The 2006 suit, which was tentatively settled for $US20 million, also alleges that company officers earned more than $US18 million in insider trading even as the company’s stock plummeted.

“As a result of the disclosures of the Company’s true financial condition, its stock ratings have been slashed,” the suit, initially filed by John Fenninger who purchased Take-Two common stock, states. “Moreover, the Company is exposed to class action lawsuits and regulatory enforcement actions brought by the Attorney Generals of several states. While the public investors lost over one billion dollars in market capitalization, the Individual Defendants pocketed over $US18 million in insider trading proceeds.”

Hot Coffee, a bit of hidden sex found behind the apartment doors of the game, was discovered in July 2005 after a modder released a hack for the game that unlocked the previously hidden content.

Earlier today, Take-Two announced that they had reached a settlement in the case, with the company and its insurer paying out more than $US20 million.

The nut of the allegations contained in the 34-page suit, is that Take-Two was spending more than it was bringing in and couldn’t survive until the next Grand Theft Auto. So, the suit alleges, the company pushed Grand Theft Auto: San Andreas out the door knowing that there was pornographic material in the game because delays would have cost the company too much. If the material was known to be in the, the suit continues, major retailers wouldn’t have sold it.

The outcome, according to the suit, was inflated stock prices based on bad or uninformed information from the company and a plunge in stock values when the truth came out.

The suit also alleges that Take-Two lied about the included sex scenes, nicknamed Hot Coffee, when they first came to light, with the company the scenes were “the work of a determined group of hackers who have gone to significant trouble to alter scenes.’”

The suit outlines how the value of Take-Two’s stock first rose significantly with the release of the game and then began to plummet as the allegations and suits came to light. The suit connects the two, alleging that the company lied during financial statements to try and cover themselves and later key executives profited from inside information while selling company stock.

It’s an interesting read and worth some time if you’ve been following the Hot Coffee allegations and are interested in a document that ties stock values and company statements to the life-cycle of the controversial sex scene in San Andreas. But do keep in mind that just because the suit was settled, that doesn’t mean the contents have been proven or disproven.

Class Action

The class action will be dismissed in exchange for an aggregate payment of $US20,115,000 into a settlement fund for the benefit of class members, of which $US15,200,000 will be paid by Take-Two’s insurance carriers, and $US4,915,000 will be paid by Take-Two.

“We are pleased to have reached this settlement, which represents another important step forward for the Company,” said Strauss Zelnick, Chairman of Take-Two.

Hey kids! It’s a downloadable GTA game! Your parents won’t even have to go into the store to show ID! Oh who am I kidding, you’ve all already played it.

Grand Theft Auto: San Andreas™ [Xbox Originals - Thanks Mustapha!]

You may recall that in November of last year, U.S. District Court for the Southern District of New York granted preliminary approval of a settlement of several class action suits against Take-Two. TTWO expected then to pay out up to $US 2.75 million for the settlement, pending Court approval.

Turns out that few actually filed claims. On July 31, the Court said that “the plaintiffs could no longer meet their burden of showing that the case could proceed on the proposed class basis” according to an SEC filing.

Take-Two opts not to weigh in on whether an appeal is likely in the filing, but when a million bucks is offered and folks don’t bite — only $US 30,000 in claims were filed — we’d have a hard time believing that one is in the cards. The attorneys involved already got their paycheck actually haven’t yet been paid, at least on the plaintiff side. Makes me feel that much better about never completing “The Guide To Spending Your ‘Hot Coffee’ Settlement”.

Update: Ted Frank from Overlawyered wrote in to clear some things up for us. He writes: “The plaintiffs’ attorneys have not gotten their paycheck. My objection was premised on the grounds that the court should not approve a settlement that paid the attorneys so much more than what the class received; when the court rejected the settlement, it meant there was no court approval for a payment to the plaintiffs’ attorneys”.

Take-Two must cover over a million dollars in legal fees and has agreed to a hefty charitable donation as part of the settlement, but they’ll pay out just $AU 31,390 in resolving claims with consumers. The “benefits” to consumers ranged from $AU 5.23 to $AU 36.62, with some claimants getting a decaffeinated copy of San Andreas.

Unsurprisingly, another lawyer has poked his nose into the settlement, claiming that the lawsuit has no merit. That claim is partly based on the fact that so few offended parties wanted to experience the “Hot Coffee” healing power of cash.

Adding weight to the argument that the suit has no merit, is that it appears that some of those deposed were clueless about the game’s content to begin with. Killing? Well known. But stealing? In Grand Theft Auto? Who knew?!

Anyone out there file a claim? We’d like to know!

Hidden Sex Scenes Draw Ho-Hum, Except From Lawyers [New York Times - thanks, Michael!]

The photo here was taken from a poster reader Grant picked up during his time at EB Games. Thanks man!

UPDATE: Here’s the full image for comparison.

* Sorry to Tassie. It’s a great place, lots of trees.Click here for the large version.

We never anticipated how this thing was going to be blown out of proportion by the mainstream media and the politicians…

He continues:

‘m still proud of finding and uncovering the [Hot Coffee] scenes – because of all the work and research it took… When I look back at it, I think [Rockstar] should have reacted differently, but I don’t hold a grudge at all.

Then he added, “So Rockstar, pllleeeeasssee send me a free copy of GTAIV.”

OK, he didn’t actually say that last part.

Hot Coffee Rewind: Famed Dutch Modder Talks to EGM [GamePolitics]

• Grand Theft Auto: San Andreas First Edition Disc – Replacement Disc
• Detailed Store Receipt – Cash payment up to $US 35.00
• General Credit Card Statement or Check – Cash payment up to $US 17.50
• Disc/Purchase Details – Cash payment up to $US 10.00
• No Disc/Purchase Details – Cash payment up to $US 5.00

Gaming Steve noted that the masses are well aware of the settlement opportunities, now that ads are running in magazines like People. Everyone involved has until May 16 to grab their cash. Good luck!

GTA Class Action Settlement [via Gaming Steve]