Lerach Coughlin Stoia Geller Rudman & Robbins LLP Files Class Action Suit against America Service Group, Inc.

NEW YORK--(BUSINESS WIRE)--April 6, 2006--Lerach Coughlin Stoia Geller Rudman & Robbins LLP ("Lerach Coughlin") (http://www.lerachlaw.com/cases/asg/) today announced that a class action lawsuit has been commenced in the United States District Court for the Middle District of Tennessee on behalf of purchasers of America Service Group, Inc. ("ASG" or the "Company") (NASDAQ:ASGRE) common stock during the period between September 24, 2003 to March 16, 2006 (the "Class Period").

If you wish to serve as lead plaintiff, you must move the Court no later than 60 days from today. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff's counsel, Samuel H. Rudman or David A. Rosenfeld of Lerach Coughlin at 800/449-4900 or 619/231-1058 or via e-mail at [e-mail]. If you are a member of this class, you can view a copy of the complaint as filed or join this class action online at http://www.lerachlaw.com/cases/asg/. Any member of the purported class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member.

The complaint charges ASG and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The Company and its subsidiaries, provide managed healthcare services to correctional facilities in the United States. ASG contracts with state, county, and local governmental agencies to provide healthcare services to inmates of prisons and jails. The Company operates its Correctional Healthcare Services segment through its subsidiary Prison Health Services ("PHS") and its Pharmaceutical Distribution Services segment through its subsidiary Secured Pharmacy Plus ("SPP").

The complaint alleges that, throughout the Class Period, defendants issued numerous positive statements and filed quarterly reports with the SEC which described the Company's increasing financial performance. These statements were materially false and misleading because they failed to disclose and misrepresented the following adverse facts, among others: (a) that ASG was not charging its customers in accordance with applicable contracts; (b) that ASG failed to properly credit customers with discounts, rebates or price savings resulting from purchases from alternative sources; (c) that ASG failed to provide customers with proper credit for the return of pharmaceutical products; (d) that defendants inappropriately established and used reserves during various periods over the last five years to more closely match SPP reported earnings to its budgeted results, among other things; (e) that the Company lacked adequate internal controls and was therefore unable to ascertain its true financial condition; and (f) that as a result of the foregoing, the values of the Company's net income, retained earnings and reserves were materially overstated at all relevant times.

According the complaint, on March 15, 2006, after the markets closed, ASG shocked the market when it issued a press release announcing the findings of its internal investigation into SPP. As a result of the findings of the investigation, the Company has announced that it will restate earnings for the years ended December 31, 2001 through December 31, 2004 and for the first six months of 2005 and issue refunds of $3.6 million, plus interest, to customers for instances in which it failed to credit them with discounts, rebates or price savings to which they were entitled, among other things.

In response to this announcement, the price of ASG common stock fell $5.65 per share, or almost 29%, to close at $13.95 per share, on unusually heavy trading volume.

Plaintiff seeks to recover damages on behalf of all purchasers of ASG common stock during the Class Period (the "Class"). The plaintiff is represented by Lerach Coughlin, which has expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud.

Lerach Coughlin, a 160-lawyer firm with offices in San Diego, San Francisco, Los Angeles, New York, Boca Raton, Washington, D.C., Houston, Philadelphia and Seattle, is active in major litigations pending in federal and state courts throughout the United States and has taken a leading role in many important actions on behalf of defrauded investors, consumers, and companies, as well as victims of human rights violations. Lerach Coughlin lawyers have been responsible for more than $20 billion in aggregate recoveries. The Lerach Coughlin Web site (http://www.lerachlaw.com) has more information about the firm.