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

Litigation Release No. 18240 / July 21, 2003

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.)

Commission Settles with Mother and Fiancee of Former Znetix CEO

On July 14 and 15, 2003, the Securities and Exchange Commission entered into settlements with relief defendants Stacy Gray, 29, and Bonnie Couch, 61, the fianc©e and mother of Kevin Lawrence, former CEO of Znetix, Inc., and Health Maintenance Centers, Inc. (HMC) based on Bainbridge Island, Washington. As alleged in the Commission's complaint filed in federal district court in Seattle, Washington, on January 23, 2002, Znetix, HMC and a related company raised more than $91 million from more than 5,000 investors nationwide with false promises of an imminent, lucrative initial public offering of Znetix.

Although Couch and Gray, as relief defendants, were not charged with substantive violations of the federal securities laws, they agreed to disgorge all ill-gotten gains they obtained from the stock offerings. Among Couch's ill-gotten gains are real property, automobiles, and jewelry. Gray received, among other things, a $330,000 engagement ring from Lawrence. Previously, on February 15, 2002, the Court appointed a permanent receiver over Znetix, HMC, and related entities. Pursuant to the judgments entered against Couch and Gray, they will turn over all ill-gotten gains to the Court-appointed receiver.

The Commission's case is pending against the remaining defendants, Kevin L. Lawrence, Donovan C. Claflin, Clifford G. Baird, and Kimberly Alexander. On July 31, 2002, a federal grand jury in Seattle returned a sixty-four count Indictment, charging Lawrence with securities fraud, wire fraud, mail fraud, money laundering, and conspiracy to commit those offenses. Lawrence was arrested on August 1, 2002, and was ordered detained pending trial. His trial is scheduled to commence on March 22, 2004. Claflin has pled guilty to securities fraud and conspiracy and Baird to conspiracy. Both are obligated to cooperate with the government.