Jury Trial Demanded - Securities Class Action Clearinghouse

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					                              UNITED STATES DISTRICT COURT
                             WESTERN DISTRICT OF OKLAHOM A

                                      CLASS ACTION COMPLAINT

                                                                JURY TRIAL DEMANDE D

        Lead Plaintiff, Meisenbach Capital Management, Inc ., individually and on behalf of all

other persons similarly situated, by its undersigned attorneys, for its complaint against

defendants, alleges the following based upon personal knowledge, information and belief, based

upon, inter alia, the investigation conducted by and through its attorneys, which included, among

other things, interviews with former employees, a review of the defendants' public documents,

conference calls and announcements made by defendants, United States Securities and Exchange

Commission ("SEC") filings, wire and press releases published by and regarding Dobson

Communications Corp . ("Dobson" or "the Company"), securities analysts' reports and advisories

about the Company, and information readily obtainable on the Internet . Lead Plaintiff believes

that further substantial evidentiary support will exist for the allegations set forth herein after a

reasonable opportunity for discovery .

                                 SUMMARY AND OVERVIE W

        1 . This is a securities class action on behalf of all purchasers of the publicly traded

securities of Dobson, between May 6, 2003 and August 9, 2004 (the "Class Period"), inclusive,

against Dobson and certain of its officers and directors for violations of the Securities Exchange Act

of 1934 (the "1934 Act") .

        2 . Dobson is a rural and suburban wireless communications services provider offering

wireless calling, voice privacy and call security, tri-mode handsets and roaming . During the Class

Period, Dobson co-owned, through a joint venture with AT&T Wireless, American Cellular

Corporation ("American Cellular") . Dobson managed 100% of American Cellular's operations,

which offers products, services, customer service and marketing substantially identical to Dobson's .

        3 . Dobson generates revenue in two significant ways . First, customers pay for wireles s

cell phone services through pre-arranged monthly calling plans . In this context, the Company's

customer base is predominantly customers who are "post paid" ; i .e., those customers who agree to

pay a monthly fee for a certain amount of minutes on Dobson's wireless network, and additional fees

if the customer uses additional minutes in any given month . Second, Dobson generates revenue by

charging customers of other cell phone carriers a per-minute fee to "roam" on Dobson's network .

Because Dobson's network of cell phone towers has always been in predominantly rural areas where

major carriers do not own towers, roaming revenue from other carriers provided a particularly high

margin of profit for the Company . Approximately 90% of Dobson's roaming revenue came from

customers of AT&T and Cingular .

        4 . The Company was in dire straits by May 2003 . It had been suffocating under th e

terms of a $290 million personal loan that top Company executives had received from Bank of

America (" Bank of America") in 2001 . Teetering on the brink of default, which would have

triggered a change of control provision in the loan agreement, Dobson scrambled to renegotiate the

terms of the loan . To induce Bank of America to refinance, the Company offered over 30 million

shares of its class `A' common stock . Obviously, for this stock to be worth anything, the Company

needed to portray itself in as favorable a light as possible . Thus, when Dobson reported its operatin g

results for the first quarter of 2003, it claimed to have had a strong quarter, and virtually guaranteed

that AT&T would continue to provide Dobson with a sizable amount of roaming profits .

         5 . Two weeks later, Bank of America agreed to refinance the personal loan on favorable

terms . The stock that Bank of America received was subject to a shareholder agreement with other

major shareholders, which restricted Bank of America from selling its shares until 2006 . This news,

combined with the Company's characterization of its second quarter earnings as "strong," its

continued promises of roaming profits, and claims of low customer turnover, caused Dobson's stock

to skyrocket over the summer of 2003 .

         6 . The Company took advantage of the jump in its stock value by acquiring th e

remaining 50% of American Cellular from AT&T, using Dobson stock as payment . Moreover, the

parties to the above-referenced shareholder agreement were obliged to sell virtually all of their

shares for substantial profits, which in turn freed up the restriction on Bank of America's right to sell

its stock .

         7 . Further inflating the value of the Company's stock was the announcement it made in

early October 2003 . Dobson forecasted earnings guidance for 2004, projecting that the Company

would have a banner year due in part to the guaranteed revenue stream from AT&T's roaming

customers . Two weeks after this earnings guidance, and with the previous shareholder restrictions

eliminated from the picture, Bank of America sold all of its stock for a gigantic profit .

         8 . Unbeknownst to the public, however, Dobson's projections of a stable customer base

and solid roaming revenue were a farce . The Company was well aware that it seriously lagged the

industry in developing and deploying crucial technology, and as such was simply incapable of

servicing substantial blocks of AT&T's roaming customers . Moreover, the Company had been

manipulating its internal tracking systems, allowing it to eliminate negative subscriber informatio n

from the data that the Company reported to the public .

       9. As most farces go, this one too would not last forever. The walls began to crumble i n

November 2003, when the Company reported a lackluster third quarter performance . Despite

declining roaming minutes , the Company nevertheless reaffirmed its 2004 earnings guid ance,

claiming that AT&T's roaming customers would basically save the day .

        10 . However, in February 2004, Dobson was forced to reduce its earnings projections

after reporting a devastatingly bad quarter, due in large part to losing a substantial amount o f

roaming business from AT&T. The Company was forced to admit that it was not ready to servic e

AT&T's roaming customers . This news shocked the market, causing Dobson's share price to div e


        11 . Then, in May 2004, the Company's internal tracking schemes caught up with it whe n

the new billing system it had switched to did not allow it to hide subscriber cancellations anymore .

Thus, not only had Dobson reported lower than expected roaming revenues, but also by now it wa s

forced to publicly acknowledge that the Company's subscriber base was not as robust as had bee n

previously reported .

        12 . After this news, and another bad quarter, the Company was forced to lower its 200 4

earnings guidance a second time, causing the stock to plunge a final 55% .

        13 . During the Class Period, the statements that Dobson issued caused its share price t o

rocket from $2 .69 to $10 .00 per share . When the Company's true financial condition and busines s

prospects were finally revealed in August 2004, the stock had plummeted all the way back down t o

$1 .17 per share, causing Plaintiff and members of the Class to suffer substantial damages .

                                  JURISDICTION AND VENUE

        14. Juri sdiction is conferred by §27 of the 1934 Act . The claims asserted herein arise

under §§10(b) and 20(a) of the 1934 Act and Rule lOb-5 .

        15 . Venue is proper in this Dist rict pursuant to §27 of the 1934 Act, 15 U .S.C. §§ 78aa

and 28 U.S.C. § 1391(b) . Many of the false and misleading statements were made in or issued fro m

this District . Additionally, the Company maintains its principal offices in this Distric t

        16 . In connection with the acts, conduct and other wrongs alleged in this Complaint ,

defendants, either directly or indirectly, used the means and instrumentalities of interstate commerce ,

including but not limited to, the United States mails, interstate telephone communications, and the

facilities of the national securities exchange .

                                           THE PARTIE S

        17 . Lead Plaintiff Meisenbach Capital Management , Inc . ("Plaintiff'), purchased Dobso n

securities at artificially inflated prices during the Class Period, as set forth in its previous

certifications filed with this Court and incorporated by reference here, and was damaged thereby,

and was further damaged after the truth about Dobson's financial condition and business prospects

were revealed to the marketplace, causing Dobson's stock value to sharply decline .

        18 . Defendant Dobson is a rural and suburban wireless communications service s

provider . Dobson is headquartered at 14201 Wireless Way, Oklahoma City, Oklahoma . Dobson

had 139 . 42 million shares actively traded on the NASDAQ National Exchange by the end of th e

Class Period.

       19 . Defendant Everett R . Dobson ("Everett Dobson") served as the Chairman and Chie f

Executive Officer ("CEO") of Dobson throughout the Class Pe riod. Everett Dobson has served as a

director and officer of the Company since 1982 . From 1990 to 1996, Everett Dobson served as a

director, President and Chief Operating Officer of Dobson and President of the Company' s cellular

subsidiaries. Everett Dobson was elected as Chairman of the Board and CEO in April 1996 . Everett

Dobson and his brother, Stephen Dobson, are the directors of RLD Inc ., the general partner of the

Dobson Family Partnership . Together, Everett Dobson and Steven Dobson are referred to herein a s

the "Dobson Family."

        20. Defendant Russell L . Dobson ("Russell Dobson") served as a director of Dobso n

throughout the Class Period . Russell Dobson served as the Company's Chairman of the Board an d

CEO from 1990 to 1996 . Russell Dobson joined his father at Dobson Telephone Company in 195 6

an d became the controlling owner and CEO in 1975 , when he purchased his father 's interest.

        21 . Defendant Stephen T . Dobson ("Stephen Dobson") served as a director of Dobso n

and as its Secretary throughout the Class Period . Stephen Dobson served as the Treasurer of Dobson

from 1990 until September 1998, and began serving as the Company's Secretary in 1990 . Stephen

Dobson also served as General Manager and Secretary of Dobson Telephone Company from 1994 to

1998 and 1990 to 1998, respectively . Stephen Dobson and his brother, Everett Dobson, are the

directors of RLD Inc ., the general partner of the Dobson Family Partnership .

        22. Defendant Douglas Stevens ("Stevens") served as the company's Chief Operatin g

Officer throughout the Class Period .

        23 . Defendant Bruce R . Knooihuizen ("Knooihuizen") served as the Company's Chie f

Financial Officer and as a Vice President throughout the Class Pe riod.

       24 . Defendant Richard D . Sewell, Jr. ("Sewell") served as the Company's Treasurer

throughout the Class Period.

       25 . Defendant Trent LeForce joined the company as Controller in February, 1997 an d

served in that position throughout the Class Period .

       26. The individuals named as defendants in ¶¶ 19-25 are collectively referred to herein a s

the "Individual Defendants ."

       27. The Individual Defendants, because of their positions with the Company, possesse d

the power and authority to control the contents of Dobson's quarterly reports, press releases an d

presentations to securities analysts, money and portfolio managers and institutional investors, i .e.,

the market . Each defendant was provided with copies of the Company's reports and press releases

alleged herein to be misleading prior to or shortly after their issuance and had the ability and

opportunity to prevent their issuance or cause them to be corrected . Because of their positions and

access to material non-public information available to them but not to the public, each of thes e

defendants knew that the adverse facts specified herein had not been disclosed to and were bein g

concealed from the public and that the positive representations which were being made were then

materially false and misleading . The Individual Defendants are liable for the false statement s

pleaded herein, as those statements were each "group-published" information, the result of the

collective actions of the Individual Defendants .

                                CLASS ACTION ALLEGATION S

        28. Plaintiff brings this action as a class action pursuant to Federal Rule of Civi l

Procedure 23(a) and (b)(3) on behalf of a Class, consisting of all persons who purchased o r

otherwise acquired the securities of Dobson between May 6, 2003 and August 9, 2004, inclusive ,

and who were damaged thereby . Excluded from the Class are defendants, the officers and directors

of the Company, members of their immediate families and their legal representatives, heirs, succes-

sors or assigns and any entity in which defendants have or had a controlling interest .

       29. The members of the Class are so numerous that joinder of all members is imprac-

ticable. Throughout the Class Period , Dobson 's securities were actively traded on the NASDAQ .

While the exact number of Class members is unknown to Plaintiff at this time and can only be

ascertained through appropriate discovery, Plaintiff believes that there are hundreds or thousands of

members in the proposed Class . Record owners and other members of the Class may be identified

from records maintained by Dobson or its transfer agent and may be notified of the pendency of this

action by mail, using the form of notice similar to that customarily used in securities class actions .

        30 . Plaintiffs claims are typical of the claims of the members of the Class as all members

of the Class are similarly affected by defendants' wrongful conduct in violation of federal law that i s

complained of herein .

        31 . Plaintiff will fairly and adequately protect the interests of the members of the Clas s

and has retained counsel competent and experienced in class and securities litigation .

        32 . Common questions of law and fact exist as to all members of the Class and

predominate over any questions solely affecting individual members of the Class . Among the

questions of law and fact common to the Class are :

                           (a) whether the federal securities laws were violated by defendants' acts a s

        alleged herein ;

                           (b) whether statements made by defendants to the investing public during th e

        Class Period misrepresented material facts about the business, operations and management o f

       Dobson ; and

                           (c) to what extent the members of the Class have sustained damages and th e

       proper measure of damages .

       33 . A class action is superior to all other available methods for the fair and efficien t

adjudication of this controversy since joinder of all members is impracticable . Furthermore, as the

damages suffered by individual Class members may be relatively small, the expense and burden o f

individual litigation make it impossible for members of the Class to individually redress the wrongs

done to them . There will be no difficulty in the management of this action as a class action .

                               SUBSTANTIVE ALLEGATION S

A.      Pre-Class Period : Dobson Borders on a Change of Control

        34 . In 2001, the Company's largest shareholder, the Dobson Family Partnership - wholly

owned by the Dobson Family - put its entire interest in the Company at risk by secretly pledging its

majority stake in Dobson as collateral for a huge $290 million personal loan made by Bank of

America to the Dobson Family Partnership . At the time, the Dobson Family Partnership owned

about 60 percent of the Company's outstanding stock and a greater percentage of the voting shares .

       35 . When the public discovered the existence of the loan in September 2001, investor s

who distrusted the Dobson Family's concealment of the loan and refusal to disclose the purpose of

the loan even after they discovered it ravished the Company's stock . With Dobson's stock trading in

the high teens on the NASDAQ in 2001, Bank of America had been willing to accept the family's

60% stake in Dobson as security for the loan, but by 2002 the Company's stock price tumbled below

$10 per share . Eventually, the Company's stock traded down to pennies per share and was de-listed

at $0.35 per share in October 2002 .

       36 . The Dobson Family scrambled to prevent Bank of America from calling the loan in

order to maintain control of the Company . In mid-November 2002, the stock price rose above $1 per

share on news of surprisingly strong 3Q'02 financial results . The stock was re-listed on the

NASDAQ Small Cap Market at more than $2 per share in early 2003 .

         37 . Still, by January 2003, Dobson was plagued by uncert ainty surrounding the loan, as

well as doubts about its ability to grow its customer base an d generate roaming profit . On January

15, 2003, writing for Standard & Poors, Rosemarie Kalinowski noted :

         The ratings on cellular service provider Dobson Communications Corp . and its subsidiary,
         Dobson Operating Co ., LLC, are on CreditWatch with negative implications reflecting the
         uncertainty related to the Dobson family loan with Bank of America that matures on March
         31, 2003, unless extended . The ratings were placed on CreditWatch December 17, 2002 .
         The ratings reflect the impact of lower roaming yield on revenue growth, lower net customer
         additions compared with guidance for full-year 2002, and overall slow industry growth .
                                         *********** *
         Favorable resolution of the Dobson family loan with Bank of America is essential to the
         rating. If required payments are not met, Bank of America could foreclose on the collateral,
         triggering a change of control under Dobson Communications' note indenture . This would
         result in the acceleration of the payment of the company's senior notes at 101% of the
         principal amount plus accrued and unpaid interest .

         38 . Through early May 2003, the Dobson Family continued to struggle to convince Ban k

of America to avoid default on the loan, triggered by the Company's low stock price, which would

permit Bank of America to acquire a controlling interest in the Company . After receiving a brief

extension at the end of March 2003, defendants had their backs against the wall and desperately

needed to do something to avoid a change of control .

    B.      The Class Period Begins : Defendants Avert a Chance of Contro l

         39 . The Class Period opens on May 6, 2003, when defendants held a conference call t o

report earnings for the first quarter of 2003 . The Company reported that the amount of roaming

minutes of use on the Company's network was up an astonishing 28% from the same quarter in the

previous year, netting Dobson a 3% increase in roaming revenue . The Company reported a net

addition of 10,300 subscribers, and average revenue per user ("ARPU") of $42 . Everett Dobson

claimed that he was "very pleased with the first quarter of 2003," and with respect to the stability of

Dobson's customer base, commented that :

       As said in past calls, growth for growth sake is not our strategy . Instead, adding high value,
       post pay, contract subscribers is the focus . In fact, over 60% of our first quarter gross adds
       opted to sign two-year contracts, and virtually all others were one-year contracts .
       Additionally, the average remaining contract life of our sub base is eleven months .

        40. Up until that point, Dobson had employed "TDMA" technology in its cell towers,

which was the predominant technology in the cell phone industry , and was compatible with AT&T' s

customers' needs . However, "GSM," a new technology, had begun to take hold in the industry b y

2003, and both AT&T and Dobson had signaled a desire to switch to the new technology . As

TDMA technology was phased out, the rates at which other carriers paid Dobson to roam on it s

TDMA-enabled towers were drastically reduced .

        41 . Recognizing that Dobson would need to transition to GSM technology in order t o

maintain historical roaming revenues , the Company explained in May 2003 that it had entere d

negotiations with AT&T, an d expected AT&T to use Dobson as a preferred roaming provider o n

Dobson's new GSM networks . Recognizing that such a deal would be crucial to Dobson's futur e

revenue stream, Everett Dobson reassured the public : "We're not too worried about it, frankly ,

AT&T has expressed a willingness to use our network, and we're working through the terms an d

conditions ."

        42. In the same conference call, Avi Silver, an analyst with Bear Stearns, noted that near

thirty-percent growth in roaming minutes was significantly greater than the industry average, an d

asked whether such results could be sustained by Dobson . Everett Dobson responded by claiming :

        30% sustainable? No, almost by definition its not sustainable . But we think, you know, if
        you look at our model for this year, we expected pretty good growth in the first quarter . We
        saw 28% growth, that's slightly above our expectation, but not dramatically above it .
        We're being a little more cautious in the second half of the year, but again, we think there's,
        we'll continue to see pretty impressive growth this year and into the next few years.

        43. In further expanding on the likelihood that the Company would generate significan t

roaming revenue from AT&T, Everett Dobson claimed that "As we begin to roll out our GSM on a

local basis in the fourth quarter of this year, we believe there is incremental growth in customers and

perhaps RPU (revenue per user) ." He went on to state, "I me an our strategy is to have our GSM

network ready when the minutes are there and AT &T, we're not at all clear as to how fast or

how soon AT&T will convert existing TDMA customers to GSM , but as we previously

announced, we're in the midst of rolling out GSM throughout our entire footprint" (emphasis added) .

       44 . Two weeks later, after having reassured the public that its roaming revenue woul d

continue to be a stable source of income, Dobson announced that Bank of America had agreed to

restructure the personal loan to the Dobson Family Partnership . On May 19, 2003, Defendants

issued a press release entitled "Dobson CC Limited Partnership and Bank of America Close New,

Five-Year Agreement to Restructure the Dobson Family Partnership Loan ; Agreement Eliminates

Change of Control Risk Related to Loan ." Under a new five-year loan agreement, the amount owed

by the Dobson Family Partnership to Bank of America had been reduced from the $310 million th e

Family Partnership then owed (on the original loan of $290 million) to $60 million with a five-year

term, at Bank of America's prime interest rate . In exchange, the Dobson Family Partnership would

transfer 32 .5 million shares of Dobson's Class A common stock to Bank of America, which would

have resale restrictions and could not be sold until May 2006 .

       45 . After the stock transfer to Bank of America, the Dobson Family Partnership retained

approximately 21 million shares of common stock, including 19 million shares of Class B stock and

2 million shares of Class A stock . The 21 million retained shares represented approximately 65

percent of the voting power of all outstanding common stock because Dobson's Class B stock has

superior voting rights to its Class A common stock . Accordingly, the Dobson Family maintained

control of the Company.

       46. Bank of America entered into a lock-up agreement with the Dobson Family

Partnership and Dobson Communications covering the 32 .5 million shares of Dobso n

Communications' common stock that Bank of America acquired from the Dobson Famil y

Partnership . The lock-up agreement would continue until May 2006 and would preclude Bank o f

America from selling its Dobson stock, except in certain circumstances . Bank of America could sell

in private transactions up to 4 million shares prior to May 16, 2004 ; however, these shares were no t

freely tradable and could not be sold unless they were registered with the SEC or if an exemptio n

from such registration was available . The lock-up agreement allowed Bank of America to sell th e

rest of the Dobson shares only in certain circumstances, including in private placements or othe r

transactions exempt from the registration requirements of the Securities Act of 1933 ; in connectio n

with any business combination involving Dobson Communications ; in registered public offerings ;

under Rule 144 at anytime after May 16, 2004 ; in any transaction that occurred after May 16, 200 4

for a price equal to or greater than $10 per share ; or in certain other transactions in which the Dobson

Family Partnership was also a seller of stock .

        47. Finally, it was disclosed that Bank of America entered into a separate agreement with

a significant Dobson Communications shareholder not affiliated with the Dobson Famil y

Partnership . Under this separate agreement , Bank of America was further restricted until May200 6

from selling shares in private placements or other transactions that were exempt from the registratio n

requirements of the Securities Act of 1933, except for the 4 million shares which could be sold in a

private transaction prior to May 16, 2004, and sales after May 16, 2004 under Rule 144 . Thi s

additional lock-up agreement automatically terminated if the significant shareholder's stoc k

ownership in Dobson Communications fell below a certain level .

         48 . On the May 19, 2003 news that the Dobson Family Partnership had successfully

renegotiated the terms of its loan with Bank of America, avoiding potential default and a change of

control, the Company's share price rose 31 % on heavy volume to close at $4 .40 per share . Over 1

million shares of Dobson were traded on the NASDAQ Small Cap exchange, more than six times the

daily average .

    C.       Defendants Continue to Flood the Market with Good New s

         49 . On June 18, 2003, defendants announced that they had completed a swap of wireles s

prope rties with AT&T . Under the swap, Dobson acquired two Alaska coverage areas , including

Anchorage , in exchange for its two Califo rnia wireless prope rties, which included the city of Santa

Cruz . As part of the deal that Everett Dobson said "benefits Dobson Communications," AT&T

Wireless return ed to Dobson 200,000 shares of Dobson preferred stock it bought for $200 million in

2001 , permitting Dobson to c ancel the stock and to remove $26 million in accrued dividends from its

balance sheet . Defend an ts did not disclose that the c ancellation of AT&T's Dobson stock was a

substantial step toward eliminating one of the parties to the shareholder agreement that rest ricted

Bank of America from selling its recently acquired shares .

         50 . On August 5, 2003, Defend ants held a conference call to repo rt Dobson ' s second

quarter earnings . The Company reported strong results, among them that churn was at an industry

low of 1 .5% ; roaming revenue was up 6 .1% from the same quarter in the prior year ; and that the

average length of contract remaining on subscribers' plans was eleven months, compared to nine

months in the prior year. The Company also reported a net addition of 13,000 subscribers, and

ARPU of $43 .

         51 . The Company also announced at the conference call that it had finalized its GSM

roaming agreement with AT&T, in which Dobson would serve as AT&T's preferred, and in som e

cases, exclusive, roaming provider . Dobson had announced the same kind of deal with Cingular on

January 28, 2002 . In addition to the exclusivity portion, Dobson agreed to further cut the rates at

which AT&T customers roamed on its TDMA network, in exchange for reciprocal cuts from AT&T .

Though he refused to disclose the specific rates, Everett Dobson claimed that the new roaming

agreement would be "incrementally more valuable to us compared to the previous roaming


        52 . Dobson also announced at the conference call that it had accelerated its plans t o

deploy the GSM technology . Defendant Stevens claimed the acceleration was due to Dobson' s

commitment to being the "first in the market" to offer new technologies, and its desire to present it s

customers with a broader selection of services .

        53 . During the same conference call, Matt Craig, an analyst from Merryl Lynch, note d

that in Dobson's Youngstown, Ohio market another wireless provider had already deployed its ow n

GSM towers . He then asked whether Defendants were concerned about losing roaming revenue as a

result of roaming partners taking their GSM business elsewhere, since Dobson's GSM network ha d

not been completed . Everett Dobson replied by stating :

               When you get into the GSM roaming environment , we expect to have substantial
               and significant GSM roaming revenues from AT&T but more importantly we
               created a relationship that will allow us to offer GSM to our local subscribers, and
               those subscribers will become more profitable , they will become more profitable
               to us and therefore we believe that on balance the Company becomes more profitable
               and more valuable (emphasis added) .

       54 . Two weeks later, Dobson announced in an August 19, 2003 press release that it ha d

acquired AT&T's 50% stake in Ameri c an Cellular Corp., so that Dobson would now control all o f

American Cellular. According to the press release , Dobson offered American Cellular senior 9 %2 %

note holders $48 .7 million in cash, 43 .9 million shares of newly issued Dobson Class A commo n

stock, and 681,900 shares of a new series of Dobson convertible preferred stock, worth $121 .8

million. The share issuance reduced AT&T Wireless' stock interest in Dobson to below 5% in

September 2003, so it would be able to sell its interest in Dobson without reporting the sale t o

regulators or to the market.

       55 . In characterizing the acquisition as providing Dobson with "formidable competitiv e

advantages," the Company proclaimed :

               "The Company has a low turnover, postpaid subscriber base that it estimates are only
               25 percent to 30 percent penetrated by the wireless services . Dobson believes that its
               markets have substantial potential for growth ."

The Company also played up its new roaming agreements with Cingular and AT&T, stating that : "In

terms of future roaming revenue, Dobson has signed agreements to serve as Cingular's preferre d

roaming partner through 2011 and with AT&T Wireless through 2008 ."

        56. On August 20, 2003, Dobson announced that it had signed a three-year GSM roamin g

agreement with T-mobile , USA Inc . Everett Dobson claimed that , " This agreement is another ste p

that will enable our wireless customers to roam effortlessly throughout the United States, and

eventually worldwide . Dobson is rapidly deploying GSM technology throughout its network s

and looks forward to the new customer services and functionality that this 2 .5-generation technology

will support" ( emphasis added).

        57. On August 22, 2003, Sandy Liang, writing an industry wide review for Bear Stearns

& Co., Inc ., characterized Dobson as representing "good relative value," "attractive," and that th e

Company's "debt securities are high-yield core holdings ." Key factors in this analysis were that :

               The Company had also pre-reported churn of 1 .5% in 2Q03, which was better than
               our estimate of 2% and compares with 1 .7% in 2Q02 and 1 .6% in l Q03 . While
               customer growth was slightly weaker than our expectation, the company continues to
               add high value subscribers, as two-thirds of its customers are on long term contracts
               with an average remaining life of 11 .5 months .

             58 . Based on reports of low customer turnover, and a seemingly solid base of future

roaming profits, Dobson's stock continued to climb, and defendants in turn continued to capitaliz e

on its inflated value . On September 8, 2003, with the stock trading at $8 .76 per share, Defendants

made a series of announcements . First, Dobson announced the commencement of a private offerin g

of $600 million p rincipal amount of the Company' s Senior Notes due 2013. The Company claimed

that the proceeds from this offering, together with borrowings under a new $700 million credi t

facility that was currently being arranged, would be used to refinance debt . Second, defendants

announced that, subject to market conditions and other considerations, Dobson was contemplating a

public offering of shares of its Class A common stock that would result in gross proceeds to th e

Company of up to $150 million and that any net proceeds would be used to reduce debt an d

preferred stock obligations, and for general corporate purposes . Finally, Dobson issued a pres s

release titled : "Dobson Communications Files Amendment to Registration Statement," in which th e

Company announced that J .W. Childs Equity Partners had advised that it sold all of its common

stock in tr ansactions on the open market in the p rior two weeks. As a result , J.W. Childs Equit y

Partners was no longer a party to the shareholder agreement with AT&T , Dobson and Bank o f

America. This barrage of good news caused the Company's stock price to balloon to $10 per shar e

on September 9, 2003 .

             59. On September 26, 2003, Dobson announced in separate press releases that it had

completed the previously announced private offering, which had been increased to $650 million ; and

that the Company had received a commitment on the previously announced $700 million credi t

facility .

             60 . By October 2, 2003, AT&T Wireless had completed the sale of its holdings o f

approximately 4 .5 million shares of Dobson's Class A common stock, or 3 .9% of the Company' s

equity, on the open market for $35 million . As a result, AT&T Wireless had now ceased to be a

party to the stockholder and investor rights agreement with Dobson . Thus, as each of the parties t o

the shareholder agreement had been eliminated, Bank of America was now free to sell its shares on

the open market . Moreover , as AT&T' s financial stake in Dobson v an ished, so too did its incentiv e

to roam on Dobson's network .

       61 . On October 8, 2003, the Company issued a press release entitled "Dobson

Communications Offers EBITDA Outlook ." In it, Dobson reaffirmed its earnings guidance fo r

2003, and issued its earnings guidance for the year 2004 . Specifically, Dobson projected that 200 4

EBITDA would be in the range of $480 to $515 million . Given that Dobson expected to generate

roughly $445 million EBITDA for the year 2003, its outlook for 2004 was particularly positive .

       62. On October 10, 2003, with the Company' s stock trading at $8 .80 per share ,

Defendants announced that Bank of America would sell its remaining 28 .6 million shares o f

Dobson's Class A common stock to approximately 48 institutional investors and funds on Octobe r

14, 2003 . When Bank of America obtained the 32 . 5 million shares in May 2003, they had a marke t

value of approximately $143 million. In July 2003, Bank of America had sold 4 million shares fo r

$5 .50 per share in private transactions . That sale resulted in proceeds of $22 million and left Ban k

of America with 28 .6 million shares of Dobson common stock and options to purchase 400,00 0

more shares . The remainder of Bank of America's shares were sold for $225 million in the Octobe r

private placement . In the end, Bank of America received interest on the $290 million loan for tw o

years, received 85% of its investment capital back and retained the option to purchase 400,00 0

shares of Dobson stock . Additionally, Bank of America still held a $60 million note from Dobson ,

which represented almost 140% of the remaining unpaid capital of approximately $43 million on th e

original $290 million loan to the Dobson Family Partnership .

         63 . Thus, by the end of October, Dobson had substantially reversed its fortunes i n

roughly five months . Indeed, the market viewed the Company as being on the upswing, with it s

stock trading well above $8 per share, after trading for pennies on the share just one year before . In

that same time frame, Dobson avoided a change of control, refinanced a gigantic personal famil y

loan with Bank of America, acquired total control of American Cellular, and raised $650 million in a

private note offering . Each of these accomplishments was driven by Dobson's skyrocketing stoc k

value ; which of course was driven by the slew of positive news that the Company put forth durin g

these 5 months. Indeed, the overall picture of a company with a customer base with low turn-over,

that was committed to long term contracts ; combined with stable roaming profits as far as the ey e

could see, caused the market to view Dobson as a well-positioned enterprise .

    D.      Dobson's Undisclosed Problems .
         64 . The public statements set forth above were materially false or misleading when made ,

because Dobson concealed a number of facts from the public that would have substantially change d

the market's evaluation of the Company . In reality, Dobson's roaming picture was much more blea k

than it had let on ; and the Company had been systematically concealing customer cancellations fro m

the public throughout its 5- month onslaught of positive news .

            1 . Dobson was not equipped to service existing GSM roaming customers .

         65 . Contrary to Dobson's claims that it was "rapidly deploying" GSM technology, the

Company seriously lagged the industry in making this technology available . Several witnesses have

attested to the fact that the Company would " say one thing , but do another," which resulted in ver y

poor-- if any-- GSM roaming capacity .

         66. Confidential Witness Number 1 ("CW I") was the Vice President of an independen t

agent that contracted with Dobson from 2001- 2004 . The term "Confidential Witness" shall

hereafter be referred to as "CW ." The independent agent sold Dobson wireless services in three o f

Dobson's major regions in Texas . During that time, CWI constantly received complaints fro m

customers about Dobson' s poor cellular service . Specifically, the TDMA signal was particularl y

weak. According to CW1, when the Company began switching to GSM technology in late 2003 ,

"things only got worse," as the Company did not erect enough GSM towers, causing the customers '

signal to be even weaker than the TDMA signal .

        67 . CW2, the President of the independent agent referenced in ¶ 66, confirms thi s

account . According to CW2, Dobson's GSM towers were so weak and ineffective, that when othe r

carriers' customers would attempt to roam on Dobson's network, they would ultimately end up

complaining to their primary carriers (such as Cingular and AT&T) about "dropped" or discontinue d

phone calls .

        68 . CW3 corroborates this account . CW3 served as a Customer Service Representative a t

Dobson's Corporate Headquarters in Oklahoma City from June 2003 to September 2004 . As an

example, CW3 discussed Dobson's Arizona market . In that area, TDMA service had been bad, but

when Dobson switched to GSM, the service to its customers became markedly worse. According to

CW3, most customers would call and complain that they literally had no signal at all .

        69 . CW3 further explains that the solution to the problem was to build more GSM towers,

since these towers did not cover as much area as the TDMA towers covered . However, m anagement

advised his department to tell customers that "we're working on it . But I never saw an improvement .

What we heard at meetings and saw everyday were very different ." CW3 states that at company

wide meetings, management would continue to promise to build more GSM towers in order to

improve service, but "I think we were being told one thing and in reality it was something different ."

The end result, according to CW3, was a high level of utter frustration in the customer servic e

department, as there were a lot of "promises to customers and nothing was ever delivered . It was

demoralizing to have a customer of eight years call an d c ancel their service because their service

wasn ' t working ." According to CW3, these kinds of problems were not confined to the headqua rters

area, but rather, "Everything we had was affected."

        70. CW4 worked as a Loyalty Representative at Dobson's Headquarters from May 200 3

to early 2005 . CW4's primary function was to get subscribers whose contracts were about to expire

to "reup" with Dobson . CW4 provides even further corroboration regarding Dobson's utter failure

to satisfy the market's demand for GSM . According to CW4, at one point during the fall of 2003,

upper management gave CW4's department a goal to migrate 500 customers from TDMA to GSM

service in one month . According to CW4, the reason for this challenge was that Dobson's TDMA

"towers were so overloaded, and as a result, people were not getting any service . The push to GSM

was intended to relieve the squeeze on TDMA ." CW4 and his/her team accomplished this task, but

soon learned that Dobson's GSM system was not prepared for the customers to be migrated, causing

this service to be even worse than TDMA service . According to CW4, "this was typical cart-before-

the horse Dobson behavior ."

       73 . CW5 worked as a sales representative in one of Dobson's highest producing stores,

stationed in Middletown, New York . CW5 worked for Dobson from July 2001 to September 2003 .

According to CW5, when Dobson switched to GSM, it was a "leap they weren't prepared for . They

were unable to keep up with the national networks ." As further evidence of Dobson' s

ineffectiveness in migrating to GSM, CW5 states that when the Company migrated, it also changed

billing systems . Under the TDMA service, the Company used a billing system referred to as "H .O,"

but this system was incapable of accepting GSM programming . Thus, a new billing system was

instituted company-wide in the summer of 2003 . Since Dobson eliminated the District Call Center,

the burden of activating new GSM accounts fell on sales personnel . However, the sales reps wer e

often precluded from activating new accounts because the new billing system constantl y

malfunctioned . According to CW5, "we had to turn customers away because the billing system was

always down ."

         74. CW6 worked as a Sales Manager in Wisconsin from mid 2002 to the end of Augus t

2004 . By the end of 2003, it was obvious to CW6 that GSM service in the Wisconsin area wa s

abysmal because Dobson did not deploy enough GSM towers . According to CW6, both customer s

and sales representatives had become completely "discouraged by Dobson's slow migration t o

GSM ."

         75 . CW7 worked as a Supervisor of Customer Service in Dobson's Customer Servic e

Center in Minnesota from 2002 to 2004. According to CW7, customer complaints were directly

related to Dobson's terrible GSM signal and weak service . CW7 also confirms that "it took a long

time for the GSM towers to go up, and there were a lot of promises made, but the Company kep t

moving the dates back and delaying installation ." CW7 also states that "GSM wasn't worth gettin g

at all . In the end, the reliability wasn't good, and there were lots of bugs ."

         76 . CW8 worked for Dobson from June 1999 to May 2004 . CW8's responsibilitie s

included developing sales contracts with outside corporate entities in the West Virginia an d

Maryland territories. CW8, like everyone else, recalled having severe customer service problem s

because of poor GSM service . According to CW8, Dobson failed to meet its timeline for installin g

GSM technology, and as a result, it never worked as well as TDMA did . CW8 claims that upper

management insisted that sales personal promote and sell GSM, because it would be more profitabl e

than TDMA. However, according to CW8, sales personnel were reluctant to follow this edic t

because the GSM service was much worse for the customer . CW8 also states that "Dobso n

promised a lot of towers, but the Company never delivered on these promises . There are towers that

were promised to me years ago that still haven't been put up yet ."

       77 . CW9 worked as a Market Manager in Dobson's S anta Cruz office from 2000 unti l

June 2003, when AT&T took over the territory in its swap with Dobson for its Alaskan territory .

According to CW9, it was well known that AT&T customers had already been using GS M

technology in early 2003 . As an example, CW9 explains that in early 2003, a Nokia technician cam e

to the Santa Cruz site to conduct training, and had a Blackberry device . According to CW9, "w e

could all see that the Blackberry was roaming on Cingular's GSM network ." Thus, according to

CW9, Dobson had already begun to lose roaming revenue as early as the beginning of 2003, whe n

other carriers had already switched to and deployed GSM technology . )

       78 . CW10 worked in Dobson 's Headquarters from April 1999 to January 2004 as an

analyst in the Roaming Department . CW 10 confirms that upper management was "definitely seein g

projections of roaming minutes . There were constant meetings with managers, weekly ones . In

attendance were Tina Durant, the Department Head, Trish Sweet, who was responsible fo r

Administration, and Grant Wilson, who did trending ." According to CW 10, the main topic at thes e

weekly meetings was roaming trends based on collections data .

       79 . The testimony from these witnesses severely undermines the positive statements

concerning GSM and the Company's prospects for roaming revenue made by defendants durin g

2003 . Indeed, these witnesses show that Dobson seriously lagged the rest of the industry in

effectively deploying GSM technology, so much so that its own roaming partners were forced t o

 ` This account is corroborated by CW 11, who is discussed below in ¶¶84-91 . When CW 11
began working at Dobson in March 2003, it had been widely understood by "everyone" that
Cingular and AT&T had already begun migrating customers to GSM service, which caused Dobson
to lose roaming business because it was not ready to service these customers .

take its business elsewhere as early as 2003 . Moreover, contrary to defendants' claims, Dobson wa s

not "rapidly deploying" GSM technology, but rather, continued to issue promises that it would no t

keep. As such, the rosy scenario painted by defendants was materially misleading becaus e

defendants omitted to inform the public that it had begun to lose roaming minutes and revenue fro m

its biggest roaming partner, AT&T .

       80 . The statements outlined in ¶¶ 41,42,43,52,53, and 56 were materially false an d

misleading when made . Defendants knew, or were extremely reckless in not knowing, that it ha d

already begun to lose roaming minutes as a result of seriously lagging the industry in deployin g

GSM technology . Though defendants touted Dobson ' s new roaming agreements with AT&T,

Cingular, and T-Mobile, and pointed to these agreements as the impetus for stable roaming profits ,

defendants knowingly or recklessly concealed from the market that these carriers had already begu n

to roam on GSM enabled networks, as demonstrated by CW9 . Since Dobson was not ready t o

service these customers, who had begun GSM roaming as early as the beginning of 2003, defendant s

knew or were reckless in not knowing that the Company would lose roaming business until it full y

deployed its GSM towers .

       81 . Further, Dobson's claim that the Company' s strategy was to have GSM ready when

"AT&T's minutes were there," and that it had no idea when AT&T would begin migrating TDM A

customers to GSM, was materially misleading, because defendants knew or were extremely reckles s

in not knowing that AT&T had already begun migrating customers to GSM .

       82 . Moreover, Defendants' statements that Dobson was "rapidly deploying" GS M

technology, and that it was committed to being the "first in the market" to introduce ne w

technologies were mate ri ally false and misleading because in reality, as detailed by 9 of the 1 0

confidential witnesses above, the Company moved so slow in deploying GSM towers that custome r

complaints about poor and even non-existent GSM service were persistent throughout the

Company's areas of operation . These complaints began and continued throughout 2003.

         83 . Further, defendants' EBITDA guidance for 2004, in which the Company forecasted a

banner year ; was materially false and misleading because defendants concealed the fact that a major

source of Dobson's revenue (roaming profits) was seriously in doubt as a result of the Company's

ineffectual and sluggish transition to GSM . Thus, defendants knew or were reckless in not knowing

that their 2004 earnings guidance lacked any reasonable basis when made .

             2 . Dobson made negative subscriber information magically disappear .

         84 . In addition to the misleading statements about its roaming outlook and its GSM

transition, defendants' characterizations of its customer base were also materially misleading in

2003 . Though defendants' statements caused the market to assess the quality of its customer base as

a positive metric, in reality, many more customers were fleeing Dobson than the Company reported .

         85 . CW11 was a Loyalty Retention specialist in Dobson's Headquarters from Marc h

2003 to March 2004 . CW 11's job, like CW4, was to get subscribers whose contracts were about to

expire to "reup" with Dobson for either new twelve or twenty-four month contracts . According to

CW 11, the Loyalty Retention Department was re-signing approximately 1500-1800 customers per


         86 . CW 11 reported data on re-signed contracts to a supervisor, Teresa Skaggs, who sent

the information to the director of the Call Center, David Cochlin . Cochlin was very visible, and

according to CWl 1, was often seen with Everett Dobson .

         87 . CW 11 learned in early 2003 that the drive to retain customers was directly related to

the Company's desire to paint itself in a positive light, so that it could induce Bank of America to

refinance the Dobson Family loan . According to CW11, Jeff Wooten, the Department supervisor ,

advised that CW1 1 should buy the Company's stock . When asked why, Wooten advised CW11 :

"Think about what we're doing in the department." According to CW 11, when a customer re-signed

a contract, the Company considered it as future revenue, and used that customer's re-signed

subscription in forecasting future earnings projections .

        88 . However, the Company had instituted a practice of expunging negative subscriber

data from its internal reports . Specifically, CW 11 states that most customers who "reup-ed" with

Dobson would call back a few months later and cancel their contracts because of abysmal service .

When these cancellations occurred, a few things should have happened .          First, the canceling

customer was supposed to pay an early termination fee.         Second, the previous record of the

customer's contract as future revenue should have been reversed from the Company's projections .

Third, if the customer did not pay the cancellation fee, the matter was to be referred to an outside

collection agency . According to CW11, none of these things happened because when a customer

called to cancel a recently signed contract, that customer's information was secretly erased from the

billing system that kept track of Dobson's customers .

        89 . According to CW 11, this expungement was intentional and was designed to allow fo r

inflated projections . Specifically, CW11's supervisor "stressed the need to increase subscribers,

which would increase the future revenue base . He said that these numbers would look good to any

stockholder and investor because it showed Dobson was going to grow and how much money we're

supposed to make in the next couple years ."

       90 . Thus, in order to avoid having to take a charge against its projected income, CW 11

states that the Company simply eliminated the customer who cancelled service from the billing

system after the customer had already been used to forecast future revenue . This allowed defendants

to characterize the Company's subscriber base and churn rate as indicators of the Company' s

anticipated growth . CW 11 states that Michael Threadgill, a close associate, was tasked with making

these customer cancellations vanish from the Company's internal records . Threadgill worked for the

head of the Collections department.

        91 . C W 11 further explains each employee received quarterly commissions that were tied

to the number of customers they got to re-sign with Dobson . According to CW11, after the

Company changed billing systems, it could no longer manipulate customer cancellations in the new

billing system . Thus, by early 2004, Dobson was forced to take back most of the commissions it ha d

previously promised to pay employees . When CW 11 confronted Teresa Skaggs about this, Skaggs

claimed, "it could be the case" that write-offs had been unusually high for the prior quarter . When

CW 11 pressed, and asked whether the high amount of write-offs was a result of the change in billing

systems and the Company's resultant inability to manipulate customer cancellations, Skaggs

responded by saying, "We don't talk about this . This conversation is now over ." CW1 1 was fired

two weeks later .

        92 . CW4 confirms CW 11's account . According to CW4, Threadgill was involved in th e

changeover of the Company's billing systems, and it was widely believed that "they could no longer

hide like they had in the past . So a lot of things had to come out in the open ." CW4 also explains

that the early cancellation fees assessed to customers who prematurely ended their contracts "were

never collected," and were simply "written off as "uncollectible ."

        93 . This manipulation of customer cancellations caused the Company's public statement s

about the stability of its customer base during 2003 to be materially misleading in at least two ways .

First, as more customers were canceling Dobson's services than the Company was acknowledging,

the chum rate that Defendants reported to the market was materially understated .             Second,

defendants' reports about the average length of time remaining on customers contracts wa s

artificially inflated by the Company's failure to disclose that many of the customers it was re-signin g

were canceling their contracts within months after being exposed to the Company's poor GS M


           94 . Specifically, defendants' statements as outlined in ¶¶ 39, 50, and 55 were materially

misleading when made . Defendants' claims that the average remaining time left on customers '

contracts was over eleven months was materially misleading because defendants' failed to disclos e

that many customers were actually canceling their contracts after only a few months of service . This

omission also caused the Company' s reported churn rates to be materially misleading, as they were

materially understated. Moreover, the Company's characterization of its post-paid customer base a s

being "low-turnover" was misleading for the same reason .

           95 . Further, Dobson's EBITDA forecast, as outlined in ¶61, was materially false o r

misleading, because defendants knew, or were reckless in not knowing, that the projection was base d

on artificially inflated customer contract data . As such, defendants recklessly endorsed thi s

projection without having a reasonable basis to do so .

    E.        Despite Defendants ' Best Efforts , The Truth Begins To Leak To An Unsuspecting
              Public .

           96 . On November 10, 2003, defendants held a conference call to announce Dobson' s

results for the third quarter of 2003 . Dobson missed its quarterly earnings projections by $3 million .

The Company repo rted a churn rate of 1 .8%, reported net additions of 12,400 customers , and ARPU

of $43 .50 . However, compared to prior quarters of 20% growth in roaming minutes of use o n

Dobson's network, this quarter only produced 12% growth in roaming minutes .

           97 . The Company revealed that, by that point it had not actually been receiving any GS M

roaming traffic from AT&T and Cingular . Moreover, the Company reported that approximately fift y

percent of AT&T and Cingular' s customers had already switched to GSM technology. However, the

Company reported that only 275 of its 1727 cell towers had been overlaid with GSM technology .

          98 . Commenting on these results, Sandy Liang, writing for Bear Stearns & Co ., Inc,

noted :

                 While the 17 .5% sequential rate decline [for TDMA] might have been slightly more
                 than we expected, the real surprise was the slowdown in roaming minutes
                 growth , which grew 12% year over year compared with the over 20% growth that
                 the company as a whole had typically experienced . Additionally, the 12% minutes
                 growth should actually be a lower figure as the 440 million roaming minutes that the
                 company reported in 3Q03 includes the results of the Alaska properties acquired
                 from AT&T Wireless in June, while the year ago figures do not . . . While the
                 company's major roaming partners, AT&T Wireless and Cingular have been rapidly
                 deploying GSM customers ; these customers have been unable to roam on Dobson's
                 TDMA network. (Emphasis added) .

          99 . On this news, Dobson stock dropped from $8 .02 per share to $6 .84 per share, on

extremely high volume .

          100 . Nonetheless, the drop was mitigated by defendants' concurrent statements during th e

conference call . Despite the Company's poor third quarter, defendants reaffirmed their previousl y

issued 2004 earnings guidance .2 In so doing, Everett Dobson claimed that the company had "take n

the ri sk" out of generating future roaming revenue by vi rtue of its agreement with AT&T .

          101 . Rick Prentiss , an analyst from Raymond James, asked :

` Interestingly, a Dobson representative (identified only as an "unidentified speaker" in the
conference call transcripts) explained that with respect to the earnings guidance Dobson issued in
October, "We released some very high level guidance on '04 several weeks ago now . But we
typically look at the end of a fiscal year-- calendar year in this case--before we expect or want to
release anything concerning the following year ." This statement shows that the Company's release
of its 2004 EBITDA guidance in October 2003 was uncharacteristically early . That it prematurely
issued earnings guidance to coincide with the height of the Company's five-month onslaught of good
news, mere weeks before Bank of America sold all of its Dobson shares, is further evidence that the
Company was manipulating its public disclosures to inflate the value of its stock .

                  "Can you talk to us a little about what is the termination fee in case somebody does
                  decide to leave and break a contract, and what your experience has been, historically,
                  if people have been breaking contracts? "

Defendant Stephens responded by claiming that :

                  "Our termination fee is based on the number of months you have left on the contract,
                  and we charge a flat $20 per month of remaining contract months . So if you have six
                  months left under contract life, you can get out of that contract for $120 . And to be
                  honest, we see very little of the payouts . People prefer to ride them out. I mean,
                  the facts are-- you can tell by our churn rate being relatively low. I think
                  they're pretty happy with the service " (emphasis added) .

           102 . The statements outlined in ¶¶ 100-101 were materially false or misleading for th e

reasons discussed above in ¶¶ 79-83, and 93-95 . Defendants knew, or were reckless in not knowing ,

that no "risk" had been taken out of Dobson's roaming prospects simply by virtue of its agreemen t

with AT&T because Dobson was nowhere near being ready to service AT&T's roaming customers .

Moreover, defendants knew, or were reckless in not knowing, that the Company had bee n

manipulating subscriber data, so that defendant Stephens' assurances that Dobson was not

experiencing customer turnover were flat-out untrue .

           103 . On November 19, 2003, Dobson announced in a press release that the Company' s

Class A common stock had been approved for trading on the NASDAQ National Market, and would

begin trading on that market on the same day. Everett Dobson proclaimed, "Moving to the

NASDAQ National Market is another step in positioning the company to maximize shareholder

value ."

           104 . On February 17, 2004, Defendants held a conference call to discuss the company' s

results for the fourth quarter of 2003 . Dobson reported a net loss of $70 .3 million, or $0 .53 per

share. Despite having previously forecasted quarterly EBITDA of $104-$108 million , Dobso n

reported only $94 million EBITDA . The Company reported churn of 1 .9%, and net additions o f

14,400 customers . However, the Company also reported that roaming minutes grew only 3% on a

year over year basis . The poor performance was attributed primarily to a loss of 7% of its busines s

from AT&T' s roaming customers .

        105 . Defendants admitted that despite the fact that Company was experiencing 36 %

growth in minutes of use ("MOU") in April 2003, which it said had settled to "around 18%, 19% ,

20%," by October 2003 Dobson had actually expe rienced a decline of 22%, which defendants now

admitted was a "significant change from the seasonal pattern ." Defendants also admi tted that AT&T

had not included Dobson in its customers' GSM roaming plans until early 2004.

        106 . Defendants also reduced 2004 guidance by 20% to an EBITA range of $390-42 5

million in 2004 from the Company's previous guidance of $480-520 million .

        107 . Nevertheless, defendants attempted to mitigate the bad news by claiming that in 2004 ,

full deployment of GSM technology would increase average revenue per user (ARPU) and roaming

minutes . Specifically, defendant Stephens claimed :

                When we look at fourth quarter TDMA ARPU, it was about, and this was for the
                entire base, about a little over $43 . When we go through and look at what our
                rate plan is expected to be , we're looking for an ARPU in excess of $49 .
                (Emphasis added).

Moreover, in referencing the use of Dobson's GSM towers, Everett Dobson claimed :

                But I have to tell you that the transition is happening pretty rapidly . Where we
                have lit up GSM we are starting to see significant growth in GSM minutes. And
                that trend is going to continue the rest of this year and beyond. (Emphasis
                added) .

        108 . Despite defendants' attempts to mute the bad news, Bear Stearns slashed th e

Company's stock rating from "outperform" to "peer perform," stating that "Two straight misses b y

the company and a very large reduction in 2004 guidance is too large to ignore ." Dobson's stock fell

from $7 .47 to $4 . 52 per share , a 36% drop in its market capitalization .

        109 . On February 19, 2004, Bear Stearns explained why Dobson had lost such substantia l

blocks of roaming revenue from AT&T in previous quarters .

                "We believe that because AT&T Wireless customer base is now about 20% GSM,
                Dobson is losing minutes in the interim because it had only completed its GSM
                overlay through the end of 2003 on only 625 of its 1,727 cell sites, so that Dobson
                was likely losing incremental GSM minutes on the rest of its footprint ."

        110 . On May 10, 2004 defendants held a press conference to announce results for the first

quarter of 2004 . The Company announced 1 .9% churn, $43 ARPU, and a net reduction of 5,40 0

customers . Given that the Company had gross additions of 68,000 customers, defendants essentiall y

admitted that the Company lost a total of 73,400 customers in one quarter .

        111 . CW 11 explains that this drastic turnaround in customer statistics was attributable t o

the Company's change in billing systems . According to CW1 1, data in the old billing system was

entered manually, and was accessible to anyone with access to the Company's `H' drive . The new

billing system, however, tracked subscriber data automatically from the point of origination .

According to CW 11, Dobson management had not figured out how to expunge cancellations from it s

new system by the time C W 11 left the Company in May 2004 . Thus, by the end of the first quarter

in 2004, the Company was finally forced to acknowledge that it was losing large amounts o f

customers .

        112 . In the same conference call, defendants reaffirmed the guidance the Company ha d

provided in February 2004 with respect to 2004 EBITDA.

F.      The Class Period Closes : Dobson Limps Through Another Abysmal Quarter .

        113 . On August 10, 2004, Dobson held a conference call to announce its second quarte r

financial results . The Company reported a net loss of $15 .9 million per share, or $(0 .12) per share .

Dobson also dramatically cut its forecasts for subscriber additions in 2004, after reporting that th e

Company had only added a net of 7,200 subscribers in the second quarter, and that ARPU had falle n

to $40.03 . The Company reported only a two percent increase in roaming minutes of use on

Dobson's network on a year over year basis, and churn of 1 .7% .

        114 . Also, Dobson further slashed its earnings outlook for 2004, reducing EBITD A

projections to the range of $335-$345 million.

        115 . Writing for Soleil Securities Group, Inc ., Greg Lundberg stated that

               "DCEL's 2Q04 conference calls was one of the least inspiring investor calls we've
               heard recently . DCEL has been rescued from bankruptcy's door before . Back in
               2002-03 it was a very acute issue that was solved through creditor negotiation . Now,
               the problem seems operational, which is more challenging to fix ."

        116 . Bear Stearns analyst Phil Cusak noted that the Company had now shifted its focu s

away from increasing other carriers' roaming minutes on its network and adding customers, the tw o

measures by which the company had previously touted as indicators of its growth . Instead, the

Company was now focused on increasing its ARPU. It planned to accomplish this by forcing it s

customers to migrate to more expensive calling pl ans, which the Company expected would caus e

churn to increase above 2% . What was particularly troubling, according to Cusak, were the detail s

about Dobson ' s migration of customers to GSM and its apparent non-impact on ARPU , contrary t o

the Company' s prior claims :

               "Dobson management in the past has said that the preliminary GSM subscribers were
               averaging an ARPU of $6 above the TDMA average, a statistic which gave investors
               hope that the GSM transition would bring a steady increase to ARPU . Dobson said
               on its conference call, however, that these customers had already been paying a
               higher than average ARPU, making the comparison to TDMA an invalid argument ."

       117 . On this news, Dobson's stock plunged another 55%, to close at $1 .09 per share .

       118 . By virtue of their statements during the 2Q04 conference call, Defendants hav e

admitted that the statements outlined in ¶¶ 39,53, and 107, in which they promised that a shift t o

GSM technology would provide for a more "profitable" customer and would drive ARPU "abov e

$49," were mate rially false and misleading when made . Defendants knew, or were extremely

reckless in not knowing, that the shift to GSM would in fact not provide greater ARPU . This is yet

another metric that Defendants ' issued misleading statements about, the effect of which was to

artificially inflate the value of Dobson ' s stock throughout the Class Period.

        119 . Moreover, after report ing only a two percent increase in roaming minutes, (afte r

reporting growth in the twenty percent range a year prior), defendants have revealed that Everett

Dobson' statement in ¶ 107 that the Company was starting to see significant growth in roaming

minutes in May 2004 and would continue to see that growth was materially misleading, because, in

fact, no such "significant growth" was occurring .

G.     Additional Evidence Of Sciente r

        120 . In addition to taking advantage of Dobson's stock value as described in ¶¶ 44-47,49 ,

54, 58, and 59, Company insiders personally reaped the benefits of Dobson's artificially inflated

stock value through illegal insider sales . Each of these sales came amidst the Company's five-month

onslaught of positive news, which artificially inflated the value of the stock . Moreover, each of the

insiders below disposed of substantial portions of their holdings in the Company .

        121 . On July 10, 2003, Defendant LeForce sold almost 75,000 shares of Dobson stock, at

$6.84 per share, for over $500,000 in proceeds . This represented a sale of over 80% of his holdings

in Dobson .

       122 . On August 29, 2003, defendant Stephens sold all of his 13,666 shares of Dobson

stock for over $120,000.

       123 . On August 29, 2003, Treasurer Richard Sewell sold 41,000 shares of Dobson stock

for over $364,000 . This represented a sale of 55% of Sewell's holdings .

        124 . Moreover, as alleged herein, Defendants acted with scienter in that the Individual

Defendants knew that the public documents and statements issued or disseminated in the name of the

Company were materially false and misleading ; knew that such statements or documents would be

issued or disseminated to the investing public ; and knowingly and substantially participated or acqui-

esced in the issuance or dissemination of such statements or documents as primary violations of the

federal securities laws . As set forth elsewhere herein in detail, the Individual Defendants, by virtue

of their receipt of information reflecting the true facts regarding Dobson, their control over, and/or

receipt and/or modification of Dobson allegedly materially misleading misstatements and/or their

associations with the Company which made them privy to confidential proprietary information

concerning Dobson, participated in the fraudulent scheme alleged herein .

        125 . The Individual Defendants knew and/or recklessly disregarded the falsity an d

misleading nature of the information that they caused to be disseminated to the investing public . The

ongoing fraudulent scheme described in this complaint could not have been perpetrated over a

substantial period of time, as has occurred, without the knowledge and complicity of the personnel at

the highest level of the Company, including the Individual Defendants .

                                UNDISCLOSED ADVERSE FACT S

        126 . The market for Dobson's securities was open, well-developed and efficient at all

relevant times . As a result of these materially false and misleading statements and failures to

disclose, Dobson's securities traded at artificially inflated prices during the Class Period . Plaintiffs

and other members of the Class purchased or otherwise acquired Dobson securities relying upon the

integrity of the market price of Dobson's securities and market information relating to Dobson, and

have been damaged thereby.

           127 . During the Class Period, defendants materially misled the investing public, thereb y

inflating the price of Dobson's securities, by publicly issuing false and misleading statements an d

omitting to disclose material facts necessary to make defendants' statements, as set forth herein, no t

false and misleading. Said statements and omissions were materially false and misleading in that

they failed to disclose material adverse information and misrepresented the truth about the Company,

its business and operations, as alleged herein .

           128 . At all relevant times, the material misrepresentations and omissions particularized i n

this Complaint directly or proximately caused or were a substantial contributing cause of the

damages sustained by Plaintiff and other members of the Class . As described herein, during the

Class Period, defendants made or caused to be made a series of materially false or misleadin g

statements about Dobson's business, prospects and operations . These material misstatements and

omissions had the cause and effect of creating in the market an unrealistically positive assessment o f

Dobson and its business , prospects and operations , thus causing the Company's securities to b e

overvalued and artificially inflated at all relevant times. Defendants' materially false and misleading

statements during the Class Period resulted in plaintiff and other members of the Class purchasin g

the Company's securities at artificially inflated prices, thus causing the damages complained of

herein .

                          FRAUD-ON-THE-MARKET DOCTRIN E

           129 . At all relevant times, the market for Dobson securities was an efficient market for th e

following reasons, among others : Dobson stock met the requirements for listing, and was listed and

actively traded on both the NASDAQ Small and National markets, both being highly efficient and

automated markets ; as a regulated issuer, Dobson filed periodic public reports with the SEC and the

NYSE ; Dobson regularly communicated with public investors via established marke t

communication mechanisms, including through regular disseminations of press releases on the

national circuits of major newswire services and through other wide-ranging public disclosures, such

as communications with the financial press and other similar reporting services ; and, Dobson was

followed by several securities analysts employed by major brokerage firms who wrote reports which

were distributed to the sales force and certain customers of their respective brokerage firms . Each of

these reports was publicly available and entered the public marketplace .

        130 . As a result of the foregoing, the market for Dobson securities promptly digeste d

current information regarding Dobson from all publicly-available sources and reflected such

information in Dobson's stock price . Under these circumstances, all purchasers of Dobson securities

during the Class Period suffered similar injury through their purchase of Dobson securities at

artificially inflated prices and a presumption of reliance applies . Plaintiff and other members of the

Class were further damaged when the truth about Dobson's financial condition was revealed to the

public, which caused the value of Dobson shares that Plaintiff and other members of the Class

purchased at previously artificially inflated prices to drastically plunge .

                                        NO SAFE HARBO R

        131 . The statutory safe harbor provided for forward-looking statements under certain

circumstances does not apply to any of the allegedly false statements pleaded in this complaint .

Many of the specific statements pleaded herein were not identified as "forward-looking statements"

when made . To the extent there were any forward-looking statements, there were no meaningful

cautionary statements identifying important factors that could cause actual results to differ materially

from those in the purportedly forward-looking statements . Alternatively, to the extent that the

statutory safe harbor does apply to any forward-looking statements pleaded herein, Defendants are

liable for those false forward-looking statements because at the time each of those forward-lookin g

statements was made, the particular speaker knew that the particular forward-looking statement wa s

false, and/or the forward-looking statement was authorized and/or approved by an executive office r

of Dobson who knew that those statements were false when made .

                                           COUNT I
                                 Violation Of Section 10(b) O f
                           The Exchange Act Against And Rule 10b-5
                        Promulgated Thereunder Against All Defendant s

        132 . Plaintiff repeats and re-alleges each and every allegation contained above as if fully

set forth herein.

        133 . During the Class Period, Defendants carried out a plan, scheme and course of conduc t

which was intended to and, throughout the Class Period, did : (i) deceive the investing public,

including Plaintiff and other Class members, as alleged herein ; and (ii) cause Plaintiff and other

members of the Class to purchase Dobson securities at artificially inflated prices . In furtherance o f

this unlawful scheme, plan and course of conduct, Defendants, and each of them, took the actions se t

forth herein .

        134 . Defendants (a) employed devices, schemes, and artifices to defraud ; (b) made untru e

statements of material fact and/or omitted to state material facts necessary to make the statements not

misleading ; and (c) engaged in acts, practices, and a course of business which operated as a fraud

and deceit upon the purchasers of the Company's securities in an effort to maintain artificially high

market prices for Dobson securities in violation of Section 10(b) of the Exchange Act and Rule I Ob-

5 . All defendants are sued either as primary participants in the wrongful and illegal conduct charged

herein or as controlling persons as alleged below .

        135 . Defendants, individually and in concert, directly and indirectly, by the use, means o r

instrumentalities of interstate commerce and/or of the mails , engaged and participated in a

continuous course of conduct to conceal adverse material information about the business, operations

and future prospects of Dobson as specified herein .

        136 . Defendants employed devices, schemes and artifices to defraud, while in possessio n

of material adverse non-public information and engaged in acts, practices, and a course of conduct a s

alleged herein in an effort to assure investors of Dobson's value and performance and continued

substantial growth, which included the making of, or the participation in the making of, untru e

statements of material facts and omitting to state material facts necessary in order to make the

statements made about Dobson and its business operations and future prospects in the light of th e

circumst ances under which they were made, not misleading , as set forth more particularly herein ,

and engaged in transactions, practices and a course of business which operated as a fraud and decei t

upon the purchasers of Dobson securities during the Class Period .

        137 . Each of the Individual Defendants' primary liability, and controlling person liability,

arises from the following facts : (i) the Individual Defendants were high-level executives and/or

directors of the Company during the Class Period and members of the Company's management team

or had control thereof, (ii) each of the Individual Defendants, by virtue of his responsibilities and

activities as a senior officer and/or director of the Company was privy to and participated in the

creation, development and reporting of the Company's internal budgets, plans, projections and/o r

reports ; (iii) each of the Individual Defendants enjoyed significant personal contact and familiarit y

with the other Defendants and was advised of and had access to other members of the Company' s

management team, internal reports and other data and information about the Company's finances ,

operations , and sales at all relevant times ; and (iv) each of the Individual Defendants was aware o f

the Company's dissemination of information to the investing public which they knew or recklessl y

disregarded was materially false and misleading .

        138 . Defendants had actual knowledge of the misrepresentations and omissions of

material facts set forth herein, or acted with reckless disregard for the truth in that they failed to

ascertain and to disclose such facts, even though such facts were available to them . Defendants'

material misrepresentations and/or omissions were done knowingly or recklessly and for the purpose

and effect of concealing Dobson's operating condition and future business prospects from the

investing public and supporting the artificially inflated price of its securities . As demonstrated by

defendants' overstatements and misstatements of the Company's business, operations and earnings

throughout the Class Period, defendants, if they did not have actual knowledge of the

misrepresentations and omissions alleged, were reckless in failing to obtain such knowledge by

deliberately refraining from taking those steps necessary to discover whether those statements were

false or misleading .

        139 . As a result of the dissemination of the materially false and misleading informatio n

and failure to disclose material facts, as set forth above, the market price of Dobson securities was

artificially inflated during the Class Period. In ignorance of the fact that market prices of Dobson

publicly-traded securities were artificially inflated, and relying directly or indirectly on the false and

misleading statements made by defendants, or upon the integrity of the market in which the

securities trade, and/or on the absence of material adverse information that was known to o r

recklessly disregarded by defendants but not disclosed in public statements by defendants during the

Class Period, Plaintiff and the other members of the Class acquired Dobson securities during the

Class Period at artificially high prices and were damaged thereby . Plaintiff and other members of

the Class were also damaged when the truth about Dobson's financial condition was revealed to the

public, which caused the value of Dobson shares that Plaintiff and other members of the Class

purchased at previously artificially inflated prices to drastically plunge .

         140 . At the time of said misrepresentations and omissions, Plaintiff and other members o f

the Class were ignorant of their falsity, and believed them to be true . Had Plaintiff and the other

members of the Class and the marketplace known the truth regarding the problems that Dobson wa s

experiencing, which were not disclosed by defendants, Plaintiff and other members of the Clas s

would not have purchased or otherwise acquired their Dobson secu rities , or, if they had acquire d

such securities during the Class Period, they would not have done so at the artificially inflated price s

which they paid .

         141 . By virtue of the foregoing, defendants have violated Section 10(b) of the Exchang e

Act, and Rule 1 Ob-5 promulgated thereunder.

         142 . As a direct and proximate result of defendants' wrongful conduct, Plaintiff and th e

other members of the Class suffered damages in connection with their respective purchases and sale s

of the Company' s securi ties during the Class Pe riod.

                                        COUNT II
                               Violation Of Section 20(a) O f
                     The Exchange Act Against the Individual Defendant s

         143 . Plaintiff repeats and re-alleges each and every allegation contained above as if fully

set forth herein .

         144 . The Individual Defendants acted as controlling persons of Dobson within the

meaning of Section 20(a) of the Exchange Act as alleged herein . By virtue of their high-level

positions, and their ownership and contractual rights, participation in and/or awareness of th e

Company's operations and/or intimate knowledge of the false financial statements filed by th e

Company with the SEC and disseminated to the investing public, the Individual Defendants had th e

power to influence and control and did influence and control, directly or indirectly, the decision-

making of the Company, including the content and dissemination of the various statements whic h

Plaintiff contends are false and misleading . The Individual Defendants were provided with or ha d

unlimited access to copies of the Company's reports, press releases, public filings and othe r

statements alleged by Plaintiff to be misleading prior to and/or shortly after these statements wer e

issued and had the ability to prevent the issuance of the statements or cause the statements to b e

corrected .

        145 . In particular, each of these Individual Defendants had direct and supervisor y

involvement in the day-to-day operations of the Company and, therefore, is presumed to have ha d

the power to control or influence the particular transactions giving rise to the securities violations a s

alleged herein, and exercised same .

        146 . As set forth above, the Individual Defendants each violated Section 10(b) and Rul e

1Ob-5 by their acts and omissions as alleged in this Complaint. By virtue of their positions a s

controlling persons, the Individual Defendants are liable pursuant to Section 20(a) of the Exchang e

Act. As a direct and proximate result of the Individual Defend ants' wrongful conduct , Plaintiff and

other members of the Class suffered damages in connection with their purchases of the Company' s

securities during the Class Period .

        WHEREFORE , Plaintiff prays for relief and judgment, as follows :

                • Determining that this action is a proper class action, certifying Plaintiff
                       as Class Representative pursuant to Rule 23 of the Federal Rules of Civil
                       Procedure and Plaintiff's counsel as Class Counsel ;

                • Awarding compensatory damages in favor of Plaintiff and the other Class
                       members against all defendants, jointly and severally, for all damages
                       sustained as a result of defendants' wrongdoing, in an amount to be proven
                       at trial, including interest thereon ;

                • Awarding Plaintiff and the Class their reasonable costs and expenses
                      incurred in this action, including counsel fees and expert fees ; an d

               • Such other and further relief as the Court may deem just and proper .

                                      JURY TRIAL DEMANDED

Plaintiffs hereby demand a trial by jury.

Dated : April 20, 2005

                                                         /s/ Todd M. Mosser
                                                   SCHIFFRIN & BARROWAY, LLP
                                                   Gregory M . Castaldo
                                                   Trevan Borum
                                                   Todd M . Mosse r
                                                   280 King of Prussia Road
                                                   Radnor, PA 19087
                                                   (610) 667-770 6
                                                   Lead Counsel for Plaintiff

                                                   FEDERMAN & SHERWOOD
                                                   William B . Federman
                                                   Bar Number : 2853
                                                   120 N. Robinson, Suite 2720
                                                   Oklahoma City, OK 73102
                                                   Telephone : 405/235-1560
                                                   Facsimile : 405/239-2112
                                                   Counsel for Plaintiff

                                                   STRONG MARTIN & ASSOCIATES
                                                   Don Strong
                                                   G. Steve Marti n
                                                   120 N. Robinson Ave
                                                   Suite 2700
                                                   Oklahoma City, OK 73102
                                                   Liaison Counsel for Plaintif f

                               CERTIFICATE OF SERVICE

I hereby certify that on April 20, 2005, I electronically transmitted the attached
document to the Clerk of the Court using the ECF System for (1) filing and (2)
transmittal of a Notice of Electronic Filing to the following ECF registrants : Warren F. Bickford;
Jennifer F .Sherrill, Stuart W. Emmons, William B . Federman, Don S . Strong, G . Stephen Martin,
Gregory Castaldo, Trevan Borum, R. Thomas Seymour, Drew Neville, Jr., Russell A. Cook,
George S . Corbyn, Jr ., Kathryn M . Zynda, and William A . Johnson.

                               s/ Todd M. Mosser


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