A class-action lawsuit filed on behalf of shareholders of Westar Energy seeks compensatory damages for the way the company was operated when David Wittig was in charge.
The suing shareholders include two pension funds and any shareholder who purchased the company’s stock between March 29, 2000, and Nov. 8, 2002. They are seeking almost $100 million in damages, Topeka attorney Christopher Joseph said Friday.
Joseph is a partner with Joseph & Hollander, Topeka and Wichita, which with Schoengold & Sporn, of New York, are lead counsel for the plaintiffs.
The lawsuit, filed Tuesday in U.S. District Court in Topeka, alleges the stock price of Westar Energy (NYSE: WR) was artificially inflated from $15 per share to a high of $26 during a period from March 29, 2000, to Nov. 8, 2002, because of false statements. Wittig was president, chief executive officer and chairman of the board of directors until he resigned shortly after he was charged with criminal counts unrelated to his position with Westar in November 2002.
The lead plaintiffs are Local 812 IBT Pension Fund and the American Radio Association Pension Fund.
The defendants are Westar Energy; Wittig; Douglas T. Lake, former executive vice president, chief strategic officer and board member; Paul Geist, former senior vice president, chief financial officer and treasurer; Carl Koupal, former chief administrative officer and executive vice president; Richard D. Terrill, former executive vice president, general counsel and corporate secretary; former board members Gene Budig, Frank Becker and John C. Dicus; and current board member John Nettels.
Westar spokesman James Ludwig said the company would defend against the actions that may have occurred under previous officers and directors, but it isn’t providing legal counsel for Wittig or Lake.
“Because of our position, we have not agreed to pay them anything,” Ludwig said. Budig, a former University of Kansas chancellor who was reached in Princeton, N.J., said, “I’m not familiar with it and I have no comment.”
Koupal declined to comment, saying he hadn’t reviewed the suit carefully.
Lake’s telephone number has been disconnected, and attempts to reach other defendants were unsuccessful.
Joseph said the class-action lawsuit includes anyone who purchased stock in Westar Energy from March 29, 2000, the date Western Resources, the earlier name of Westar Energy, announced a proposed “restructuring” to separate the electric utility operations from its unregulated businesses, to Nov. 8, 2002, when the Kansas Corporation Commission issued an order blocking the restructuring plan and reversed certain accounting transactions.
Joseph said the amended lawsuit was filed Tuesday, which coincidentally was the day after a U.S. District Court jury in Kansas City, Kan., convicted Wittig of money laundering, conspiracy and four counts of submitting false bank entries, all felonies.
Originally, there were five separate lawsuits against the utility company. The complaint filed Tuesday is 135 pages and expands the allegations against the defendants, Joseph said Friday. One of five original lawsuits was dismissed.
Wittig’s co-defendant in the loan conspiracy trial, Clinton Odell “Del” Weidner II, former president of Capital City Bank, was convicted of conspiracy, money laundering and two counts of false bank entries. At the beginning of the two-week trial, Weidner pleaded guilty to two other counts of false bank entries. Wittig and Weidner are to be sentenced Oct. 20 in Topeka.
Wittig had introduced a plan to restructure Westar Energy and create a separate company, Westar Industries. In the trial, witnesses said Wittig and his colleagues were going to receive a $20 million loan from Capital City Bank to buy stock in Westar Industries and could expect large returns on their investments.
U.S. District Judge Julie Robinson will handle the class-action lawsuit. Robinson also handled the criminal trial of Wittig and Weidner.
Westar spokeswoman Karla Olsen wouldn’t comment on the lawsuit, but said: “We believe we are on the right track moving forward. We believe our debt reduction and restructuring plan is solid. We already have implemented parts of that plan.”
The class-action suit appears to include some of the information that came out of the trial of Wittig and Weidner.
Stock in Westar Energy closed Friday at $15.78 per share, up 11 cents.
© Copyright 2003 CJOnline / The Topeka Capital-Journal / Morris Communications
By Steve Fry and Michael Hooper
THE TOPEKA CAPITAL-JOURNAL