Litigation Release No. 19884 / October 25, 2006

Accounting and Auditing Enforcement Release No. 2498 / October 25, 2006

SEC v. Thomas P. Clark, Civil Action No. CV 06-380 ADM/AJB (D. Minn.)

Court Enters Judgment Against Thomas P. Clark, Former CFO of Health Risk Management, Inc.

On October 19, 2006, United States District Judge Ann D. Montgomery of the United States District Court for the District of Minnesota entered a final judgment against Thomas P. Clark in a civil action brought by the Securities and Exchange Commission. Clark, of Edina, Minnesota, was charged with causing Health Risk Management, Inc. (HRMI) to file materially false financial statements. Clark consented to the entry of the judgment pursuant to a settlement with the Commission.

In its complaint, the Commission alleged that in August 2000, Clark negotiated a $1.85 million settlement on behalf of HRMI and its wholly owned Medicaid HMO to settle an arbitration dispute with one of the HMO's healthcare providers. According to the complaint, Clark sought to hide the full amount of the settlement expense by recasting $1.35 million of the settlement as a pre-paid "retainer" for consulting services. The complaint alleges that HRMI never needed the consulting services and never received them. The complaint further alleges that Clark booked the $1.35 million payment as an asset rather than as a settlement expense, causing HMRI to file materially false financial statements with the Commission for the second and third quarters of 2000. The complaint also alleges that Clark failed to inform HRMI's outside auditors about the consulting agreement and the true amount of the settlement.

Without admitting or denying the allegations in the Commission's complaint, Clark consented to a Final Judgment permanently enjoining him from violating Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5, 13b2-1, and 13b2-2, and from aiding and abetting HRMI's violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20 and 13a-13. The Final Judgment also orders Clark to pay a civil penalty of $20,000, which was based, in part, on his financial condition as represented to the Commission, and prohibits him, for five years, from acting as an officer or director of a securities issuer.