FalconStor shareholder lawsuits to continue

FalconStor shareholder lawsuits to continue
Long Island Business News
The class action lawsuits involve bribery in the form of Fa1conStor stock options, restricted shares and money deposited in a casino gaming account. The suits charge the bribes were made to obtain three software contracts from Chase, including $4.1 ...

Although former FalconStor CEO ReiJane Huai committed suicide a day before he was slated to plead guilty to a role in a bribery scheme involving the sale of millions of dollars in software and services to JPMorganChase, shareholder class action lawsuits are ongoing against the firm and its executives.

Newsday today first reported that the former CEO of Melville-based FalconStor was scheduled to appear in court to plead guilty on Tuesday, the day after his suicide.

One of Long Island’s most successful high-tech executives, Huai lately found himself the target of a wide range of litigation, including class action lawsuits as well as a criminal proceeding by the U.S. Attorney’s office.

Josiah Kharje, assistant to Judge Leonard Wexler in U.S. District Court in the Eastern District of New York, confirmed to LIBN that Huai was slated to plead guilty in a criminal suit.

FalconStor and various executives still face class action suits charging that Huai and other executives from Feb. 5, 2009 to Sept. 29, 2010, artificially inflated FalconStor’s stock price by misrepresenting the company’s revenues and prospects to the public.

The suits also cite Huai’s role in artificially boosting earnings through the bribery case in which he was set to plead guilty.

Prosecutors claimed FalconStor provided Zahner with a roughly $6,000 golf club membership to a club in Ohio; a $26,000 downpayment toward a home in Galena, Ohio; $10,000 in gift cards; $126,000 in FalconStor stock options and restricted shares; $10,000 in cash and $7,000 related to gambling debts and other entertainment fees in Macau, China.