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U.S. Securities and Exchange Commission

Before the

Release No. 43389 / September 29, 2000

Release No. 1322 / September 29, 2000

File No. 3-10333

In the Matter of





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

In anticipation of the institution of these proceedings, Gomez 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, Gomez, 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 Gomez be, and hereby are, instituted.


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

A. Luis E. Gomez, age 38, is a resident of Jericho, New York, and was Controller of Health Management, Inc. from December 1993 until July 1996. Gomez has been licensed in the state of New York as a certified public accountant since October 1995.

B. 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").

C. On September 26, 2000, a Final Judgment and Order was entered against Gomez 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 pursuant to his consent. The Final Judgment and Order permanently enjoined Gomez from future violations of Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 and Rules 10b-5, 13b2-1 and 13b2-2 thereunder; and ordered him to pay a civil penalty in the amount of $10,000.

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 controller of Health Management, Gomez knowingly participated in the fraudulent accounting scheme at Health Management. Gomez prepared fraudulent entries in the company's books and directed other Health Management employees in carrying out the scheme. Gomez also assisted Health Management's Chief Executive Officer and Chief Financial

Officer in the preparation of false financial statements filed with the Commission. Finally, Gomez misled Health Management's independent auditors in order to conceal the scheme, as well as independent counsel appointed by a Special Committee of the board of Health Management to investigate accounting irregularities.


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

Accordingly, IT IS HEREBY ORDERED, effective immediately, that:

A. Gomez is suspended from appearing or practicing before the Commission as an accountant.

B. After five years from the date of this Order, Gomez may request that the Commission consider his reinstatement by submitting an application (attention: Office of the Chief Accountant) to resume appearing or practicing before the Commission as:

1. a preparer or reviewer, or a person responsible for the preparation or review, of any public company's financial statements that are filed with the Commission. Such an application must satisfy the Commission that Gomez' work in his practice before the Commission will be reviewed either by the independent audit committee of the public company for which he works or in some other acceptable manner, as long as he practices before the Commission in this capacity; and/or

2. an independent accountant. Such an application must satisfy the Commission that: (a) Gomez or the firm with which he is associated is a member of the SEC Practice Section of the American Institute of Certified Public Accountants Division for CPA Firms ("SEC Practice Section"); (b) Gomez or the firm has received an unqualified report relating to his or the firm's most recent peer review conducted in accordance with the guidelines adopted by the SEC Practice Section; and (c) as long as Gomez appears or practices before the Commission as an independent accountant, he will remain either a member of the SEC Practice Section or associated with a member firm of the SEC Practice Section, and will comply with all applicable SEC Practice Section requirements, including all requirements for periodic peer reviews, concurring partner reviews, and continuing professional education.

C. The Commission's review of an application by Gomez to resume appearing or practicing before the Commission may include consideration of, in addition to the matters referenced above, any other matters relating to Gomez' character, integrity, professional conduct, or qualifications to appear or practice before the Commission.

By the Commission.

Jonathan G. Katz


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).