SHERWOOD, Ark., July 30 /PRNewswire-FirstCall/ -- Pet Quarters Inc. (OTC: PDEN.PK), formerly a mail-order catalog and internet based pet supply company based in Lonoke, Arkansas, announced today that it filed a complaint against Thomas Badian, Rhino Advisors, Inc., Ladenburg Thalmann & Co., Inc. and others in the United States District Court for the Eastern District of Arkansas, Western Division. The complaint alleges a scheme by the defendants to defraud PQI and its investors by posing as investors and acquiring convertible securities, common stock and warrants with the intention of manipulating downward the price of the stock; a practice commonly referred to as death spiral finance which violates both federal and state securities laws. PQI is seeking over $400,000,000 in damages from this action and is represented by the law firms of O'Quinn, Laminack & Pirtle, Christian Smith & Jewell, and Heard, Robins, Cloud, Lubel & Greenwood, LLP, all of Houston, Texas.

Attorney Sean Greenwood said: "As described in the complaint, death spiral practitioners appear to be bona fide investors who carefully select companies whose shares can be manipulated and totally controlled by them. The perpetrators of these schemes work through a network of agents and finders that seek out suitable targets and steer them to a group of death spiral practitioners. The perpetrators typically operate through multiple tiers of offshore funds, advisors, directors and agents for the purpose, we believe, of obscuring the identity of the investors and impeding investigations by regulatory authorities in order to avoid civil liability.

Two of the defendants in the case, Thomas Badian and Rhino Advisors, Inc., were the subject of an SEC civil enforcement action which they settled for $1,000,000 pertaining to the trading of shares of SEDONA (R) Corporation. Badian is also currently the subject of a criminal prosecution by the United States government in the Southern District of New York which alleges stock fraud and stock manipulation in the shares of SEDONA. Mr. Badian is currently a fugitive from justice.

Steve Dempsey, Chairman and CEO of PQI says: "What happened to us, SEDONA, and other companies like us is a travesty. The promise of American business is that through hard work, good planning and good execution, you can succeed. We were never given a chance. We were targeted for destruction." Lead counsel John O'Quinn said: "We are committed to the relentless pursuit of justice for PQI and its shareholders."