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U.S. Securities and Exchange Commission

UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 43388/ September 29, 2000

ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 1321 / September 29, 2000

ADMINISTRATIVE PROCEEDING
File No. 3-10332

In the Matter of

DREW BERGMAN, CPA,

Respondent.

ORDER INSTITUTING PUBLIC PROCEEDINGS PURSUANT TO RULE 102(e) OF THE COMMISSION'S RULES OF PRACTICE, MAKING FINDINGS AND IMPOSING SANCTIONS

I.

The Securities and Exchange Commission ("Commission") deems it appropriate that public administrative proceedings be, and hereby are, instituted against Drew Bergman ("Bergman") pursuant to Rule 102(e) of the Commission's Rules of Practice.1

In anticipation of the institution of these proceedings, Bergman has submitted an Offer of Settlement ("Offer") which the Commission has determined to accept. Solely for the purpose of this proceeding and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the findings contained herein, except for those set forth below in Section II, paragraph C., which is admitted, Bergman, by his Offer, consents to the entry of the findings and imposition of sanctions contained in this Order Instituting Public Proceedings, Making Findings and Imposing Sanctions ("Order").

Accordingly, IT IS ORDERED that proceedings against Bergman be, and hereby are, instituted.

II.

On the basis of this Order and the Offer submitted by Bergman, the Commission finds that:

A. Health Management, Inc. ("Health Management") is a former Delaware Corporation, which ceased to exist after it was purchased in October 1997. Health Management was headquartered in Holbrook, New York, and was in the business of providing outpatient drug therapies and management services to individuals, hospitals and insurance companies. Health Management's stock was registered with the Commission pursuant to Section 12(g) of the Exchange Act and traded on the National Association of Securities Dealers Automated Quotation System ("NASDAQ").

B. Drew Bergman, age 43, is a resident of Merrick, New York, and was the Chief Financial Officer of Health Management, Inc. until December 26, 1995, at which time he was appointed Treasurer and Chief Development Officer. Bergman resigned his positions at Health Management, Inc. on February 16, 1996. Bergman has been licensed by the state of New York as a certified public accountant since 1982.

C. On September 26, 2000, a Final Judgment and Order was entered against Bergman by the United States District Court for the Eastern District of New York, in Securities and Exchange Commission v. Clifford E. Hotte, et al., Civil Action No. CV00-5704 (E.D. NY), pursuant to his consent. The Final Judgment and Order permanently enjoined Bergman from future violations of Sections 17(a) of the Securities Act of 1933; Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(5) of the Securities Exchange Act of 1934; and Rules 10b-5, 12b-20, 13a-1, 13a-13, 13b2-1 and 13b2-2 thereunder; ordered him to disgorge the sum of $23,775, together with prejudgment interest; ordered him to pay a civil penalty in the amount of $53,775; and barred Bergman from serving as an officer or director of any reporting company.

D. The Commission's Complaint alleged that, throughout fiscal 1995, beginning May 1, 1994, and continuing through the first two quarters of fiscal 1996, Health Management issued false and misleading quarterly and annual financial statements and press releases in which it materially overstated its revenues, earnings and financial condition.

E. The Complaint alleged, among other things, that as the Chief Financial Officer of Health Management, Bergman conceived and executed the fraudulent accounting scheme at the company and directed others in carrying out the scheme. Bergman prepared and signed Health Management's false financial statements and participated in the preparation of false press releases. In order to conceal the scheme, Bergman also actively misled Health Management's independent auditors and the independent counsel appointed by a Special Committee of the board of Health Management to investigate accounting irregularities.

III.

On the basis of the foregoing, the Commission deems it appropriate to accept the Offer submitted by Bergman and to impose the sanctions specified therein.

Accordingly, IT IS HEREBY ORDERED, effective immediately, that Bergman is suspended from appearing or practicing before the Commission as an accountant.

By the Commission

Jonathan G. Katz
Secretary


Footnotes

1 Rule 102(e)(3)(i), in relevant part, provides that the Commission may suspend from appearing or practicing before it any accountant who by name has been permanently enjoined, by a court of competent jurisdiction in an action brought by the Commission, from violating any provision of the federal securities laws or the rules and regulations thereunder. 17 C.F.R. 201.102(e)(3)(i).

http://www.sec.gov/litigation/admin/34-43388.htm


Modified:09/29/2000