which a

Defendant has a controlling interest or which is related to or affiliated with any of the Defendants,

and the legal representatives, heirs, successors in interest or assigns of any such excluded party .

37. The Class and Subclass are so numerous that joinder of all members is impracticable .

As of May 11, 2000, En Pointe had 6 . 5 million shares of common stock issued and outstanding, an d

such shares were publicly traded on the NASDAQ NMS during the Class Period . The exact numbe r

of members of the Class is not known at this time, but is believed to number in the thousands .

38. Lead Plaintiffs will fairly and adequately protect the interests of the members of th e

Class and Subclass, and Lead Plaintiffs have no interests which are contrary or in conflict with the

interests of the Class members that they seek to represent. Plaintiffs have retained competent

counsel, who has been appointed by the Court as Lead Counsel for the Class, experienced in class

action litigation under the federal securities laws to ensure such protection, and intends to prosecute

this action vigorously .

39. Lead Plaintiffs ' claims are typical of the members of the Class and the Subclass ,

because Lead Plaintiffs and all of the Class members sustained damages arising from the same

wrongful conduct complained of herein .


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40 . A class action is superior to all other available methods for the fair and efficient

adjudication of this controversy since joinder of all members is impracticable . Furthermore, as the

damages suffered by individual members of the Class may be relatively small, the expense and

burden of individual litigation make it impossible for the members of the Class to individually seek

redress for the wrongs done to them . There will be no difficulty in the management of this action

as a class action.

41 . Questions of law and fact common to the members of the Class predominate over any

questions that may affect only individual members in that Defendants have acted on grounds

generally applicable to the entire Class . Among the questions of law and fact common to the Clas s

i are :

a) whether the federal securities laws were violated by Defendants' acts as allege d

herein ;

b) whether Defendants' omitted and/or misrepresented material facts and whether

Defendants breached any duty to convey material facts or to correct material facts previously

disseminated ;

c) whether Defendants participated in and pursued the common course of conduct

complained of herein ;

d) whether Defendants acted with scienter in omitting and/or misrepresenting material

facts, and otherwise manipulating the market for ENPT stock ;

e) whether the price of En Pointe common stock was artificially inflated during the

Class Period as a result of the material misrepresentations and omissions complained of herein ;

f) whether the Insiders were control persons of En Pointe as alleged herein ; and

g) whether members of the Class have sustained damages and, if so, the proper measure

of such damages .

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SUBSTANTIVE ALLEGATION S

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Background

42. Founded in January 1993 by Bob Din and Naureen Din, En Pointe is a California-

based reseller of information technology products including desktop and laptop computers , monitors

and application software . In August 1996, En Pointe Technologies was taken public by the Boston

Group, a broker/dealer formerly registered with the State of California . For the three years following

its initial public offering ("IPO") at $8 .00/share , En Pointe stock typically fluctuated in price between

$4 and $10 on the NASDAQ. At the time of the IPO, defendants Bob and Naureen Din and their

son and daughter , Ali Mahyuddin and Mediha Din, controlled over 33 % of the outstanding shares

of En Pointe . By 1999 , En Pointe had over 5 . 9 million shares outstanding , with Insiders controlling

3 .1 million shares (approximately 52%) and the public float accounting for approximately 2 .8

million shares (approximately 48%) .

43 . During 1999, companies in the B2B market started to enjoy unusual attention fro m

investors because many market research companies estimated the profit potential in this sector to

be enormous. For example, International Data Corporation estimated that "Internet-based

procurement applications will grow from $187 million in 1998 to $8 .5 billion in 2003, well on the

way in automating the estimated $1 .3 trillion that U .S. corporations spend on indirect purchases . "

44. Beginning in early 1999, however, En Pointe's business had begun to deteriorate . For

example, while En Pointe reported net income of $0 .19, $0.04 and $0.16 per share for the first,

second and third quarters of Fiscal 1998, En Pointe reported a net loss of ($0.01), ($0 .76) and ($0 .16)

per share, for the first, second and third quarter of Fiscal 1999, respectively . By December 31, 1999,

sales of En Pointe had fallen by over 20%, compared to the same fiscal quarter of the prior year.

Thus, without price manipulation, the prospects for a rise in share price of En Pointe were bleak at

best.

45. Simultaneously, Defendant Laurienti, a veteran securities manipulator, was castin g

!+ about for a likely target for his next pump and dump scheme . Advised by Defendant Bergman ,

Laurienti's eye fell upon En Pointe . En Pointe's public float was relatively small (2 .8 million

Consolidated Amended Cl ass Action Complaint 1 1 Master Case No . 0l-CV-0205 L (CGA)

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shares), with approximately half of the Company's shares held by insiders and members of the Din

family . With this small float and the attendant small trading volume in the stock, and with

management that had already demonstrated a strong interest in boosting its share price through

questionable means, En Pointe was a nearly ideal pump and dump stock .

46. With shares of En Pointe trading at around $6 in early 1999 and a public float of 2 . 8

million shares, Laurienti recognized that he had the financial capacity to purchase enough shares to

manipulate the price of the stock . Laurienti also realized, however, that with Insiders controlling

almost half of the outstanding shares of En Pointe, the market could be inundated with shares at any

given time - depressing the price of En Pointe shares and increasing the public float . Laurienti

decided to minimize this risk by enlisting the support and cooperation of En Pointe's management.

The Hampton-PorterlEn Pointe Connectio n

47. Hampton-Porter's resident stock tout and Director of Research, Defendant Bergman ,

had a long standing relationship with En Pointe's senior management, and with Defendant Bob Din

in particular . Bergman had been employed with the Boston Group when it took En Pointe publi c

in the August 1996 IPO, and had been responsible for stirring up investor interest in the offering .

48. Thereafter, from late 1997 until September 1998, Bergman worked as a consultant ,

Director of Investor Relations, and/or Vice President with Xybernaut Corp ., a Fairfax, VA company.

While Bergman working with Xybernaut, he introduced the two companies and encouraged them

to enter into a "strategic partnership" that was long on hype but short on substance . For the purposes

of generating investor interest in the two companies, Xybernaut published a press release on May

21, 1998 which stated in part :

Xybernaut Corporation (Nasdaq: XYBR), a leader in wearable computers, todayannounced that an agreement had been completed with En Pointe Technologies, Inc .(Nasdaq: ENPT), under which En Pointe will market, sell and service Xybernaut(R)products in the U .S . and Canada on a non-exclusive basis .

En Pointe is one of the nation's fastest-growing resellers of computer products andservices, directing a team of more than 475 employees from its Los Angeles,California corporate headquarters and currently generating revenues in excess of$500 million annually . With coverage in 19 cities throughout the U .S ., En Pointesales and service consultants bring customized, cost-effective computer hardware,software and service solutions to a wide range of Fortune 1000 companies, includingIBM Global Services, Northrop Grumman and Motorola, as well as state and local


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Dr. Mark Bergman, noted industry analyst and consultant stated : "En Pointe hasgrown rapidly by providing its customers with quality products, expertise and service .I feel that Xybernaut's hardware and software products fit perfectly into En Pointe'sbusiness model . The En Pointe sales force was introduced to Xybernaut's productslast week, and their response to the product was overwhelmingly enthusiastic . Ibelieve that the combination of Xybernaut's world-class products and En Pointe'smarketing strength will result in tremendous success for both companies . "

49 . Bergman left Xybernaut in September 1998 to try his hand as a freelance stock

promoter . To this end, he founded Access IFinancial .com, "advertising" investment e-mail

newsletter service and "tout sheet" web site, and named himself the President of the company . On

the Access1 web site, Bergman hyped to stocks of companies that paid him to provide positive

coverage for them, often using the companies' own stock as consideration . En Pointe was one such

company . In fact, the financial news website www.briefing.com published an article on August 8,

2000, stating that Access 1 Financial .com had disclosed that it was paid by subject companies for their

positive coverage, and that one such company was En Pointe. Similarly, Bloomberg News published

an article on April 28, 2000, further documenting Bergman's "analyst for hire"operation, stating in

part :

For a Fee, Analyst Mark Bergman Will Hype Your Company's Stock Santa Monica,California, April 28 (Bloomberg)

Environmental Solutions spurted to 7 3/8 from 4 718, with 1 .5 million shareschanging hands a day, after it issued a press release Feb. 25 saying Bergman's firm,Access 1 Financial of Santa Monica, California, had begun "coverage" of thecompany with a "buy" recommendation . Internet bulletin boards soon begancirculating the optimistic report .

Then, on March 13, Teodosio Pangia -- the man Bergman says paid him $25,000 and30,000 shares to write the report -- filed with the Securities and ExchangeCommission his intention to sell 3,170,975 shares of Environmental Solutions, hisentire holding .

The sequence of events -- shares of the Richmond Hill, Ontario, company now tradeat around 2 -- makes it seem like a "classic pump-and-dump" operation to AlanBromberg, professor of law at Southern Methodist University in Dallas .

Buyers were influenced by a seemingly independent analyst ' s report to bid up astock, Bromberg said, while insiders sold at the inflated prices . This may be morethan just unethical . "If a company ' s press release about a research report fails to


disclose the report was bought and paid for," says Valerie Caproni, director of theSEC"s Pacific regional office, "it's probably securities fraud . "

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Disclosure

Environmental Solutions isn't alone in not providing full disclosure. SinceDecember, Access I has issued reports on a score of small companies; typically, thecompanies and their investor relations representatives then draw attention to thereports via electronic press-release services as if they'd been the work of anindependent analyst, not a paid consultant .

In style and content, Bergman's reports mimic those of traditional stock analysts --"We recommend the accumulation of Environmental Solutions Worldwide Inc .'sshares for appropriate investors" -- though he's hardly an impartial evaluator of acompany's prospects .

As Bergman's brochure to potential clients puts it, his analyst reports are designedto have a "potentially substantial impact on your company's valuation . "

Manipulation ?

In the case of Environmental Solutions -- a three-year-old start-up with no revenueor manufacturing operations -- shares began rising even before Bergman's report waspublished : for days, word had spread over the Internet of an imminent analyst's reportthat would highlight the company's excellent prospects .

As a case study, Environmental Solutions seems "consistent with a short-termmanipulation of the market for the benefit of a selling insider," said John Coffee, aColumbia University law professor .

Bergman says he worked as an analyst at D .H. Blair Investment Banking, atHambrecht & Quist, and Hampton Porter of San Diego, among others, before startingAccess 1 as a financial public relations service .

Bergman concedes ordinary investors can get "confused" over his company'sservices. "I think that could easily be remedied with a rule that companies have todisclose that they've paid for the research report," he says .

In any event, companies might be re-thinking Bergman's role in their businessstrategy. Shares of all 23 companies for whom his firm issued "buy"recommendations are now trading for less than on the day his reports came out .

50. On June 23, 1999, Hampton-Porter published a press release announcing that it had

hired Bergman as its Director of research, stating :

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Hampton-Porter is pleased to announce the addition of Mark Bergman as Directorof Research. Mark Bergman is one of the leading experts in the area of technologyenterprises and investment advice . Recently, he was Chief of Global Equities at FABCapital, and Senior Analyst at leading Investment Banking firms, such as Volpe,Hambrecht & Quist, Cruttenden Roth . In addition, he was Director of Research forthe Boston Group . He has founded leading technology growth firms and was recentlySenior Vice-President of Xybernaut Corporation -- the worldwide leader in wearablecomputers . Dr. Bergman received a Ph.D . from Northwestern University andcompleted post-doctorate work at the University of Illinois .

51 . Because he had longstanding contacts with the Insiders and with Defendant Bob Di n

in particular, and because he had already been compensated by En Pointe and the Insiders to tout E n

Pointe's stock on the AccesslFinancial web site, Defendant Bergman was in an ideal position t o

recruit Bob Din and the Insiders to participate in Laurienti's pump and dump scheme .

Defendants Prepare Their Fraudulent Schem e

52. On or about September 1, 1999, Defendants began preparing to artificially inflate E n

Pointe's stock price to enable Defendants to pocket millions in unlawful insider trading proceeds .

To this end, Laurienti assembled a team of his associates to join him at Hampton-Porter, a penny

stock brokerage firm in which he had a 40% ownership interest . Although Laurienti had been barred

by the SEC in 1993 from acting in a supervisory capacity with any broker dealer or investment

company, Laurienti was able to operate this boiler room outfit through Walker, the President of

Hampton-Porter . Laurienti also ensured his control of Hampton-Porter by installing his trusted

friend, James Green, as the branch manager and hiring his brother, Bryan Laurienti, to join as a

broker .

53 . Laurienti and Bergman approached Bob Din about their plan to accumulate share s

of En Pointe and to assume command of the company ' s public float . Laurienti convinced Bob Din

that his plan would be a mutually bene ficial one . With control over a significant port ion of the

public float , Laurienti would essentially act as a price suppo rt for the stock while Bob Din could act

in a similar capacity by controlling the sale of shares by Insiders . Under this arrangement,

defendants would profit handsomely from the rise in price and could coordinate their selling of

shares to optimize their returns .

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1 54, Laurienti offered to purchase a large stake in En Pointe and promote its stock in

2 exchange for Bob Din's assurance that Insiders would not flood the market with stock . In return,

3 Bob Din agreed to limit insider sales to 125,000 shares for a period of time during the first quarter

4 of 2000. Additionally, Bob Din and En Pointe would need to fund payments or "concessions" to

5 Hampton-Porter registered representatives for pushing En Pointe shares on their clients . Realizing

6 that Laurienti's proposal could potentially mean a huge boost to En Pointe stock (of which the Bob

7 Din alone owned over 1 million shares), the Insiders agreed to participate in the fraudulent

8 conspiracy .

9 55. Specifically, Bob Din agreed to regulate all Insider sales by En Pointe's officers and

10 directors to ensure that the market would not be inundated with a large number of En Pointe shares

11 at any given time and provide the illicit financial inducements to Hampton-Porter brokers in

12 exchange for their assistance with the "pump" of the stock . In return, Laurienti agreed to cause

13 Hampton-Porter to issue falsely positive analyst reports about En Pointe's business prospects, and

14 to instruct Hampton-Porter's brokers to sell En Pointe securities to unsuspecting clients and

15 members of the Class. In addition, En Pointe would pay illegal "kickbacks" or "concessions" to

16 Hampton-Porter and its brokers, in which Walker and Laurienti were direct beneficiaries . The

17 "kickback" or "concessions" paid to Hampton-Porter from En Pointe amounted to illicit payments

18 of $0 .50 per share, over and above the broker's regular commission for their sales of En Pointe

19 securities .

20 56. With the fraudulent scheme firmly established and investor interest beginning to

21 surface as a result of increasing trading volumes, defendants began to aggressively promote En

22 Pointe shares . Pursuant to their agreement, Bob Din and En Pointe paid Hampton-Porter at least

23 $1 .5 million to push En Pointe stock . Holding up their side of the bargain, Laurienti and Walker

24 held several meetings to instruct the Hampton-Porter registered representatives to sell En Pointe

25 stock. During these meetings, Laurienti would insruct the brokers on ways to entice clients to invest

26 in the Company and to convince those clients to hold their shares . Laurienti informed the brokers

27 that Hampton-Porter would pay a "concession" of 50 cents per share, over and above the broker's

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regular commission, for all sales of En Pointe shares. A credited concession would be deducte d

from the brokers paychecks, however, if their clients sold the stock within a certain period of time .

(See Exhibit 1 : Declaration of Adam Gilman , a Hampton-Porter registered representative) .

57. Laurienti's efforts at Hampton-Porter mirrored his previous attempts at such boile r

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room tactics while employed at Dickinson & Co . In 1993, in fact, Laurienti had been barred by the

SEC from acting in a supervisory capacity with any brokerage firm for permitting kick-backs of cash

and securities to his brokers for selling a stock called Fairmont Resources, Inc ., a Canadian penny

stock .

58 . While all of these elements of the scheme were falling into place, Laurienti bega n

quietly acquiring shares of En Pointe for his own account and through his various alter egos, Time

Holdings, LLC, JSL Enterprises, LLC, and JSL Holdings, LP, in order to gain control of the public

float of En Pointe . Time Holdings alone acquired 522,700 shares of En Pointe from August to

December of 1999 . This holding alone amounted to an 8 .8% stake in En Pointe, just below the 10%

insider threshold . Not only did Laurienti ultimately acquire these shares but he also consistently

bought and sold the stock to create the appearance of active trading and interest in the stock . (See

Exhibit 2 : Schedule 13D/A of Time Holdings, LLC) . In addition, Laurienti bought additional shares

of En Pointe through several personal accounts, including but not limited to, TD Waterhouse and

Ameritrade, Laurienti bought additional shares of En Pointe . By early December 1999, Laurienti

had purchased 520,000 shares of En Pointe for his personal accounts . In the aggregate, through his

personal account, the accounts of affiliated entities, and Hampton-Porter's clientele, Laurienti

controlled as much as 2 million shares of En Pointe stock .

59. While Hampton-Porter's brokers aggressively pushed their clients to invest in E n

Pointe securities, and with no other investment analysts reporting on En Pointe securities, En Pointe

and Hampton-Porter seized the opportunity to "pump" the stock by issuing false and misleading

public statements . To this end, Bergman began preparing and drafting promotional "analyst reports"

to be published concurrently with "buy" recommendations from Hampton-Porter .

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Consolidated Amended Class Action Complaint 17 Master Case No 01-CV-0205 L (CGA)

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60. With this boiler room operation ready to commence, Hampton-Porter brokers began

a vigorous campaign to induce their clients to invest in En Pointe. If clients did not buckle under

the weight of the high-pressure sales pitch, the brokers would simply engage in unauthorized trading

of En Pointe in their client's accounts . Any complaints by the clients would be met with a cancel and

rebill of the transaction to another unsuspecting client's account effectively creating the perception

of even greater trade activity in En Pointe . Any efforts by investors to sell their shares during this

time were essentially blocked by their brokers who were unwilling to forfeit their concessions .

Laurienti's First Union Securities , Inc. Account

61 . Having amassed an enormous position in En Pointe at a number of discount brokerage

firms, Laurienti contacted William A . King ("King"), Senior Vice President and Director of

Corporate Executive Services of First Union Securities, Inc. ("First Union") in its Newport Beach

Office to inquire about First Union's margin requirements in late 1999 . King informed Laurienti that

First Union would allow him to borrow against 50% of his total portfolio .

62. In or about January 2000, Laurienti opened an individual account in his name at Firs t

Union ("the Personal Account") with King acting as the registered representative for the account .

Laurienti executed the requisite margin documents to allow him to take advantage of First Union's

margin requirements . Upon the opening of the Personal Account, Laurienti initially transferred in

350,000 shares of En Pointe .

63 . Recognizing his potential for liability for the inevitable debit balance that would

occur when En Pointe shares returned to their true market value, Laurienti asked King to open a

separate account at First Union on behalf of JSL Holding ("the Partnership Account") . King knew

that such a request would be met with resistance and suspicion by First Union . To coax First Union

into allowing such an account, Laurienti represented the JSL Holdings was being formed for "estate

planning purposes" . Laurienti submitted the Partnership Account opening documents listing JSL

Enterprises, L .L .C . as the general partner of JSL Holding . This application was rejected by First

Union . Laurienti then resubmitted the opening documents with JSL Holdings, L .P . as the general

partner . This too was rejected by First Union .


1 64, Finally, Laurienti represented to First Union that he was now the General Partner of

2 JSL Holdings and would assume full responsibility for all debit balances arising from the account .

3 Laurienti, consistent with this charade, signed and executed the opening account documents on

4 behalf of JSL Holdings as its general partner. In truth and in fact, JSL Enterprises, Inc ., a

5 corporation with no assets, is the sole General Partner of JSL Holdings . Laurienti made these

6 misrepresentations to dupe First Union into allowing him to transfer his En Pointe shares to an

7 account that would essentially shield Laurienti from the certain debit balance that would allow En

8 Pointe's plunge . On January 31, 2000, an account was opened for JSL Holdings at First Union .

9 65. Having set up his dummy account, Laurienti directed the transfer of all of his

10 positions from his Personal Account, including the 350,000 shares of En Pointe, and an existing

11 debit balances of approximately $6 .2 million to the Partnership Account on or about February 10,

12 2000. An additionally 180,555 shares of En Pointe would be transferred into his account on March

13 7, 2000 from a non-party brokerage firm . As the value of this stock rose in February and early

14 March, the equity in Laurienti's First Union account increased dramatically . In furtherance of his

15 scheme, Laurienti periodically made withdrawals on the equity essentially borrowed from First

16 Union and transferred those amounts to various accounts ensuring that he would stand to profit

17 millions when the bottom fell out of the price of En Pointe shares . In February and March 2000

18 alone, Laurienti transferred over $2.2 million from his First Union account to other accounts of

19 unknown origin .

20 Defendants Begin the Manipulation

21 66. On or about December 7, 1999, several En Pointe officers participated in a conference

22 call with business journalists , analysts and investors . Specifically, three En Pointe executives (Bob

23 Din, Latif, and Posner) participated in this conference call . During the call, Bob Din commented on

24 En Pointe's new "wholly owned" subsidiary SupplyAccess . Bob Din further stated :

25 We have recently launched a new subsidiary, SupplyAccess, Inc ., which is beingpositioned to compete well against entities such as Ariba and Commerce One . We

26 are in the process of seeking a private placement of securities for no less than $ 9 .75Mand no more than $18 .75M .

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67 . Ariba and Commerce One were and are the two leading companies in the B2 B

exchange market and experienced strong demand for their stock in 1999 . Bob Din, in the December

7, 1999 conference call, characterized En Pointe's subsidiary SupplyAccess as "being positioned to

compete well against" both Ariba and Commerce One, the dominant companies in the B2B

marketplace . This statement was patently false . In fact, neither En Pointe nor SupplyAccess have

ever been significant players in the B2B market in which Ariba and Commerce One operate, and they

were not positioned to offer any significant competition to those companies .

68 . B2B industry reports confirm that SupplyAccess and En Pointe were not even

remotely involved as players in the B2B marketplace . Specifically, in January 2000, Broadview

International, LLC released a research report entitled "Market Maps of B2B Digital Marketplaces

and Web-Enabled Supply Demand Management Companies ." Broadview's report sought to account

for every known public and private company operating in the B2B market . Additionally, Broadview

categorized each company into market segments identifying the focus of the B2B companies . Ariba

and Commerce One were characterized as "Super Verticals" as opposed to just horizontal or vertical

market B2B companies . This characterization of Ariba and Commerce One reflected their

domination of the B2B space . Most importantly, neither En Pointe nor SupplyAccess were

mentioned as operating in any B2B market whatsoever -- in fact they were not even mentioned in

the report .

69. A March 13, 2000 press release published by Commerce One, Inc . further

demonstrates the fact that En Pointe and SupplyAccess were not and never have been competitors

of Commerce One . This press release lists En Pointe as one of over 30 "vendors and suppliers" who

had "endorsed Commerce One's Round Trip capability ." This statement makes it clear that En

Pointe was a purchaser of Commerce One's technology, rather than a competitor in the B2B market .

70 . During the December 7,1999 conference call, defendant Bob Din also announced that

the private placement offering of SupplyAccess would garner a total of "no less than $9 .75 millio n

and no more than 18 .75 million." The maximum offering of $18 .75 million would have left E n

Pointe with a majority interest in SupplyAccess .

Consolidated Amended Class Action Complaint 20 Master Case No . 01-C V-0205 L (CGA)

1 71, This statement was knowingly misleading because Bob Din, in light of his position

2 and access to internal private placement memoranda for SupplyAccess, knew at that time that a

3 supplemental offering was being prepared for another $7 .6 million, which in turn would leave En

4 Pointe with a minority ownership interest in SupplyAccess .

5 72. That same day, December 7, 2000, defendants formally informed the market

6 concerning the Company's planned private placement of SupplyAccess stock with the filing of a

7 Form 8-K with the SEC . This document stated, in relevant part .

8 The Company is in the process of seeking funding for a private placement ofsecurities in its recently incorporated, currently wholly owned, direct-procurement

9 focused subsidiary, SupplyAccess, Inc ., for no less than $9 .75 million and no morethan $18 .75 million .

1073. After the early December conference call and 8-K filing, the share price of En Pointe

11began to steadily rise as Hampton-Porter created artificial demand for the stock and as the market

12digested the news that En Pointe was purportedly a majority owner of SupplyAccess, a company that

13was "well positioned" to compete with Wall Street darlings Ariba and Commerce One . In early

14December, En Pointe stock traded around $10 per share and an average volume of about 30 to 50

15thousand shares a day . In fact, En Pointe stock had never traded above $14 a share during the prior

16two years . By December 31, 1999, En Pointe closed at $27 .50 per share .

1774 . On January 13, 2000, En Pointe filed its annual report on SEC Form 10-K . This

18document stated, in relevant part :

19The Company has recently formed a new subsidiary, SupplyAccess, Inc ., to continue

20 the maintenance and enhancement of these systems, and to offer some of the benefitsof these systems to third parties . A private placement of the capital stock of thi s

21 subsidiary is currently in process ; there can be no assurance, however, that the privateplacement will be successfully completed .

2275 . The quoted statements in the January 13, 2000 Form 10-K were materially false and

23misleading at the time that they were made, in that Defendants concealed the fact that En Pointe was

24poised to proceed with a supplemental private placement offering which would reduce the

25Company's ownership in SupplyAccess to a minority position .

2676. Throughout the Class Period, Laurienti, Walker and H-P and caused Hampton-Porter

27to consistently advocate the "hidden value" of SupplyAccess to En Pointe's stock price . Hampton-

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Consolidated Amended Class Action Complaint 21 Master Case No . 01-CV-0205 [ . (CGA)

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Porter published glowing "analyst reports" drafted and prepared by Bergman which were designed

to artificially inflate the share price of En Pointe stock and work in tandem with the artificial demand

for the stock that Hampton-Porter's boiler room operation was creating . For example, in a research

report published January 11, 2000, Hampton-Porter stated :

We rate ENPT Accumulate, Speculative . While En Pointe Technologies' stock pricehas run more than 280% in the past two weeks and the valuation does appear loftyon a near term basis, we believe that the current price of the stock reflects a fewcritical metrics that should sustain an increase in valuation over the mid to longerterm .

[W]e believe the company 's true strategic value is in its Internet-relatedsubsidiaries, Firstsource.com and SupplyAccess Inc., and that the recent run up interms of stock price is due to market speculation in terms of these businesses . EnPointe currently holds a 71 % stake in Firstsource and a 51 % stake in SupplyAccess(upon completion of an $18 million private placement) . As each of these companiesramp in terms of revenue and capturing market share, we believe that they representa significant value to En Pointe shares . Moreover, an IPO of SupplyAccess couldunleash enormous additional value to En Point shareholders, given a conservativevaluation relative to its peers on the street (see discussion below) . At present, we feelthat En Point represents a compelling indirect play in the business-to-businesseCommerce market.

SupplyAccess Inc. focuses on large enterprise e-procurement solutions in thebusiness-to-business marketplace, including procurement of IT products and services,operating resources and other vertical products and services . Strategic partnersinclude SAP AG (NYSE : SAP) and Microsoft Corp . (Nasdaq: MSFT) . In its first twoquarters of operation, the company has already processed more than $100 million intransactions .

Growth in the business-to-business Internet commerce market continues to explode,and is affecting the way small businesses to large corporations are doing business .Business-to-business eCommerce enables companies to drastically reduce costs,increase and sustain ROI and gain competitive advantages over their peers .According to Giga Information Group, savings due to the use of business-to-businesseCommerce solutions for US businesses will explode from $15 billion in 1998 toabout $600 billion in 2002. Moreover, one-fourth of all US business-to-businesspurchasing will be done online by 2003, reaching approximately $2 .8 trillion intransaction value, according to the Boston Consulting Group .We believe that SupplyAccess is poised to take advantage of this exponentiallygrowing business-to-business eCommerce market, differentiating itself from itscompetitors such as CommerceOne, Ariba and PurchasePro on a number ofdifferent levels .

*** *

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1 [W]e believe that SupplyAccess has a significant opportunity in the huge B2Bmarket, and therefore makes a compelling value proposition for shareholders of E n

2 Pointe. En Pointe is in the process of issuing a privateplacementfor SupplyAccess,raising $18 million. Upon completion , En Pointe will retain a 51% stake in

3 SupplyAccess. Given the street's interest in e-procurement companies andSupplyAccess' competitive positioning in this space, a SupplyAccess IPO would

4 bring substantial value to En Pointe. (Emphases added.)

5 77. Through Hampton-Porter, Laurienti, Walker and H-P continued to feed similar false

6 and misleading information to the market on February 4, 2000, when Hampton-Porter published

7 another Bergman report containing the following statements :

8 To reiterate , we believe that SupplyAccess has a significantopportunity in the hugeB2B market, and therefore makes a compelling value proposition for shareholders

9 of En Pointe . En Pointe is in the process of issuing a private placement fo rSupplyAccess, raising $18 million. Upon completion, En Pointe will retain a 51 %

10 stake in SupplyAccess . Given the street's interest in e-procurement companies andSupplyAccess' competitive positioning in this space, a SupplyAccess IPO would

11 bring substantial value to En Pointe . (Emphases added . )

12 78. The January 11 and February 4, 2000 compared SupplyAccess to Ariba and

13 Commerce One on a market capitalization basis . For example, in the February 4, 2000 report, H-P,

14 and Jaurienti cause Hampton-Porter to state :

15 Company Recent Stock Price Market Capitalization:Ariba- $172 15,629,640

16 Commerce One- $214 15,470,362Purchase Pro- $119 3,358,741

17 En Pointe- $38 227,00 0

18 Assuming that SupplyAccess is valued at a conservative multiple of 60X year '00revenues to its peers, (CMRC @ 123x year '00 ; and ARBA @ 80x year '00), with

19 projected revenue of $7,591,000 in its first year of operations, SupplyAccess shouldbe valued at approximately $17 per share (28,000,000 basic outstanding) . An initial

20 public offering of SupplyAccess would unleash value to En Pointe in the followingmanner: Upon completion of an $18 million private placement, En Pointe woul d

21 own 51 % of SupplyAccess (which should be valued at approx. $17 per share) . Thiswould in turn, bring an additional $40 to En Pointe's current $38 .25 trading level .

22 We believe that trading 60x `00 revenues, an IPO of SupplyAccess would brin gsomewhere between $35 and $40 of value to En Pointe's market capitalization .

2379. The quoted statements in the January 11, 2000 and February 2000 reports were

24materially false and misleading at the time that they were published because : a) SupplyAccess was

25not a direct competitor of either Commerce One or Ariba and has never been ; b) Defendants

26concealed and affirmatively misrepresented the fact that En Pointe and the Insiders were planning

27a $7.6 million supplemental offering of SupplyAccess preferred stock which would reduce En

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Consolidated Amended Class Action Complaint 23 Master Case No 01-CV-0205 1. (CGA)

1 Pointe's ownership below that of a majority position; c) the reports concealed the fact that

2 Defendants were engaged in a scheme to artificially inflate En Pointe's share price so that Defendants

3 could sell En Pointe stock to the unsuspecting public for massive illegal profits, and that Hampton-

4 Porter and En Pointe were paying Hampton-Porter's sales representatives special incentive payments

5 for sales of En Pointe stock ; d) the reports concealed the fact that control persons of Hampton-Porter

6 owned extremely large stakes in En Pointe stock and were causing Hampton-Porter to advise readers

7 to buy the stock in order to enrich themselves ; and e) SupplyAccess was a new start up with an

8 unproven technology of questionable value, and there was no reasonable basis for the projection that

9 SupplyAccess would generate $7 .5 million in revenues in its first year of operations .

10 80. The fact that the SupplyAccess revenue projections contained in the January 11, 2000

11 and February 2000 reports set forth above were materially false and misleading when made is further

12 demonstrated in the Company's subsequent filings . Because En Pointe's voting interest in

13 SupplyAccess dropped below 50% effective April 4, 2000 and En Pointe did not otherwise have

14 control, En Pointe began to account for its investment in Supply Access under the equity method of

15 accounting . Under this method of accounting, En Pointe recognized a loss of $512,000 on its

16 minority stake for the fiscal year ended September 30, 2000 . No significant revenues from

17 SupplyAccess were reported or evident . In fact, according to En Pointe's annual report on SEC Form

18 10-K, filed on January 18, 2001, "SupplyAccess, a start-up internet portal business-to-business

19 provider, did not record any net sales for the approximate six month period in which the former

20 subsidiary was consolidated with the Company ."

21 81 . On February 10, 2000, En Pointe and the Insiders published a press release which

22 stated, in relevant part :

23 With the new business systems now operational, En Pointe is at the forefront ofbusiness-to-business e-commerce utilizing its unique tool, SupplyAccess(TM) . . .

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25The Company is in the process of obtaining funding for a private placement of

26 securities in its subsidiary, SupplyAccess, Inc .

27 111

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Consolidated Amended Class Action Complaint 24 Master Case No. 01-CV-0205 L (CGA)

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82. En Pointe's and the Insiders ' statements in the February 10, 2000 press release wer e

materially false and misleading at the time that they were published, in that they concealed the facts

that: a) neither the Company nor SupplyAccess was an active competitor in the business-to-business

e-commerce marketplace, and in fact neither was considered to be a player in this market ; and b)

contrary to prior statements, En Pointe was poised to proceed with a supplemental private placement

offering which would reduce the Company's ownership in SupplyAccess to a minority position .

83 . On February 25, 2000, En Pointe and the Insiders' made another announcemen t

concerning their planned private placement of SupplyAccess equity, stating that "its subsidiary,

SupplyAccess, Inc ., has completed a first closing of a $26 .5 million investment in

SupplyAccess(TM) Series A Preferred Stock ." This statement was materially false and misleading

at the time that it was made, because it failed to disclose, and En Pointe and the Insiders concealed

the fact that En Pointe was poised to proceed with a supplemental private placement offering which

would reduce the Company's ownership in SupplyAccess to a minority position .

84. On February 25, 2000, En Pointe's common stock reached an all-time high of $5 2

per share . In an effort to capitalize on the stock's all-time and the undisclosed knowledge of the

impending sale of En Pointe's controlling interest in SupplyAccess, the Insiders sold 141,922 shares

worth approximately $7 .4 million worth of their stock on February 28, 2000 and February 29, 2000 .

(See ¶~ 105-113, infra) .

85 . On March 2, 2000, En Pointe filed a report on Form 8-K with the SEC, stating in part :

The Company announces that its web procurement business-to-business subsidiary,SupplyAccess, Inc ., recently completed an initial funding of a private placement ofSeries A preferred stock in the gross amount of $18 million . Such funding resultedin the sale of 12 million shares of preferred stock at $1 .50 per share, representing46.1 % of the total 26 million shares of outstanding stock . With the conclusion of thissale, the Company's ownership in SupplyAccess, Inc . is 53 .9%.

86. The quoted statements in the March 2, 2000 Form 8-K were materially false and

misleading at the time that they were made , in that En Pointe and the Insiders concealed the fact that

En Pointe was poised to proceed with a supplemental private placement offering which would reduce

the Company ' s ownership in SupplyAccess to a minority position .

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1 87, After the release of March 2 Form 8K, from March 2, 2000 through March 15, 2000,

2 the Insiders sold an additional 556,095 shares of En Pointe stock worth approximately $27 .6 million .

3 (See IT 105-113, infra) . Despite this flood of Insider sales, Laurienti had been able to stabilize the

4 price of the stock by continuing his promotional efforts and encouraging clients of Hampton-Porter

5 to buy En Pointe shares . Laurienti's success in this regard was temporary, however . Finally, on

6 April 4, 2000, news of the Insider sales caused a share price decline significant enough to trigger a

7 $1,370,300 margin call on Laurienti's First Union Partnership Account . The margin call demanded

8 that additional funds and/or securities be deposited into the Partnership Account. First Union

9 contacted Laurienti and demanded that he deposit cash or eligible securities to meet the margin call

10 and was told that if he did not meet the margin call, securities would be sold in his account.

I 1 Laurienti met the call by liquidating shares of companies other than En Pointe . Laurienti specifically

12 instructed First Union never to sell his En Pointe shares to meet a margin call .

13 88. Laurienti received an additional margin call from First Union on or about April 11,

14 2000 due to a further decline in the prices of En Pointe . Laurienti again instructed First Union not

15 to sell any En Pointe stock in the Partnership Account as he represented he was in the process of

16 obtaining funds and/or securities to deposit into the Partnership Account to meet the margin call .

17 Laurienti told First Union that he could get a letter of authorization to transfer $2 million from an

18 existing account at First Union . The existing account was that of Mediha Din, the eighteen-year-old

19 daughter of Bob Din. Bob Din suggested to First Union that his daughter would authorize the

20 transfer of $2 million from her First Union account to JSL Holdings' First Union account . Laurienti

21 told First Union that he had, in fact, made the arrangements to receive the $2 million loan and that

22 the margin calls would be met . Based upon these representations, First Union did not immediately

23 liquidate the entire Partnership Account . Upon consultation with his in-house lawyer at En Pointe

24 about this transaction, however, Bob Din rescinded the offer as his counsel advised him that the

25 transfer of funds would be "too obvious" . Bob Din then attempted to arrange for a banker to loan

26 Laurienti the requisite amount to cover the debit balance . When the banker, Laurienti and King

27 informed a margin clerk that such a loan would take a week to arrange, First Union liquidated the

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Consolidated Amended Class Action Complaint 26 Master Case No . 0 I-CV-0205 L (CGA)

1 remainder of the account to meet the margin calls . First Union has since filed a NYSE arbitration

2 claim against En Pointe, Bob Din and Laurienti for fraud in connection with Laurienti's margin

3 account and Laurienti's promotion of En Pointe common stock .

4 89. On April 13, 2000, En Pointe and the Insiders issued a press release announcing the

5 closing of a supplemental sale of SupplyAccess preferred stock of $7 .6 million and that En Pointe

6 was "no longer a majority stockholder of SupplyAccess, Inc ." In fact, it was later revealed that En

7 Pointe's ownership interest had declined to 45 .1%. In response to this stunning revelation, En

8 Pointe's stock price plummeted from an intra-day high of $28 .50 to close at $12 .87 on over 2 million

9 shares traded .

10 90. En Pointe shares have not traded over $13 per share since and traded at $9 per share

11 90 days after the April 13, 2000 En Pointe press release . This price reflects less than a $54 million

12 market capitalization for the entire company . Insiders profited at least $35 million dollars alone from

13 their insider sales from February 28 to March 15, 2000.

14 91 . During and immediately after the April 13, 2000 crash of En Pointe stock, and in

15 order to relieve some of the selling pressure, Hampton-Porter's trading room, at the direction of

16 defendants Laurienti, Walker and H-P refused to accept sell orders from clients . Defendants

17 Laurienti, Walker and H-P also caused Hampton-Porter to pressure its registered representatives to

18 sell En Pointe stock to their customers without regard to its suitability .

19 92. The aftermath ofthe April 13 revelation was reported by Bloomberg News as follows :

20 En Pointe Technologies Inc . (ENPT) shares fell $14 .63, or 53 percent, to $12 .88 .The provider of business-to-business information technology products and services

21 said it's no longer the majority owner of SupplyAccess, Inc., an operator of abusiness procurement web site .

22Post-Class Period Events

2393 . On April 14, 2000, a Hampton-Porter client named Steven Crosby went to Hampton-

24Porter's offices and confronted his broker and several other Hampton-Porter representatives . He was

25informed that Defendants were working feverishly to support En Pointe's share price, and that Bob

26Din had agreed to provide $1 .5 million to Hampton-Porter secretly to allow Defendants to create

27artificial demand for the stock and prop up the plummeting share price . He was also informed that

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Hampton-Porter was purposefully disguising these purchases to make them appear to be made

through different brokerage firms . These facts are alleged in an arbitration complaint styled Crosby

v. Hampton-Porter Investment Banking, LLC, filed with the National Association of Securities

Dealers in June of 2000 .

94. On April 17, 2000, in a last-ditch effort to boost En Pointe ' s share price and continue

with Defendants ' scheme , Laurienti , Walker and H-P caused Hampton-Po rter to publish another

report touting En Pointe and SupplyAccess . This report contained a "strong buy" recommendation

for En Pointe's stock and stated that En Pointe's stock had been "oversold due to market conditions . "

95 . Following the events outlined in the Class Period, various legal actions, includin g

those filed by Lead Plaintiffs and by First Union and the Crosbys, have been instituted against

Defendants in connection with their scheme to manipulate the price of En Pointe securities .

Apparently, these legal actions have spurred Hampton-Porter to essentially go into hiding . In fact,

on May 17, 2001, The San Diego Union-Tribune published an article stating, in relevant part

"Hampton-Porter, a brokerage house with a history of disciplinary actions and lawsuits against it,

has abruptly departed its office in downtown San Diego . "

96 . As of June 2001, the Company's share price still has not recovered, hovering aroun d

$2 per share .

CAUSATION ALLEGATION S

97. En Pointe's common stock was publicly traded on the NASDAQ NMS at all relevan t

times. Defendants' material misrepresentations, and omissions manipulative contrivances had th e

effect of artificially inflating the price of En Pointe's stock .

98. Defendants had a duty to promptly disseminate accurate and truthful information with

respect to En Pointe's financial and operational condition or to cause and direct that such informatio n

` be disseminated and to promptly correct any previously disseminated information that was

misleading to the market . As a result of their failure to do so, the price of En Pointe's stock price

was artificially inflated during the Class Period, damaging Lead Plaintiffs and the Class .

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I Consolidated Amended Class Action Complaint 28 Master Case No . 01-CV-0205 L (CGA)

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99. Defendants' false and misleading statements and omissions in their public statements

directly caused losses to the Class . On the strength of these false statements, misrepresentations and

material omissions, the Company's stock was artificially inflated to a Class Period high of $52 on

February 25, 2000 and remained artificially inflated until the end of the Class Period . Lead Plaintiffs

and all class members who bought shares during the Class Period were harmed thereby, when the

share prices plummeted on April 13, 2000 upon the revelation of the true nature of the Company's

ownership of SupplyAccess .

100. Until shortly before the filing the original complaint, Lead Plaintiffs and the Clas s

~ was unaware of all of the facts, as described herein, and could not have reasonably discovered th e

Defendants' fraudulent scheme by the exercise of reasonable diligence .

ADDITIONAL SCIENTER ALLEGATION S

101 . Each misrepresentation and/or omission ofmaterial fact alleged herein was made wit h

reckless disregard for, or knowledge of its false and misleading nature . At all relevant times, each

Defendant was in a position to know, and did in fact know the material facts regarding the Company

as set forth herein. Specifically, the Insiders were in a position to know, and indeed must have

known that the Company was not actively operating as a competitor to Ariba and Commerce One .

Indeed, as described above, En Pointe was listed in a Commerce One press release as a purchaser

of Commerce One's services and products, rather than a competitor . Similarly, the Insiders were in

a position to know, and must have known or recklessly disregarded the fact that the Company was

planning an expanded private placement offering of SupplyAccess securities which would reduce

the Company's ownership of SupplyAccess below 50% . Indeed, by February 25, 2000, Defendants

had done a primary closing on the supplemental offering, and thus had to know the full terms of the

deal by the date, and almost certainly months before .

102. The Insiders had the opportunity to commit and participate in the fraud describe d

I herein . The Insiders were each top officers, directors and/or shareholders of En Pointe and thu s

controlled the Company 's press releases, corporate reports, SEC filings and communications with

analysts . Thus, they controlled the public dissemination of and could falsify and/or omit, th e

Consolidated Amended Class Action Complaint 29 Master Case No . Ol-CV-0205 L (CGA)

material information about En Pointe's business prospects and operations, that reached the publi c

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and affected the price of En Pointe stock .

103 . Laurienti, Walker, Bergman, Hampton-Porter, and the other Hampton-Porter related

defendants were engaged in a purposeful, intentional manipulation of the market for En Pointe's

stock at all times during the Class Period . As such, they intentionally paid incentive kickbacks to

brokers for selling En Pointe stock to unwitting customers, intentionally parked stock in clients'

accounts without their consent, intentionally avoided selling En Pointe stock for clients and seized

back incentive payments made to brokers whose clients sold their shares . These intentional acts

were all a part of a scheme the express purpose of which was to artificially inflate the share price of

En Pointe stock. Laurienti profited at least $2 .2 million by siphoning off cash from his margin

account when the En Pointe's share price was high, and then refusing to pay back such cash when

margin calls were precipitated by the crash in En Pointe's share price . Lauritenti also planned on

selling his En Pointe shares at an even more considerable profit, but was undercut when the Insiders

broke ranks and engaged in their insider sales .

104 . By mid-March, the price of En Pointe shares had been driven to astronomical levels .

What had previously been a $9 stock as late as December 1999 had increased five-fold to $52 .

Enticed by the prospect of immediate and sizeable returns at the stock's all-time high and the

undisclosed knowledge of the impending sale of En Pointe's controlling interest in SupplyAccess,

the Insiders began a wholesale sell-off of their shares . Despite the fact that it is unlawful for any

person who is an officer, director or controlling person of an issuer to sell stock in the issuer at a time

when he/she knows material information about the issuer which would significantly affect the market

price of the issuer's security, the Insiders sold hundreds of thousands of En Pointe shares to the

unsuspecting public, while concealing the scheme to artificially inflate the price of En Pointe

securities, between February 28, 2000 and March 15, 2000, Insiders sold nearly 700,000 shares of

En Pointe netting over $35 million . The Insiders' selling during the Class Period is summarized as

follows :


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INSIDER NUMBER OF SHARES PROCEED S

Naureen and Bob Din 202,000 8,958,780

Mediha Din2 100,000 4,339,000

Ali Mohyuddin3 100,000 4,393,71 1

Ahmed 165,000 7,660,537

Briggs 18,000 869,249

Garrourte 10,000 463,729

Latif 47,185 2,154,802

Posner 33,000 1,506,85 3

Stetton 10,000 463,73 0

Mercer 7,322 339,542

Keating 5,600 262,182

TOTAL 698,017 $35,751,11 5

105. During the Class Period, Bob Din and Naureen Din made the following sales of En

Pointe common stock while in possession of material adverse information concerning the

Company's business and finances as described herein :

DATE SHARES PRICE PROCEED S

02-28-00 20,000 $44 .05 $881,000

02-29-00 30,000 $42.73 $1,281,900

03-01-00 15 ,000 $45 .46 $681,900

03-06-00 30,000 $40.83 $1,224,900

03-08-00 53,000 $43 .78 $2,320,340

03-10-00 24,000 $50.36 $1,208,640

03-14-00 20,000 $45 .66 $913,200

03-15-00 10,000 $44.69 $446,900

TOTAL : 202,0001 1 $8,958,780

Ill/

2 Mediha Din is the minor daughter of Bob and Naureen Din .

3 Ali Mohyuddin is the son of Bob and Naureen Din .

C Consolidated Amended Class Action Complaint 31 Master Case No . 01-CV-0205 L (CGA)

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106 . During the Class Period, Ahmed made the following sales of En Pointe common

stock while in possession of material adverse information concerning the Company's business and

finances as described herein :

DATE SHARES PRICE PROCEEDS

03-01-00 15,000 $45 .20 $678,000

03-02-00 10,000 $43 .25 $432,500

03-03-00 10,000 $43 .54 $435,400

03-07-00 15,000 $42.66 $639,900

03-09-00 63,300 $48 .51 $3,070,683

03-10-00 1,700 $49.62 $84,3S4

03-13-00 30,000 $48.05 $1,441,500

03-15-00 20,000 $43 .91 $878,200

TOTAL: 165,000 $7,660,537

107 . During the Class Period, Briggs made the following sales of En Pointe common stock

while in possession of material adverse information concerning the Company's business and



02-28-00 8 ,000 $51 .15 $409,200

02-28-00 5,000 $47.55 $237,750

02-28-00 1,191 $44.46 $52,95 1

02-29-00 3,809 $44.46 $169,348

ITOTAL : 18,000 S869,24 9

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108. During the Class Period, Garroutre made the following sales of En Pointe common




02-28-00 5,000 $47 .55 $237,750

02-28-00 1,191 $47 .55 $56,632

02-29-00 2,142 $44.46 $95,233

02-29-00 1 ,667 $44 .46 $74,11 9

TOTAL : 10,000 $463,729

109 . During the Class Period, Latif made the following sales of En Pointe common stock




02-28-00 15,477 $47.55 $735,93 1

02-29-00 9,523 $44 .36 $422,440

03-01-00 5,000 $44 .96 $223,800

03-03-00 9,100 $45 .11 $410,50 1

03-10-00 1,100 $50 .00 $55,000

03-15-00 6,985 $43 .97 $307,130

TOTAL : 47,185 $2,154,802

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110 . During the Class Period, Posner made the following sales of En Pointe common stock




02-28-00 10,000 $47.55 $475,500

02-28-00 5,000 $47.55 $237,75 0

02-28-00 477 $47.55 $22,68 1

02-29-00 9,523 $44.46 $423,392

03-06-00 5,000 $41 .21 $206,050

03-14-00 3,000 $47 . 1 6

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$141,480

TOTAL: 33,000 -1i - $ 1,506,853

111 . During the Relevant Period, Stetton made the following sales of En Pointe common




02-28-00 6,191 $47 .55 $294,382

02-29-00 3,809 $44 .46 $169,34 8

TOTAL: 10,000 $ 463,730

112 . During the Class Period, Mercer made the following sales of En Pointe common stock

while in possession ofmaterial adverse information concerning the Company's business and finances

as described herein :


02-28-00 4,533 $47.55 $215,544

02-29-00 467 $44 .46 $20,762

02-29-00 2,322 $44.46 $103,23 6

TOTAL : 7,322 $339,542

Consolidated Amended Class Action Complaint 34 Master Case No. 01-C V-0205 L (CGA)

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113 . During the Class Period, Keating made the following sales of En Pointe common




02-28-00 1,000 $48 .87 $48,870

02-28-00 1,600 $47,55 $76,08 0

02-28-00 1,247 $47.55 $59,294

02-29-00 1,753 $44.46 $77,93 8

TOTAL : 5,600 $262,182

114 . These sales are unusual and suspicious in their timing and amount since Insiders had

never before sold shares in February and March (and therefore such sales were not part of an adopted

annual practice) and Insiders sold a majority of their ownership positions as demonstrated below :

(1) Briggs sold 100% of his ownership position ;(2) Garroutte sold 100% of his ownership position;(3) Keating sold 100% of his ownership position ;(4) Mercer sold 100% of his ownership position;(5) Latif sold 89 .3% of his ownership position;(6) Posner sold 68 .4% of his ownership position ;(7) Bob Din and Naureen Din sold 61 .5% of their ownership position ;(8) Stetton sold 58% of his ownership position ; and(9) Ahmed sold 20% of his ownership position for $7 .66 million .

115 . Moreover, these sales took place shortly after the Defendants primed the market with

their talk of being "we ll positioned" to compete with Ariba and Commerce One and their

SupplyAccess venture . The Insiders ' sales were also timed to take advantage of the arti ficial demand

for En Pointe stock that was fostered by Hampton -Porter's boiler room operation , and to precede the

announcement that En Pointe 's ownership of SupplyAccess had fallen below 50% .

116. The combination of attributable knowledge with the evident profit incentives for th e

various Defendants creates a strong inference of scienter .

FRAUD ON THE MARKET ALLEGATION S

117. At all relevant times , the market for En Pointe common stock was an efficient market

for the following reasons, among others :

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a. At all relevant times during the Class Period, En Pointe's common stock waslisted and actively traded on the NASDAQ NMS, a highly efficient nationalsecurities market. During the Class Period, the Company had approximately6.5 million shares of common stock issued and outstanding ;

b. As a registered and regulated issuer of securities , En Pointe filed periodicreports with the SEC and the NASDAQ NMS, in addition to the frequentvoluntary dissemination of information described in this Complaint ; and

c . Several financial analysts covered and reported on En Pointe's developments,and disseminated such reports to the investing public .

118 . As a result of the above, the market for En Pointe securities promptly digested current

information with respect to En Pointe from all publicly available sources and reflected such

information in En Pointe's stock prices. Under these circumstances, all purchasers of En Pointe

stock during the Class Period suffered similar injury through their purchase of securities at prices

which were artificially inflated by the Defendants' manipulative activities . Thus, a presumption of

reliance applies .

FIRST CLAIM FOR RELIE FViolations of Section 10(b) of The Securities Exchange Act of 1934

and Rule IOb-5 Promulgated thereunder(Against All Defendants)

119 . Plaintiff incorporates by reference and realleges all preceding paragraphs as thoug h

fully set forth herein.

120 . During the Class Period, Defendants En Pointe, Bob Din, Latif, Naureen Din, Ahmed ,

Posner, Briggs, Garroutte, Stetton, Keating, Mercer, Hampton-Porter, H-P, Time Holdings, JSL

Holdings, JSL Enterprises, Laurienti, Walker and Bergman engaged in a plan, scheme and course

of business which operated as a fraud upon Plaintiff and the Class, and made various untrue

statements of material fact and omitted to state material facts necessary to make the statements made,

in light of the circumstances under which they were made, not misleading to Plaintiff and the Class

as set forth above. The purpose and effect of this scheme was to induce Plaintiff and the Class to

purchase the Company's common stock during the Class Period at artificially inflated prices .

121 . By reason ofthe foregoing, Defendants knowingly or recklessly violated Section 10(b )

of the Securities Exchange Act of 1934 (hereinafter "Exchange Act") and Rule I Ob-5 promulgated

thereunder in that they themselves or aperson whom they controlled : (a) employed devices, schemes

Consolidated Amended Class Action Complaint 36 Master Case No. 0 I-CV-0205 L (CGA)

1 and artifices to defraud ; (b) made untrue statements of material facts or omitted to state material facts

2 necessary in order to make the statements made, in light of the circumstances under which they were

3 made, not misleading ; or (c) engaged in acts, practices and a course of business that operated as a

4 fraud or deceit upon Plaintiff and the Class in connection with their purchases of the Company's

5 common stock during the Class Period.

6 122. As a result of the foregoing, the market price of the Company's common stock was

7 artificially inflated during the Class Period . In ignorance of the false and misleading nature of the

8 representations described above, Plaintiff and the Class relied, to their detriment, directly on the

9 misstatements or the integrity of the market both as to price and as to whether to purchase these

10 securities . Plaintiff and the Class would not have purchased En Pointe stock at the prices they paid,

11 or at all, if they had been aware that the market prices had been artificially and falsely inflated by

12 Defendants' false and misleading statements and omissions. At the time of the purchase of En

13 Pointe stock by Plaintiff and the Class, the fair market value of said common stock was substantially

14 less than the price paid by Plaintiff. Plaintiff and the Class have suffered substantial damages as a

15 result .

16 SECOND CLAIM FOR RELIEFViolations of Section 20(a) of The Securities Exchange Act of 1934

17 (Against Defendants Attiazaz "Bob" Din, Saved Latif, Naureen Din, Zubair Ahmed,Ellis Posner, Mark Briggs, Verdell Garroutte, Jacob Stetton, Eric Keating ,

18 Robert Mercer, John William Laurienti, Gregory Walker, H-P Holdings, LLC,and JSL Enterprises, LLC)

19123 . Plaintiff incorporates by reference and realleges all preceding paragraphs as though

20fully set forth herein.

21124. Defendants Bob Din, Latif, Naureen Din, Ahmed, Posner, Briggs, Garroutte, Stetton,

22Keating and Mercer are liable for En Pointe's material misrepresentations and omissions complained

23of herein under §20(a) of the Exchange Act in that they functioned as control persons of En Pointe

24by virtue of their executive and directorial positions with the Company, their knowledge of and

25involvement in the business of the Company, their daily access to confidential information regarding

26the operations and finances of the Company, and their power and ability to make public statements

27on behalf of En Pointe to shareholders, potential investors and the media during the Class Period .

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Consolidated Amended Class Action Complaint 37 Master Case No . OI-CV-0205 L (CGA)

1 As such, they had the power and ability to control the Company's actions .

2 125. During the Class Period, defendants Laurienti, Walker and H-P were control persons

3 of Hampton-Porter, in that H-P owned 100% of Hampton-Porter, Walker and Laurienti own and

4 controlled H-P, H-P owned Hampton-Porter, Walker was the President of Hampton-Porter, and

5 Laurienti was empowered by Walker to direct Hampton-Porter's activities and communications . In

6 this regard, H-P, through Walker, and Laurienti had direct access to Hampton-Porter's proprietary

7 information systems, and had ultimate control of Hampton-Porter's trading schemes and

8 communications functions, including the publishing of analyst reports .

9 126. During the Class Period, defendants Laurienti and JSL Enterprises were control

10 persons of JSL Holdings, in that JSL Enterprises is the sole general partner of JSL Holdings and

11 Laurienti has a majority ownership interest in JSL Holdings . In this regard, Laurienti and JSL

12 Enterprises had knowledge of and involvement in the day to day business of JSL Holdings . As such,

13 they had the power and ability to control JSL Holdings' actions .

14 127. During the Class Period, Laurienti was a control person of JSL Enterprises, in that

15 Laurienti has a majority ownership interest in JSL Enterprises . In this regard, Laurienti had

16 knowledge of and involvement in the day to day business of JSL Holdings . As such, they had the

17 power and ability to control JSL Enterprises' actions .

18 128. During the Class Period, defendants Laurienti and Walker were control persons of

19 Time Holdings, in that Laurienti and Walker have joint ownership of Time Holdings . In this regard,

20 Laurienti and Walker had knowledge of and involvement in the day to day business of Time

21 Holdings. As such, they had the power and ability to control Time Holdings' actions .

22 THIRD CLAIM FOR RELIEFFor Violations of Sections 10(b) and 20A of The Securities Exchange Act of 1934

23 (Against Attiazaz "Bob" Din, Javed Latif, Naureen Din, Zubair Ahmed, Ellis Posner,Mark Briggs, Verdell Garroutte, Jacob Stetton, Eric Keating and Robert Mercer)

24129. Plaintiff incorporates by reference and realleges all preceding paragraphs as though

25fully set forth herein .

26130. This claim is asserted against Defendants Bob Din, Latif, Naureen Din, Ahmed,

27Posner, Briggs, Garroutte, Stetton, Keating and Mercer ("Insiders") pursuant to §§ 10(b) and 20A

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Consolidated Amended Class Action Complaint 38 Master Case No 01-CV-0205 L (CGA)

1 of the Exchange Act and Rule lOb-5 promulgated thereunder, by a Subclass consisting of all

2 purchasers of En Pointe stock who purchased such stock contemporaneously with the insider sales

3 of the Insiders, which took place between February 28 and March 15, 2000 as detailed herein .

4 131. During the Class Period, as detailed above, Insiders, while in possession of material,

5 non-public information concerning the supplemental offering of SupplyAccess stock and

6 SupplyAccess' uncompetitive position, took advantage of the inflated market for En Pointe's stock

7 by dumping their own shares on unwitting investors . In so doing, the Insider Trading Defendants

8 garnered a total of over $35 million in proceeds .

9 132. Insiders' stock sales were timed to take advantage of the information gap that existed

10 between the time of the initial announcements and analyst reports concerning SupplyAccess, and the

11 revelation that En Pointe had reduced its ownership of SupplyAccess to a minority position . At the

12 time of their insider sales, Insiders knew or recklessly disregarded that they possessed materially

13 adverse non-public information regarding the supplemental offering of SupplyAccess stock and the

14 fact that SupplyAccess was not a genuine competitor to Ariba and Commerce One in the B2B

15 marketplace, and that this information had not been disclosed to the investing public .

16 133. As set forth above, Insiders each violated § 10(b) and 20A of the Exchange Act and

17 SEC Rule lOb-5 . As a direct and proximate result of the Defendants' wrongful conduct, and by

18 virtue of the fact that Lead Plaintiffs and the Subclass purchased shares of En Pointe stock on the

19 NASDAQ NMS contemporaneously, Lead Plaintiffs and the Subclass suffered damages in

20 connection with these purchases . Such damages stem from the facts that Lead Plaintiffs and the

21 Subclass paid artificially inflated prices for En Pointe stock as a result of the Defendants' violations,

22 and would not have purchased at such inflated prices, if at all, had Defendants fulfilled their legal

23 duty to disclose the materially adverse non-public information or abstain from selling such securities .

24 134. Lead Plaintiffs Richard Tavano, Robert Mayer and Dennis Pasko purchased shares

25 of En Pointe stock contemporaneously with Insiders' sales, as reflected in Lead Plaintiffs'

26 certifications, on file with the Court . Specifically, Richard Tavano purchased a total of 2,200 shares

27 on March 15, 17 and 21, 2000 ; Robert Mayer purchased 500 shares on March 2, and another 1,900

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Consolidated Amended Class Action Complaint 39 Master Case No . 0l-CV-0205 L (CGA)

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shares on March 16 and 17, 2000 ; and Dennis Pasko purchased 500 shares on February 28, 2000 .

PRAYER FOR RELIEF

WHEREFORE, Plaintiff, on his own and on behalf of the Class, pray for judgment a s

follows :

1 . Declaring this action to be a class action pursuant to Rules 23(a) and 23 (b)(3) of the

Federal Rules of Civil Procedure on behalf of the Class defined herein ;

2. Awarding Lead Plaintiffs and the Class rescissory or compensatory damages in an

amount which may be proven at trial, together with interest thereon ;

3 . Awarding Lead Plaintiffs and the Class pre judgment and post judgment interest, as

well as their reasonable attorneys' fees and expert witness fees and other costs ; and

4 . Awarding such other and further relief as this Court may deem just and proper

including any extraordinary equitable relief and/or injunctive relief as permitted by law or equity to

attach, impound or otherwise restrict the Defendants' assets to assure Lead Plaintiffs and the Class

have an effective remedy .

Dated: June 18, 2001 By: 14 -1

3 es C . Krause; Hsq.Yatrick N . Keegan , Esq .

RAUSE & KALFAYAN

Burton H . Finkelstein, Esq .Donald J . Enright, Esq .FINKELSTEIN, THOMPSON& LOUGHRAN

Lead Counsel for Lead Plaintiffs

Other Plaintiffs' Counsel :

Robert I . Harwood, Esq .Frederick W . Gerkens, III, Esq .WECHSLER HARWOOD HALEBIAN & FEFFER LLP488 Madison AvenueNew York, NY 10022

Michael D . Braun, Esq .Patrice L . Bishop, Esq .STULL, STULL & BROD Y10940 Wilshire Boulevard, Suite 2300Los Angeles, CA 9002 4


I Jules Brody, Esq .Aaron L. Brody, Esq .

2 STULL, STULL & BRODY6 east 45th Stree t

3 New York, NY 90024

4 Marc S . Henzel, Esq.LAW OFFICES OF MARC S . HENZEL

5 210 West Washington Squar eThird Floor

6 Philadelphia, PA 19106

7 Kevin J. Yourman, Esq .Vahn Alexander, Esq .

8 WEISS & YOURMAN10940 Wilshire Boulevard, 24th Floor

9 Los Angeles, CA 90024

10 Ronald A. Marron, Esq .MARRON & WILSON, LLP

11 1475 Sixth Avenue, Suite 301San Diego, CA 9210 1

12Evan Smith, Esq .

13 BRODSKY & SMITH11 Bala Avenue, Suite 39

14 Bala Cynwyd, PA 19004

15 Corey D HolzerHOLZER & HOLZER

16 6135 Barfield Road, Suite 102Atlanta, GA 3032 8

17Kirk Hulett, Esq .

18 HULETT HARPER LLP550 West C Street, Suite 1770

19 San Diego, CA 9210 1

20 Jeffery R. Krinsk, Esq.FINKELSTEIN & KRINSK

21 501 West Broadway, Suite 1250San Diego, CA 9210 1

22Alfred G . Yates, Jr ., Esq .

23 LAW OFFICES OF ALFRED G . YATES, JR .519 Allegheny Building

24 429 Forbes AvenuePittsburgh, PA 15219

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DEMAND FOR JURY TRIA LRule 38(b) of the Federal Rules of Civil Procedure

Lead Plaintiffs, on behalf of themselves and all others similarly situated, hereby demand a

trial by jury of this action .

Dated: June 18, 2001 By :Jam C' Krause ,'Esq.' NPa ick N. Keegan, Esq . L

USE & KALFAYAN

Burton H. Finkelstein, Esq .Donald J. Enright, Esq .FINKELSTEIN, THOMPSON& LOUGHRAN

Lead Counsel for Lead Plaintiffs

Consolidated Amended Class Action Complaint 42 Master Case No . 01-CV-0205 I . (CGA)

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James C. Krause, Esq., SBN 66,478Patrick N. Keegan, Esq ., SBN 167,698KRAUSE & KALFAYAN1010 Second Avenue, Suite 1750San Diego, CA 9210 1Tel : (619) 232-0331Fax: (619) 232-4019

Burton H. Finkelstein, Esq .Donald J . Enright, Esq .FINKELSTEIN, THOMPSON & LOUGHRAN1055 Thomas Jefferson Street, NW, Suite 601Washington, DC 20007Tel: (202) 337-8000Fax : (202) 337-8090

Lead Counsel for Lead Plaintiffs(Additional Counsel on Signature Page)

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

In re EN POINTE TECHNOLOGIES, INCSECURITIES LITIGATION

This Document Relates To :

ALL ACTIONS

Master Case No. 01-CV-0205 L (CGA)

PROOF OF SERVICE

I am employed with the LAW OFFICES OF KRAUSE & KALFAYAN , whose address is

1010 Second Avenue, Suite 1750 , San Diego , California, 92101 ; 1 am not a party to this cause . I

am over the age of eighteen years .

I further declare that on the date hereof I served a copy of the following documents :

CONSOL IDATED AMENDED CLASS ACTION COMPLAINT FOR VIOLATIONS OF

THE FEDERAL SECURITIES LAWS on the interested parties listed below :

SEE ATTACHED SERVICE LIS T

IX] BY FIRST CLASS MAIL. I am familiar with the business practice of this office for

collection and processing of correspondence with the United States Postal Service on the sam e

I Proof of Service 1 Master Case No. 01-CV-0205 L (CGA)

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date that it is placed for collection . I deposited in the ordinary course of business at San Diego,

California on June 18, 2001 .

[ ] BY UPS EXPRESS MAIL. I am familiar with the business practice of this office for

collection and processing of correspondence with the United Parcel Service on the same date that

it is placed for collection on .

[ J BY PERSONAL DELIVERY. I then sealed the envelope and caused it to be hand

delivered to the offices of the addressee .

BY FAX. Counsel whose name appears above, was faxed a copy of said document(s)

by facsimile transmission .

I declare under penalty of perjury that the foregoing is true and correct .

Executed on June 18, 2001 .

Stacy Boite l

f Proof of Service 2 Master Case No. 01-CV-0205 L (CGA)

GREGG A. RUFFALO v . EN POINTE TECHNOLOGIES, INC, et al.SERVICE LIST

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Todd E . Gordinier, Esq .John F . Cannon, Esq .Jason H . Anderson, Esq .STRADLING, YOCCA, CARLSON & RAUTH660 Newport Center Drive , Suite 160 0Newport Beach , CA 92660-6422Tel: (949) 725-4000Fax : (949) 725-4100

OF COUNSEL :Burton H . Finkelstein, Esq .Donald J . Enright, Esq .FINKELSTEIN, THOMPSON & LOUGHRAN1055 Thomas Jefferson Street , NW, Suite 601Washington , DC 20007

Attorneys for DefendantsEn Pointe Technologies, Inc ., Attiazaz"Bob" Din, Javed Latif, Naureen Din ,

Zubair Ahmed, Ellis Posner, MarkBriggs, Verdell Garroutte, Jacob Stetton,

Eric Keating, and Robert Mercer

Robert I . Harwood, Esq .Frederick W . Gerkens, III, Esq .Thomas J. Harrison, Esq .WECHSLER HARWOOD HALEBIAN & FEFFER LLP488 Madison AvenueNew York, NY 10022

Michael D . Braun, Esq .Patrice L . Bishop, Esq .STULL, STULL & BROD Y10940 Wilshire Boulevard, Suite 2300Los Angeles, CA 9002 4

Jules Brody, Esq.Aaron L . Brody, Esq .STULL, STULL & BRODY6 east 45th Stree tNew York, NY 90024

Kevin J . Yourman, Esq .Vahn Alexander, Esq .WEISS & YOURMAN10940 Wilshire Boulevard, 24th FloorLos Angeles, CA 90024

Ronald A . Marron, Esq .MARRON & WILSON, LLP1475 Sixth Avenue, Suite 301San Diego , CA 9210 1

Evan Smith, Esq .BRODSKY & SMITH11 Bala Avenue, Suite 39Bala Cynwyd, PA 19004

Proof of Service Master Case No. OI-CV-0205 L (CGA)

I Corey D HolzerHOLZER & HOLZER

2 6135 Barfield Road, Suite 102Atlanta, GA 3032 8

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Proof of Service 4 Master Case No. 41 -CV-0205 L (CGA)

1 James C. Krause, Esq., SBN 66,478 Patrick N. Keegan, Esq...

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