Rigrodsky & Long, P.A. Announces A Securities Fraud Class Action Lawsuit Has Been Filed Against Commonwealth Bankshares, Inc.

WILMINGTON, Del.--(BUSINESS WIRE)--Rigrodsky & Long, P.A. announces that a complaint has been filed in the United States District Court for the Eastern District of Virginia on behalf of all persons or entities that purchased the common stock of Commonwealth Bankshares, Inc. (“Commonwealth” or the “Company”) (OTC GREY: CWBS) between May 9, 2008 and September 23, 2011, inclusive (the “Class Period”), alleging violations of the Securities Exchange Act of 1934 against the Company and certain of its officers (the “Complaint”).

“for Bank [I]nsiders to fraudulently conceal the Bank’s true financial condition in many ways, including overdrawing demand deposit accounts to make loan payments, extending new loans or additional principal on existing loans to cover payment shortfalls, and funneling Bank-owned property to certain troubled borrowers, to the detriment of the Bank.”

If you purchased shares of Commonwealth during the Class Period, or purchased shares prior to the Class Period and still hold Commonwealth, and wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact Timothy J. MacFall, Esquire or Peter Allocco of Rigrodsky & Long, P.A., 825 East Gate Boulevard, Suite 300, Garden City, NY at [phone], by e-mail to [e-mail], or at: http://www.rigrodskylong.com/investigations/commonwealth-bankshares-inc-cwbs.

Commonwealth is a bank holding company that primarily conducted its business through the Bank of Commonwealth operating subsidiary (the “Bank”). The Complaint alleges that throughout the Class Period, defendants made materially false and misleading statements, and omitted materially adverse facts, about the Company’s business, operations and prospects. Specifically, the Complaint alleges that defendants concealed the Company’s and Bank’s true financial condition in a number of ways, including by, among other things, fraudulently underreporting the Company’s allowance for loan and lease losses (“ALLL”) and provision for loan and lease losses (the “Provision”), in an effort to overstate the quality and nature of the Bank’s loan portfolio. As a result of defendants’ false and misleading statements, the Company’s stock traded at artificially inflated prices during the Class Period.

According to the Complaint, throughout the Class Period, the truth of the Company’s true financial condition emerged through partial disclosures. Although the Company announced increases in ALLL and the Provision over time through partial disclosures, it fraudulently attempted to do so with a “soft landing” by failing to increase ALLL and the Provision to the full extent required, and at the same time issuing false reassurances to investors. Finally on September 23, 2011, the Virginia State Corporation Commission Bureau of Financial Institutions closed the Bank and appointed the FDIC as receiver. During the Class Period, shares in Commonwealth plummeted over 99% from a close of $16.39 on May 9, 2008 to $0.11 per share on September 23, 2011.

On December 20, 2012, an indictment was unsealed that charged the individual defendants with conspiracy to commit bank fraud and related crimes. According to the indictment, the purpose of the bank fraud conspiracy was “for Bank [I]nsiders to fraudulently conceal the Bank’s true financial condition in many ways, including overdrawing demand deposit accounts to make loan payments, extending new loans or additional principal on existing loans to cover payment shortfalls, and funneling Bank-owned property to certain troubled borrowers, to the detriment of the Bank.” Subsequently, on January 13, 2013, the United States Securities and Exchange Commission (“SEC”) filed a civil enforcement action against certain of the individual defendants for fraudulently misstating the Company’s ALLL in filings made with the SEC between November 2008 and August 2010.

If you wish to serve as lead plaintiff, you must move the Court no later than March 25, 2013. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Any member of the proposed 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.

While Rigrodsky & Long, P.A. did not file the Complaint in this matter, the firm, with offices in Wilmington, Delaware and Garden City, New York, regularly litigates securities class, derivative and direct actions, shareholder rights litigation and corporate governance litigation, including claims for breach of fiduciary duty and proxy violations in the Delaware Court of Chancery and in state and federal courts throughout the United States.

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