2nd Shareholder Suit Is Filed Against With Design

A second shareholder lawsuit has been filed against With Design in Mind International Inc., a troubled Chatsworth maker of toys and novelty gifts.

The latest complaint, which seeks class-action status, was filed Feb. 17 in federal court in Los Angeles. It alleges violation of federal securities laws, and also names as defendants former executives of With Design, the company’s accountants and the underwriters of its 1991 public stock offering.

The lawsuit stems from alleged embezzlement by With Design’s former chief executive, Steve Zuloff; Barry Benjamin, its former chief financial officer, and Benjamin’s son, David, a former company executive. The three were ousted in June and subsequently settled a complaint brought by the company by agreeing to pay about $1 million, mostly in stock and cash. The former executives did not admit or deny any wrongdoing.

In November, With Design, Zuloff and the Benjamins were slapped with a shareholder lawsuit alleging that the company and former officials issued false and misleading information to artificially inflate With Design’s stock price. With Design’s attorney, Gregory Lindstrom, said he soon expects a court ruling on the company’s motion to dismiss it from the lawsuit.

The second shareholder suit essentially says that the alleged embezzlement should have been revealed in information issued by the company in connection with the 1991 stock sale.

In both complaints, the shareholders are represented by Los Angeles attorney Lionel Glancy. Both seek unspecified damages.

Lindstrom said With Design and its new management would fight the latest complaint. “We’re the victims here,” he said.