Friday, November 19, 1999
Suit says LCA founder swindled
BY RANDY TUCKER
The Cincinnati Enquirer
LCA-Vision Inc. founder Stephen Joffe and his wife lost more than $4 million worth of their own company stock after pledging the shares as collateral for a loan from Credit Bancorp Ltd.
Credit Bancorp is a European investment firm with offices in Lexington, Ky. It is being sued by the U.S. Securities and Exchange Commission (SEC) for defrauding investors, including Mr. Joffe and his wife, Sandra.
They declined to comment.
In a lawsuit filed Wednesday in U.S. District Court in New York, the SEC alleged Credit Bancorp failed to return to the Indian Hill couple 950,000 shares of LCA stock after they decided not to enter into a loan agreement with the investment firm.
Mr. Joffe, chief executive officer of LCA in Kenwood, and his wife originally pledged 2.85 million shares of their own LCA stock to Credit Ban corp in late 1997 as collateral for a loan, the SEC said.
Shortly thereafter, the couple requested their securities be returned. However, they only received about 2 million shares, according to the lawsuit.
After threatening legal action, the couple also received a cash payment of $1.66 million from Credit Bancorp, but that only partially covered the value of the shares that were not returned, said Charles Hertlein, a Cincinnati-based attorney for LCA-Vision.
Mr. Hertlein said the couple would rather return the cash payment from Credit Bancorp in return of the outstanding stock, which closed unchanged Thursday at $4.21ò.
But LCA said in a statement that Mr. Joffe and his wife have concluded that it appears unlikely they will recover the 950,000 shares not returned by Credit Bancorp.
As a result, the couple said they plan to amend their stock ownership filings with the SEC to reflect the decrease in their stake in the company.
LCA emphasized, however, that neither the couple's loss nor the SEC lawsuit involve or affect the operations, financial condition or future prospects of LCA-Vision.
The principals of LCA which owns and operates 22 laser vision-correction centers in the United States, Canada and Europe were among officials of four companies allegedly defrauded by Credit Bancorp, the SEC said.
The other investors included officers of the oil and gas firm Vintage Petroleum; Colorado Casino Resorts; and World Wide Wireless Communications Inc.
In a statement late Wednesday, Credit Bancorp President Richard Blech said the company is outraged at the allegations outlined in the SEC's complaint.
Credit Bancorp has not victimized any of its business partners, individuals or corporations alike, he said. In fact, none of our business partners has lost money as a result of our business arrangements with them.
Mr. Blech added the company intends to vigorously defend the case and clear our good name.
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