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News Release: 02-10

GRAY DAVIS, Governor
Date: 12/20/02

DEMETRIOS A. BOUTRIS, Commissioner

**INVESTOR ALERT**

Department of Corporations Orders Sale of Fitness Club Stock to Stop

Company's President Used Investors' Funds to Buy Luxury Items

 

Sacramento, December 20, 2002 — California Corporations Commissioner Demetrios A. Boutris today announced that the Department of Corporations has issued a Desist and Refrain Order against Washington-based Health Maintenance Centers, Inc. (HMC), ordering the company and its president, Keith L. Lawrence, to stop offering and selling unqualified, non-exempt securities in California.

"Instead of using investors' money to build fitness centers, HMC used the money to finance Keith Lawrence's expensive taste in houses, cars and boats," said Commissioner Boutris. "Cases like this drive home the need for California consumers to call the Department to find out if their prospective investment is registered or whether complaints have been filed."

From 1997 through March 2001, Health Maintenance Centers, Inc. sold approximately $9 million of stock to over 1,100 investors in 24 states, including California, with the promise that the shares could be exchanged for a soon to be publicly listed company, Znetix, Inc. No initial public offering ever took place, Mr. Lawrence and other officers of HMC diverted the money for their private use, and the SEC froze their assets earlier this year. Investors who believe that they are owed money should contact the federally appointed receiver, Michael Grassmueck, at www.znetix.com.

The California Department of Corporations reminds consumers to contact the Department before they make any investment. Potential investors should call the Department's toll-free telephone number, 1-866-ASK-CORP (1-866-275-2677), to verify that the stock they are considering has been registered.

The Department of Corporations is California's Investment and Financing Authority, reporting to the Business, Transportation and Housing Agency and the Governor. The Department is responsible for the regulation, enforcement and licensing of securities, franchises, off-exchange commodities, investment and financial services, independent escrows, consumer and commercial finance lending and residential mortgage lending. For further information or to obtain a complaint form, see the Department's Web site at www.corp.ca.gov or call 1-866-ASK-CORP (1-866-275-2677).

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