Health Maintenance Centers, Inc. et al.

On February 15, 2002, the SEC obtained preliminary injunctions against Kevin Lawrence and his companies, Health Maintenance Centers (HMC) and Znetix, Donovan Claflin, HMC's treasurer, Cascade Pointe of Arizona and Cascade Pointe of Nevis (collectively Cascade), and their managing director, Clifford Baird. The SEC also obtained asset freezes against these and other defendants.

The SEC alleged that from 1995 to January 2002, HMC, Znetix, and Cascade raised approximately $91 million from more than 5,000 investors nationwide by falsely promising that: (1) Znetix would conduct an initial public offering (IPO); (2) investor funds would be used to finance HMC and Znetix's purported business of developing and operating "medically integrated" health and fitness clubs; and (3) funds would be used to capitalize the Znetix IPO. Instead, Lawrence and Claflin spent a large portion of the funds on themselves and their friends and family. In addition, the SEC alleged that since May 2001, Cascade and Baird sold nearly $17 million of unregistered securities for the sole purpose of purchasing HMC shares for a purported HMC rescission offer. For more information bout the SEC's action, you can read Litigation Release Nos. 17335 (Jan. 24, 2002) and 17372 (Feb. 21. 2002).

On February 15, 2002, the Court appointed Michael Grassmueck as Receiver over HMC, Znetix and Cascade. In October 2005, the Receiver distributed approximately $18.5 million to eligible claimants. On March 7, 2007, the Receiver made a final pro rata distribution. According to the Court's Order, claimants must cash their checks within 90 days of distribution or by June 5, 2007. Those not cashed by that date will be voided and remaining funds will be forwarded to the SEC. For the latest information, you can visit the Receiver's website.

http://www.sec.gov/divisions/enforce/claims/healthmaincenters.htm