August 6, 1998
The Associated Press
The Florida Times-Union
TALLAHASSEE — Gubernatorial candidate Buddy MacKay gained $501,085 by selling stock in a company his brother once headed, but a plunge in value has prompted other stockholders to sue the company.
A group of shareholders filed a lawsuit in federal court in Georgia, accusing Premiere Technologies and its officers of fraud and market manipulation, the New York Times Regional Newspaper Group reported yesterday.
The suit alleged company managers failed to disclose management problems, including an inability to run the company, and sold 320,000 shares of stock at “artificially high” prices before divulging the problems.
Premiere said in a statement it would “defend the suit vigorously,” describing it as “completely without merit.”
MacKay’s brother, George MacKay, is not a party to the suit, said Lawrence Klayman of Boca Raton, attorney for the shareholders suing the firm.
MacKay reported the capital gain on his 1997 tax return from the sale of Premiere stock his younger brother gave him in 1995 as a Christmas present.
George MacKay, an Orlando engineer, was an original investor and once president of the Atlanta-based firm, which specialized in communications services such as voice message and teleconferencing. He left Premiere in 1995.
The stock, which MacKay reported on his tax return was valued at $13,750 when given to him, had not been offered for sale to the public at that time.
When the company offered 4.6 million shares to the public in March 1996, asking $18 a share, trading in the shares opened at $21.75 on the NASDAQ stock exchange and closed after one day at $23.94.
At that price, MacKay’s holdings were suddenly worth more than $400,000. Premiere’s stock later approached $50 a share, but by the time MacKay first sold some of his shares, in January 1997, the price was $29.
MacKay sold the stock “because he needed to take care of some debts,” campaign spokeswoman Michelle Kucera said. “It was the right time to sell the stock. It had been going up and down, and he took advantage of the opportunity.”
The stock has since plunged to about $20 in December and fell further this year to the $10 range.