UNITED STATES DISTRICT COURT - Securities Class Action Services

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
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GERALD LEVINE, individually and :
on behalf of all others similarly :
situated, :
:
Plaintiff, :
:
v. :
:
METAL RECOVERY TECHNOLOGIES, INC., : C.A. No. 96-525
formerly known as MALVY TECHNOLOGY, :
INC., JACK ALEXANDER, MICHAEL LUCAS, : JURY TRIAL DEMANDED
MICHEL RABHI, GARY SALTER, SGA :
GOLDSTAR RESEARCH, INC., BARRON :
CHASE SECURITIES, INC., EURO- :
ATLANTIC SECURITIES, INC., LA JOLLA :
CAPITAL CORP., COHIG & ASSOCIATES, :
GRUNTAL AND COMPANY, INC., LARRY :
TURRELL, DONALD HENDERSON, TOM :
BROZEL, SIMON D. BAIER, DAVID W. :
D'ANDREA, JOSEPH MICELLI, JR., and :
NICOLAS J. GIANDOMENICO, :
:
Defendants. :
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follows:
CLASS ACTION COMPLAINT
Plaintiff, by his counsel, alleges for his Complaint as
JURISDICTION AND VENUE
1. This action seeks redress on behalf of plaintiff and all
others similarly situated for losses they sustained as a result of
defendants' manipulation of the market in and misleading statements
and omissions of material facts relating to the stock of Malvy
Technology, Inc. ("Malvy" or "the Company")(now known as Metal
Recovery Technologies, Inc. or "MRTI"). This action is brought

pursuant to Sections 9, 10(b), and 20 of the Securities Exchange
Act of 1934, 15 U.S.C. sections 78i, 78j(b), and 78t, and Rule 10b-
5(1)-(3) promulgated by the Securities and Exchange Commission
("SEC") thereunder.
2. Beginning no later than early 1993, defendants Michael
Lucas, Michel Rabhi and Jack Alexander conspired with others
identified below to swindle open market purchasers of the stock of
Malvy (then known as Sphinx Natural Resources, Inc.). Their scheme
ultimately defrauded investors of many millions of dollars, much of
which eventually lined the pockets of defendants and their co-
conspirators.
3. The scheme was a simple one. First, the conspirators
caused Malvy to enter into an agreement to acquire 100% of the
stock of a French Company, Malvy France, for $32,500,000. In fact,
defendants acquired Malvy France from an entity which they
controlled, and most of the purported purchase price in reality
came back to them.
4. In order to pay for the acquisition of Malvy France,
defendants Alexander, Lucas and Rabhi purportedly caused the
Company to issue 16,250,000 shares under SEC Regulation "S" to
foreign investors for $2 per share. In fact, much of that stock
was purchased by defendants through various affiliates. Defendants
then pumped up the price of Malvy's stock through a series of acts
including false and misleading public statements and also bribes to
stock traders and brokers. As the price of Malvy's stock soared in
late 1993 and early 1994, defendants unlawfully dumped their
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unregistered stock on unwitting investors, reaping huge profits.
Ultimately, Malvy's stock price crashed, leaving the investing
public holding stock of little value.
5. This Court has jurisdiction of this action under Section
27 of the Exchange Act, 15 U.S.C. section 78aa, and pursuant to 28
U.S.C. sections 1331 and 1337.
6. Malvy is incorporated under the laws of the State of
Delaware. Certain of the omissions and misrepresentations
complained of herein were omitted from or contained in documents
and/or wires disseminated within this jurisdiction. In addition,
by knowingly manipulating the market in, and misrepresenting facts
relating to, a Delaware corporation, defendants have transacted
business within this jurisdiction. Accordingly, venue is proper in
this District.
7. The fraud alleged herein was perpetrated in large measure
by means of the mails, the telephone and other instrumentalities of
interstate commerce. During the class period, Malvy's common stock
was traded on the NASDAQ National Market System.
PARTIES
8. Plaintiff, Gerald Levine, is an individual who resides in
Brooklyn, New York, and is a citizen of the State of New York.
Plaintiff Levine purchased 16,000 shares of Malvy common stock at
various times during the period from November 1, 1993 through and
including May 24, 1995 (the "Class Period"), beginning with the
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purchase of 2,000 shares on November 1, 1993 and ending with the
purchase of 10,000 shares on October 18, 1994. As a result of the
fraud alleged herein, plaintiff Levine purchased Malvy stock at
prices that were artificially inflated and he thereby sustained
substantial damages.
9. Defendant Malvy, now known as Metal Recovery
Technologies, Inc., is a corporation organized under the laws of
the State of Delaware with its principal executive offices
presently located in East Chicago, Indiana. Over the last five
years, the Company has engaged in a number of businesses, none of
them profitably.
10. Defendant Michael Lucas ("Lucas") became a Director and
Chairman of the Board of Malvy on or about October 20, 1994 and
continued to hold those positions through the end of the Class
Period. Prior to October 20, 1994, defendant Lucas did not
formally hold a position with the Company, but at all material
times he had the ability to and did in fact significantly influence
the Company's affairs.
11. Defendant Jack Alexander is a Fort Smith, Arkansas based
promoter who owned a controlling interest in Malvy (then known as
Sphinx) until April 1993. Thereafter, he continued to control Malvy
through his beneficial ownership of 100% of the Company's Series A
Preferred Stock, which gave him the power to elect a majority of
the Company's Board of Directors. Two members of that Board, David
Hoyle and Tony Viele, were his associates and nominees.
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12. Defendant Michel Rabhi, with defendant Lucas, owned a

controlling block of Malvy's common stock through their ownership
and control of Vaughan Investments. Although Rabhi never served as
an officer or director of Malvy, he and defendant Lucas had the
ability to and in fact controlled the Company's affairs. At all
relevant times following April 1993, a majority of Malvy's Board of
directors, as well as its executive officers, were appointed by and
served at the behest of defendants Lucas and Rabhi.
13. Each of the foregoing individual defendants, by reason of
their management and board positions and ownership of stock, were
"controlling" persons of Malvy within the meaning of Section 20 of
the Exchange Act and had the power and influence to control Malvy
and exercised same to cause Malvy to engage in the acts complained
of herein.
14. Each of the foregoing individual defendants, because of
their respective positions, had access to adverse non-public
information about the business and finances and the future business
prospects of Malvy and acted to conceal the same in violation of
their statutory and common law duties, as particularized below.
15. Defendant Gary Salter ("Salter") was a stock promoter who
worked through a Boca Raton, Florida company called Corporate Asset
Management, Inc. ("CAM"). In or about March 1993, defendant Salter
conspired with defendants Lucas and Rabhi to manipulate and inflate
the price of Malvy stock by means of false and misleading public
statements and also bribes to stock traders and brokers.
16. Defendant SGA Goldstar Research, Inc. ("Goldstar")
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publishes a Nashville, Tennessee based stock newsletter service
called "SGA Goldstar Whisper Stocks." Goldstar's principals
conspired with defendant Salter to fraudulently promote Malvy's
stock and were paid for doing so.
17. Defendant Barron Chase Securities, Inc., is a Boca Raton,
Florida stock brokerage firm that made a market in Malvy stock. At
least one of the firm's traders, Larry Turrell, and a number of its
brokers, including David W. D'Andrea, Joseph Micelli, Jr. and
Nicolas J. Giandomenico, were bribed by defendant Salter to
manipulate the market for Malvy's stock.
18. Defendant Euro-Atlantic Securities, Inc. is a Boca Raton
based stock brokerage firm that made a market in Malvy stock. A
number of the firm's brokers, including Simon D. Baier, and one of
its traders were bribed by defendant Salter to manipulate the
market for Malvy's stock.
19. Defendant La Jolla Capital Corp. ("LJCC") is a San Diego
based investment firm that made a market in Malvy stock. A number
of the firm's brokers were bribed by defendant Salter to manipulate
the market for Malvy's stock.
20. Defendant Cohig and Associates ("Cohig") is a Chicago
based brokerage firm. At least one of Cohig's brokers, Donald
Henderson, was bribed by defendant Salter to manipulate the price
of Malvy's stock.
21. Defendant Gruntal and Company, Inc. ("Gruntal") is a New
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York City based brokerage firm. At least one of Gruntal's brokers,
Tom Brozel, was bribed by defendant Salter to manipulate the price

of Malvy's stock.
22. Defendants Gary Salter, Goldstar, Barron Chase, Euro-
Atlantic, LJCC, Cohig and Gruntal are sued individually and as co-
conspirators, and the liability of each arises from the fact that
each conspired to and engaged in all or part of the unlawful acts,
plans, schemes or transactions to defraud alleged herein.
23. The acts in furtherance of the conspiracy by
representatives of defendants Goldstar, Barron Chase, Euro-
Atlantic, LJCC, Cohig and Gruntal were all ones which those
representatives had the actual and/or apparent authority to
perform, were within the scope of their employment, were of the
kind they were authorized to perform, and were actuated at least in
part by a desire to serve their employers, and therefor the entity
defendants are liable for their acts pursuant to the doctrine of
respondent superior.
24. Defendants Goldstar, Barron Chase, Euro-Atlantic, LJCC,
Cohig and Gruntal were in a position to control the fraudulent
conduct in question, but failed to do so.
CLASS ACTION ALLEGATIONS
25. This action is brought as a class action under Rules
23(a) and 23(b)(3) of the Federal Rules of Civil Procedure.
26. The Class is defined as and consists of all persons or
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entities who purchased the common stock of Malvy on the open market
between November 1, 1993 and May 24, 1995, inclusive ("the Class").

The Class is specifically defined to exclude defendants, their
affiliates, members of the families of the individual defendants,
any entity in which any of the defendants has a controlling
interest, and the legal representatives, heirs, successors or
assigns of any of the foregoing.
27. In excess of fifty million shares of Malvy were traded
between November 1, 1993 and May 24, 1995 ("the Class Period").
Upon information and belief, plaintiff alleges that there are in
excess of 1,000 geographically dispersed members of the Class.
Thus, the Class is so numerous that joinder of all of its members
would be impracticable.
28. Plaintiff is a member of the Class, has sustained
damages, is committed to pursuing this action, and has retained
competent counsel experienced in litigation of this nature.
Plaintiff is an adequate representative of the Class in that he has
the same interests as all of the members of the Class, and he will
fairly and adequately protect the interests of the Class.
29. The claims asserted on behalf of plaintiff are typical of
those asserted on behalf of the Class.
30. There are questions of law and fact common to the Class,
including the following:
(a) whether the defendants herein made misleading
statements and omissions of fact regarding Malvy's business,
finances and prospects during the Class Period;
were material;
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(b) whether the defendants' misstatements and omissions

Malvy's stock;
(c) whether defendants manipulated the market for
(d) whether defendants acted with scienter;
(e) whether defendants' acts had the purpose and effect
of artificially inflating the market price of Malvy stock
throughout the Class Period;
(f) whether defendants, in order to effectuate and in
connection with such course of conduct, engaged in acts or conduct
in violation of Sections 9, 10(b) and/or 20 of the Exchange Act;
and
claims.
(g) the measure of damages applicable to plaintiff's
31. The aforesaid questions of fact and law are common to the
Class and predominate over questions affecting only individual
members. A class action is superior to other available methods for
the fair and efficient adjudication of this controversy.
32. The likelihood of members of the Class prosecuting
separate individual actions is remote due to the relatively small
losses suffered by each Class member as compared to the losses
suffered by the Class as a whole and compared to the burden and
expense of prosecuting litigation of this nature and magnitude.
Plaintiff anticipates no difficulty in the management of this case.
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OPERATIVE FACTS
33. Malvy was incorporated in Delaware as Sphinx Mining Inc.
on May 4, 1990. The Company changed its name to Sphinx Natural

Resources, Inc. on June 28, 1991 and changed its name to Malvy on
June 14, 1993. It adopted its present name, MRTI, on June 30,
1995.
34. Until mid-1993, the Company, then known as Sphinx Natural
Resources, Inc., was engaged primarily in the businesses of mining
and developing precious metals in Alaska, the production of oil and
gas in Oklahoma and New Mexico, and the transmission of gas through
a pipeline in Oklahoma. Those businesses were not profitable. The
Company was controlled at that time by defendant Alexander, who
served as its Chairman and Chief Executive Officer.
35. In or about early 1993, defendants Lucas and Rabhi
entered into a conspiracy with defendant Alexander (collectively,
Lucas, Rabhi, and Alexander are referred to as "the insider
defendants") to take control of Malvy (then known as Sphinx),
promote the price of the stock, and swindle unsuspecting investors.
Their scheme ultimately defrauded investors of many millions of
dollars, much of which lined the insider defendants' pockets and
those of their co-conspirators.
36. In furtherance of their conspiracy, in or about April,
1993, defendant Alexander sold 790,000 shares of Malvy common stock
to Vaughan Investments, a British company controlled by defendants
Lucas and Rabhi. At or about that time, defendant Alexander
resigned his positions with the Company, and defendants Lucas and
Rabhi, with Alexander's consent, appointed Stephen Smith, William
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Greenwood, and Roy Pearce as their nominees to the Company's Board.
37. Although Alexander resigned his positions with the

Company, two of his nominees, Tony Viele and David Hoyle, remained
as officers of the Company and on Malvy's Board. Moreover,
defendant Alexander retained beneficial ownership of 100% of the
Company's Series A Preferred stock, which entitled him to elect a
majority of the Company's Board. Alexander thereby retained
control of the Company.
38. In or about April 1993, the insider defendants caused the
Company to issue 800,000 shares of unregistered stock to certain
"offshore entities" at the price of $1.00 per share. Most, if not
all, of that stock was purchased by affiliates of defendants Lucas
and Rabhi.
39. In furtherance of their scheme, the insider defendants
caused the Company to enter into an agreement to acquire control of
Malvy Technology S.A. ("Malvy France"), a French corporation
engaged in the development of an anti-theft device for the
automotive industry (hereinafter the "Malvy Device" or "the
Device"). In June 1993, the Company changed its name to Malvy
Technologies, Inc. and announced that it was refocusing its
operations on the production and sale of the Malvy Device.
40. On or about July 13, 1993, Malvy announced that it had
agreed to acquire 100% of Malvy France for some $32.5 million from
Bondlumi Investments Ltd., an entity with legal situs in the British
Virgin Islands. A report in the July 14, 1993 Daily Oklahoman
11
stated that the Company intended to finance the purchase in stages
by placing 16.25 million shares of stock with overseas investors

over a six-month period. The article further reported that the
Company stated that the Malvy Device already had been recommended by
one French insurer to policy holders, that production of the device
in France could begin as early as September, and that Malvy was
talking to General Motors and other car makers about installing the
device during the automobile production process.
41. Defendants Lucas and Rabhi failed to disclose the facts
that Bondlumi was controlled by them or that Bondlumi had acquired
the stock of Malvy France for a tiny fraction of the $32.5 million
price paid by Malvy for that stock. In fact, Malvy's acquisition
of Malvy France from Bondlumi was a scheme through which Lucas and
Rabhi enriched themselves at the expense of the Company and its
investors.
42. Malvy then proceeded to sell some 16.25 million shares of
its stock at $2 per share to finance its acquisition of Malvy
France. The unregistered shares were sold to "overseas entities"
pursuant to Regulation S through an underwriter called Sinenvest
Limited Corp. ("Sinenvest"), a company with legal situs in Panama
and offices on the Isle of Man. In fact, Sinenvest was controlled
by defendants Lucas and Rabhi. Moreover, most of the 16.25 million
shares "sold" through Sinenvest were "purchased" by affiliates of
Lucas and Rabhi.
43. In or about March 1993, defendants Lucas and Rabhi
entered into a conspiracy with defendant Gary Salter, a Boca Raton,
12
Florida based stock promoter, who operated through a company called
Corporate Asset Management, Inc. ("CAM"), to manipulate and inflate

the price of Malvy's stock. In the fall of 1993, CAM began issuing
press releases and investment reports, described below, touting
Malvy to potential investors.
44. In addition, in furtherance of his conspiracy with Lucas
and Rabhi, Salter bribed stock brokers and traders at various
brokerage firms to stimulate trading activity in and inflate the
price of Malvy's stock. Cash payoffs were given to brokers,
typically in the amount of 15% of any sales the brokers made of
Malvy stock. The brokerage firms involved included defendants
Barron Chase, LJCC, Euro-Atlantic, and Gruntal. Defendants also
began a campaign of touting Malvy's prospects in order to drive up
the price of its stock.
45. On or about August 15, 1993, the London Sunday Telegraph
reported as follows:
A month ago, when just back from Cannes, I brought you
news that all France was talking about a revolutionary
anti-car theft device invented by former Citroen engineer
Michael Malvy.
At the time, Malvy Technology's Nasdaq-listed shares
stood at $2. Since then, news of this invention, which
disengages steering wheels by employing a specially-coded
ignition key, has hit the United States. It has
generated so much interest that Malvy is the largest
traded stock on Nasdaq. The shares are now $5.
46. Beginning at the latest with an October 7, 1993 CAM press
release, which is described in paragraph 47, below, and continuing
until at least May 24, 1995, the insider defendants knowingly
issued and/or caused Malvy to issue a series of highly favorable
public statements which touted Malvy and its stock in, inter alia,
13

press releases, SEC filings and shareholder reports. Such public
statements by the insider defendants were misleading by virtue of
their failure to include material facts relating to the finances,
management, and business prospects of Malvy, or by their failure to
correct earlier favorable statements that had become misleading by
virtue of later negative developments. Included among defendants'
false and misleading favorable statements concerning Malvy were
statements touting the existing state of development and the
current commercial prospects of the Malvy Device. The favorable
statements disseminated by the defendants consistently conveyed the
false and misleading impression that Malvy had the rights to a
workable technology which would be commercially viable in the near
term, and that there would likely be rapid and substantial near-
term growth in the Company's revenues and earnings. In fact,
defendants' statements were false and misleading and were part of a
course of business and scheme to defraud, which operated as a fraud
and deceit upon the investing public because of the misstatements
in and omissions from those documents detailed below.
47. Defendants initiated their fraudulent touting of the
stock by causing defendant Salter, through CAM, to issue a grossly
misleading piece on Malvy on or about October 7, 1993. The release
stated, inter alia, that Malvy "has created a 'better mousetrap,'
and the world is beating a path to it's [sic] door;" that the use
for the Malvy Device "doesn't stop at just vehicles, it also
applies to industrial valves, pipelines, buses, heavy equipment
(such as bulldozers, tractors, earth-movers, etc.), as well as
14

oats;" that the Company scheduled the introduction of the Malvy
Device in the United States for Spring 1994 and estimated that it
would generate $100,000,000 in sales on 200,000 locks at $500.00
per lock in the first full year of U.S. operations (1995); and that
such projection was "indeed conservative" because of the Malvy
Device's "modest price," the high auto theft rates, and the number
of new and expensive vehicles. The release also stated that in
France the Company had a "projected production rate of 100,000
locks annually, generating $50,000,000, and a gross profit of
$20,000,000 in the second year." It further stated that the Malvy
Device had recently been subjected to "a rigorous 'real world'
laboratory test" and that the Malvy Device permitted "Malvy
Technology engineers" to observe that the Malvy Device operated
"flawlessly" under driving conditions that were unusually extreme
and arduous. In fact, as subsequently revealed, the original
equipment market (OEM) device could not even be produced and had not
reached a stage of production where estimates of its sales had any
reasonable historical or other basis.
48. In furtherance of their scheme, in or about the fall of
1993, the insider defendants prepared and distributed to the
investing public a so-called Focus Report on Malvy in conjunction
with CAM. The Focus Report stated that the French insurance
industry had been conducting "extensive tests" on the device and
"will shortly recommend it to policy holders" and that the Company
had reached agreement with French vehicle giant Peugeot MTC "to
develop the Malvy anti-theft device for use on motorcycles," thus
15

purportedly expanding the Malvy Device's "uses from automobiles,
buses, trucks, boats, planes, industrial valves, and heavy
equipment." The Focus Report stated that this development
strengthened the Company's sales projection of 40,000 units
(yielding gross sales of $20 million and gross profits of $8
million) for the French market in 1994, and further noted that for
its first year in the United States, "Malvy figures it will achieve
a highly conservative 75,000 installations of its anti-theft lock,
which translates into $37,500,000 in sales." The Focus Report
further stated that the Malvy Device could be manufactured for
almost the same price as the Neiman lock generally used by
automobile manufacturers; that it therefore could replace the
Neiman lock in auto production lines for minimal cost; and that
"this development is in progress with a major European luxury
automobile manufacturer."
49. Defendant Lucas, pursuant to the conspiracy described
above, again fraudulently touted the Company by providing a staff
writer at The Daily Oklahoman with Company literature and an
interview with Company President Smith that led to the publication
of an article on Malvy on or about October 14, 1993. The article
stated, inter alia, that Smith said the Malvy lock was "the only
device, mechanical or electrical, which fully protects and prevents
a vehicle from being stolen" and that it would similarly protect
anything with a wheel, including cars, boats, motorcycles and
tractors. The article further stated that the Malvy Device would
start selling in France and Germany in November of 1993, that the
Malvy Device would cost $500 in the United States and about $700 in

Europe, and that Company literature predicted "first-year [1994]
sales of 40,000 units, generating revenue of about $20 million in
Europe alone."
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50. On October 22, 1993, and again on October 25, 1993,
defendant Lucas, pursuant to the conspiracy described above, caused
the stock to be touted through the "SGA Goldstar Whisper Stocks"
newsletter, a widely distributed investment newsletter, which
stated that the Company very conservatively projected 75,000
installations in its first full year of U.S. operations. The later
article stated that the Company "has started up production and
projects to sell approximately 100,000 units in FY 1994."
51. In early November 1993, the Company held a show for
analysts, brokers and others at the Waldorf Astoria in New York,
where it displayed a BMW fitted with the Malvy Device. At the
show, the insider defendants reiterated the projections referenced
above, and continued to tout the Company's and its stock's
prospects.
52. In November 1993, defendant Lucas, pursuant to the
conspiracy described above, also caused an article on the Company
to appear in "Individual Investor." The article stated, inter
alia, that commercial production of the lock would begin in France
that month, that the U.S. introduction would occur at the Detroit
Motor Show in February, and that Peugeot had agreed to buy the
locks for use on its motorcycles. The article quoted Mr. Malvy as
projecting sales of "a minimum of 40,000 units" in the European
accessory market in 1994, creating sales of $20 million. Also in

November 1993, defendant Lucas, pursuant to the conspiracy
described above, caused market analyst Dan Dorfman to tout the
stock on his widely followed television show.
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53. In late 1993, the insider defendants took advantage of
Malvy inflated stock price to dump much of their indirect stock
holdings on the market. Such sales were illegal because the stock
was unregistered and not saleable in the U.S. market. Nonetheless,
the insider defendants sold much of their holdings, thereby reaping
enormous profits from the fraud they had perpetrated.
54. In addition, defendants Lucas and Rabhi "lent" Malvy
money through other affiliates, including Clearwater Enterprises
Limited and Monarch Asset Management Limited. These loans were
repaid with Malvy stock, which defendants Lucas and Rabhi then
caused their affiliates to dump on the market at considerable
profit.
55. An April 1994 news release by the Company announced that
distributors of Caterpillar construction equipment in France
successfully exhibited the Malvy Device on their best-selling
Backhoe loader and would offer it as an option on that equipment.
56. On or about April 21, 1994, the Company filed its Form
10-K with the SEC for the year ended December 31, 1993. The Form
10-K stated, inter alia, that the Malvy Device was being
developed for three markets -- the auto accessory and replacement
markets, as well as the original equipment market. The Form 10-K
further stated that it was anticipated that the cost of manufacture
for the original equipment market would be "comparable with

existing steering wheel locks." The Form 10-K added that
manufacturing and fabrication problems were being worked out and
18
improvements were being made to the production process. It stated
that a production rate of 2,000 locks per month was anticipated
during the second half of 1994 and that shipments to distributors
were anticipated to commence in August. The Form 10-K additionally
stated that "the Device is designed to work on most automobiles
sold in the world, and can also be adapted to motorcycles, trucks
and heavy construction equipment. . . ."
57. In or about August 1994, Malvy distributed its 1993
Annual Report to Shareholders, which continued to tout the
Company's prospects. The Letter to Shareholders noted that the
Company had experienced some delays associated with the manufacture
of the after-market device, but attributed those delays to "changes
required to the manufacturing process in order to increase the
number of units produced and our insistence on first class quality
and reliability. . . . Despite the initial production problems we
are targeting production of 15,000 units in 1994 and 100,000 units
for 1995." The Letter further stated: "It is anticipated that the
original equipment version of the 'Malvy' will not be available
until 1996, however, the Company is working very closely with a
number of vehicle manufacturers, both in the USA and Europe." The
Letter concluded as follows: "The reception given to the Malvy
products has been very encouraging and I am confident that 1994
will see your company well on the road to an exciting and

profitable future."
58. On October 17, 1994, the Company announced that it had
successfully achieved its first two weeks' production targets and
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that "[p]roduction is continuing satisfactorily and the Malvy Anti-
Theft device will be launched at the British Motor Show commencing
on the 18th of October."
59. On October 20, 1994, the Company announced that Michael
Lucas had been appointed a director and chairman of the board and
that Smith had resigned from all of his posts with the company.
Lucas was quoted as saying that production of the Device was
"proceeding satisfactorily and that the interest shown in the
product at the British Motor Show has been very encouraging."
60. On November 2, 1994, the Company announced that it had
exceeded its October production target and that it had successfully
completed a financing to raise $2 million for additional working
capital.
61. On December 8, 1994, the Company announced that it had in
fact raised $2.5 million for working capital and that the launch of
the Malvy device in the United Kingdom had successfully commenced,
with interest being shown in numerous other countries.
62. On January 26, 1995, the Company issued a press release,
which quoted defendant Lucas as stating that "dealer and public
demand for the Malvy product is excellent. Malvy dealers are
currently being appointed in England and France. . . . Sales
targets are being met. It [the Device] is budgeted to move to a
profitable sales level during the third quarter of 1995. . . . OEM

(original equipment manufacture) progress is very encouraging and
our engineers believe that the Malvy [Device] will be perfected for
volume manufacture during 1995. . . . We are at last selling and
delivering the product to an enthusiastic market and we have a
realistic objective of being profitable by the third quarter of
1995."
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63. On February 23, 1995, the Company announced that it had
approved a 20-1 reverse split of its common shares because its
large capitalization and low share price "were an impediment to
investor interest."
64. On April 27, 1995, Malvy announced its acquisition of
Metal Recovery Industries (International) Inc. for $12 million
cash, the issuance of 14 million restricted shares and a
conditional deferred payment of $25 million. Metal Recovery
purportedly owned technology to "upgrade galvanized steel scrap
into clean scrap for steel making."
65. On or about May 24, 1995, Malvy filed its Annual Report
on Form 10-K with the SEC for the year ended December 31, 1994. It
was signed by defendant Lucas. The Form 10-K disclosed for the
first time the following facts: (1) during 1994 the Company's
French subsidiary had manufactured only approximately 3,000 after-
market locks; (2) sales of the Device did not commence until
December 1994; (3) demand for the Device was mixed, "with some
indications that the initial retail selling price, approaching
$1,000, was too high"; (4) "the major problem encountered was an

insufficient variety of hubs being available to enable the Malvy to
be fitted to a broad enough range of vehicles," as a result of
which sales were "limited to a small selection of vehicles." The
Form 10-K further disclosed that the "Malvy Device for the Original
Equipment Manufacturer is still in the design and development
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stage. Early prototypes have been found to be unsatisfactory after
extensive testing. . . ."
66. Then, on June 30, 1995 Malvy announced that it had
changed its name to Metal Recovery Technologies, Inc. and that it
had changed its business emphasis to the de-zincing of scrap steel.
It appears from that announcement and the Company's SEC filings
that the Company has substantially curtailed the Malvy operations.
The Company's stock price declined substantially as a result of the
disclosures in paragraphs 65-66.
COUNT I
PURSUANT TO SECTION 10(b)
OF THE EXCHANGE ACT
67. Plaintiff incorporates by reference the allegations of
paragraphs 1 through 66 of this Complaint as if set forth in full.
68. Throughout the Class Period, in connection with
plaintiff's and the Class' purchases of Malvy common stock,
defendants issued and caused the Company to issue public reports,
releases, and statements that were materially false and misleading
in violation of Section 10(b) of the Exchange Act and Rule 10b-
5(1)-(3) promulgated thereunder. Those reports, releases, and
statements were materially false and misleading for the reasons

specified in paragraph 68, below. In addition, certain statements
by the Company that may have been true when made became misleading
by virtue of the emergence of the facts set forth in paragraph 64,
and each of the defendants breached his duty to correct when the
prior statements became incomplete and misleading in light of those
subsequent events.
22
69. Defendants' statements in paragraphs 47-62, above, were
materially misleading with respect to the Company's business,
finances and prospects in that they misrepresented material facts
and omitted to disclose material facts necessary in order to make
the statements made not misleading. Defendants omitted to disclose
at least the following material facts:
(a) that the Malvy Device would only work on a small
selection of vehicles because there was an insufficient variety of
hubs available to fit the Device to most vehicles;
(b) that the original equipment device was still in the
design stage, had not been shown to be technically feasible, and,
indeed, that early prototypes were found to be unsatisfactory after
extensive testing;
(c) that the original equipment device could not be
installed for anything close to the modest price of the competing
Neiman lock, which was in general use in the automotive industry;
(d) that the Company did not have a commitment from
Peugeot to put the device on its motorcycles;
(e) that the Company did not have a commitment from a

major European luxury car manufacturer to install the device as
original equipment; and
(f) that, at its projected $1,000 sales price, the
device was not commercially viable for the aftermarket/accessory
markets, even if it were available for a broad range of cars.
23
70. In addition, Defendant Lucas, pursuant to the conspiracy
described above, made projections of Malvy's sales that totally
lacked any reasonable basis, as set forth above.
71. The statutory safe harbor provided for forward-looking
statements under certain circumstances does not apply to any of the
allegedly false and misleading statements pleaded in this
Complaint; those statements were not identified as "forward-looking
statements" when made. Nor was it stated that actual results
"could differ materially from those projected." Nor did meaningful
cautionary statements identifying important factors that could
cause actual results to differ materially from those set forth in
the statements at issue accompany those statements. Further, the
statements were made by Defendant Lucas with knowledge that they
were misleading.
72. Because of their positions with Malvy, defendants Malvy,
Alexander, Lucas and Rabhi had access to and knowledge of the above
facts and other undisclosed information of a material nature
concerning the business, finances and future business prospects of
Malvy and they acted with knowledge or with reckless disregard of
the misleading nature of their statements and omissions regarding
the Company.

73. Plaintiffs and the Class purchased Malvy stock in direct
or indirect reliance upon defendants' statements and in reliance
upon the integrity of the market for Malvy securities.
74. Plaintiff will rely, in part, upon the presumption of
reliance established by the fraud-on-the-market doctrine in that:
24
(a) defendants made public misrepresentations or failed
to disclose facts in public documents issued during the Class
Period;
material;
(b) the omissions and misrepresentations of fact were
(c) Malvy met the requirements for listing, and was
listed on the NASDAQ National Market System, a highly efficient and
automated market;
(d) as a regulated issuer, Malvy filed periodic public
reports with the SEC and the NASDAQ;
(e) Malvy's trading volume was substantial, averaging
many thousands of shares per day during the Class Period,
reflecting numerous trades each day;
(f) the misrepresentations and omissions alleged would
induce a reasonable investor to misjudge the value of the common
stock of Malvy; and
(g) plaintiff and the members of the Class purchased or
otherwise acquired their Malvy stock between the time defendants
failed to disclose or misrepresented material facts and the time
the true facts were disclosed, without knowledge of the omitted or

misrepresented facts.
75. Defendants' course of conduct, as described above,
constituted a device, scheme, or artifice to defraud and operated
as a fraud and deceit upon plaintiff and the Class.
76. By reason of defendants' statements and acts, plaintiff
and each member of the Class have been injured in connection with
25
their purchases of Malvy stock in that they purchased that stock at
prices that were artificially inflated by defendants' misleading
statements.
77. As to all defendants other than Malvy and Lucas,
plaintiff instituted this action within three years of the
transactions at issue and within one year of the time he was placed
on notice of defendants' fraud. As to defendants Malvy and Lucas,
plaintiffs claims have been tolled by filing of a earlier suit.
COUNT II
PURSUANT TO SECTION 9
OF THE EXCHANGE ACT
78. Plaintiff incorporates by reference the allegations of
paragraphs 1 through 66 of this Complaint as if set forth in full.
79. Defendants, in concert with others, effected or caused to
be effected a series of transactions in the common stock of Malvy,
which created actual and apparent trading activity in such stock
and raised the price such stock, for the purpose of inducing the
purchase of the stock by others.
80. For the purpose of inducing purchases of Malvy stock by

others, defendants made statements that were false and misleading
with respect to material matters, as more fully stated above.
81. Defendants knew of the falsity of their statements
regarding Malvy and acted willfully at all times relevant hereto.
82. Plaintiffs purchases of Malvy were at prices that were
affected by defendants' manipulative actions and plaintiff and
members of the Class were damaged by defendants' acts.
26
COUNT III
PURSUANT TO SECTION 20
OF THE EXCHANGE ACT
83. Plaintiff incorporates by reference the allegations of
paragraphs 1 through 66 of this Complaint as if set forth in full.
84. Defendants Alexander, Lucas, and Rabhi were, by reason of
their stock ownership, management positions and/or membership on
the Company's Board of Directors during the Class Period,
controlling persons of Malvy within the meaning of Section 20 of
the Exchange Act and had the power and influence, and exercised the
same, to cause Malvy to engage in the wrongful practices complained
of herein.
85. Defendants Alexander, Lucas, and Rabhi are therefore
liable to plaintiff and the Class pursuant to Section 20 of the
Exchange Act.
JURY DEMAND
Plaintiff demands trial by jury on all claims.

PRAYER FOR RELIEF
WHEREFORE, plaintiff demands judgment against the defendants
and in favor of plaintiff and each member of the Class as follows:
27
(a) That this Court declare this action to be a class action
pursuant to Rules 23(a) and 23(b)(3) of the Federal Rules of Civil
Procedure;
(b) That this Court order rescission of plaintiff's and the
Class' investments and/or award plaintiff and the Class the full
compensatory damages, including pre-judgment interest, that they
have sustained;
(c) That this Court award plaintiff reasonable counsel and
expert fees, as well as the costs and disbursements incident to the
prosecution of this action; and
(d) That this Court award such other and further relief as
may be just and proper.
Dated: October 31, 1996
OF COUNSEL:
LAW OFFICES OF DAVID B. ZLOTNICK
David B. Zlotnick
1039 North Sixth Avenue
Tucson, Arizona 85705
ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A.
/s/
By: _________________________________________
Norman M. Monhait (DSBA ID No. 1040)
Suite 1401, Mellon Bank Center
P.O. Box 1070
Wilmington, DE 19899-1070
(302) 656-4433
Attorneys for Plaintiffs

(520) 798-3255
LAW OFFICES OF DONALD B. LEWIS
Donald B. Lewis
5 Cynwyd Road
Bala Cynwyd, PA 19004
(610) 668-0331
28
CERTIFICATION OF GERALD LEVINE
PURSUANT TO FEDERAL SECURITIES LAWS
Gerald Levine ("Plaintiff") declares, as to the claims
asserted under the federal securities laws, that:
1. Plaintiff has reviewed the Complaint and authorized
its filing.
2. Plaintiff did not purchase the security that is the
subject of this action at the direction of plaintiff's counsel or
in order to participate in this private action.
3. Plaintiff is willing to serve as a representative
party on behalf of the class, including providing testimony at
deposition and trial, if necessary.
4. Plaintiff had the following transactions in the
common stock of Malvy during the Class Period alleged in the
Complaint:
(a) on November 1, 1993 plaintiff purchased 2,000
shares for $11,128.75;
(b) on December 30, 1993 plaintiff purchased 2,000
shares for $7,628.75;
(c) on April 5, 1994 plaintiff purchased 1,000
shares for $3,083.75;
(d) on May 13, 1994 plaintiff purchased 1,000

shares for $2,739.75;
(e) on October 18, 1994 plaintiff purchased 10,000
shares for $6,141.25;
5. During the three years prior to the date of this
Certificate, Plaintiff has not sought to serve or served as a
representative party for a class in any action filed under the
federal securities laws other than the related matter of Levine vs.
Metal Recovery, et al. Number 95-960JJF (D. Del.)
6. Plaintiff will not accept any payment for serving as a
representative party on behalf of the class beyond the Plaintiff's
pro rata share of any recovery, except such reasonable costs and
expenses (including lost wages) directly relating to the
representation of the class as ordered or approved by the court.
I declare under penalty of perjury that the foregoing is true
and correct. Executed this day of October, 1996 at
Brooklyn, New York.
3 Aug 1997
/s/
________________________
Gerald Levine