The Complaint alleges that defendants violated federal securities laws by issuing a series of materially false statements regarding the Company's growth. Specifically, defendants concealed the following: (i) Sunterra's reported expenses were materially understated; (ii) the Company's "record" financial results were the result of defendants' accounting manipulations; (iii) Sunterra's reported net income was grossly inflated; and (iv) as a result, Sunterra's projections for fiscal 2006 were grossly inflated and Sunterra was in technical default on its subordinated note agreement
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