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SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 17613 / July 15, 2002

SECURITIES AND EXCHANGE COMMISSION v. HEALTH MAINTENANCE CENTERS, INC., ZNETIX, INC., CASCADE POINTE OF ARIZONA, LLC, CASCADE POINTE OF NEVIS, LLC, KEVIN L. LAWRENCE, DONOVAN C. CLAFLIN, CLIFFORD G. BAIRD, BAINBRIDGE HUMAN PERFORMANCE CENTERS, PLLC, KIMBERLY ALEXANDER, BONNIE M. COUCH, STACY GRAY, and VICKI L. LAWRENCE, Civil Action No. C 02-0153 P (W.D. Wash.)

CEO'S MOTHER AND SISTER DEFY COURT ORDER IN $91 MILLION SECURITIES FRAUD ACTION; COURT HOLDS THEM IN CONTEMPT

On July 9, 2002, the United States District Court in Seattle held in contempt two of the defendants in a $91 million securities fraud action brought by the Securities and Exchange Commission and ordered them to turn over a Cadillac Escalade and a $57,000 Dodge Ram Truck immediately or pay a $1,000 fine that would double each day. The next day, the two defendants -- Bonnie M. Couch, 60, of Bainbridge Island, Washington and Kimberly Alexander, 39, of Poulsbo, Washington, the mother and sister of Health Maintenance Centers, Inc. ("HMC") and Znetix Inc.'s CEO -- turned over the luxury automobiles to the court-appointed receiver.

Previously, the SEC filed an emergency action on January 23, 2002, against Znetix, HMC, three related companies, their controlling executives, and several family members of the CEO, alleging that the executives falsely promised investors lucrative profits from the imminent initial public offering of Znetix. In connection with that emergency action, the Court ordered all defendants to turn over control of their automobiles, watercraft and aircraft to the court-appointed receiver.

In April 2002, two of the defendants, Couch and Alexander, defied the Court's order and refused to turn over the Cadillac Escalade and Dodge Ram. As a result, the SEC on April 30, 2002 filed a motion to hold Couch and Alexander in contempt of court. At a hearing on July 9, the Court found that Couch and Alexander had failed to comply with the Court's prior order and held them in contempt.


http://www.sec.gov/litigation/litreleases/lr17613.htm

Modified: 07/16/2002