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A trail of complaints

Even before federal regulators filed suit against his companies this week, Znetix/Health Maintenance Center principal Kevin Lawrence was the target of ongoing civil complaints and liens.

Under threat of eviction, the company agreed last week to vacate leased space on the second floor of the Pavilion building, across the street from the main HMC/HPC gym.

The agreement to give up the space – 11,000 square feet, leased over the course of several years but half of it never used – came the evening of Jan. 17.

A hearing had been scheduled in Kitsap County Superior Court the following morning on the Pavilion owner’s petition to evict the tenants for non-payment of some $75,000 in rent.

Jeff Brein, one of the Pavilion’s co-owners, described the agreement to terminate the lease as “all very amiable.”

“We wanted them to occupy the space, or give it back to us so somebody else could occupy it,” he said.

The Pavilion space was leased in the name of the Human Institute Corporation. The lease was signed by HIC president Kevin L. Lawrence, also the founder and CEO of related entities HMC, the Human Performance Center and Znetix, Inc.

About half of the space had been used by aerobics classes, but those were discontinued several weeks ago. A sign left on the door cited the resignation of the instructor.

The rest of the space had been intended for use as a martial arts studio, but was never used.

Brein this week declined to say how much HMC agreed to pay to terminate the lease, which otherwise would run through 2004.

He did say he was glad to secure the agreement, coming as it did just days before federal regulators filed suit against Lawrence, Znetix/HMC and several principals, alleging a $74 million securities fraud involving 5,000 investors.

The last-minute resolution of the Pavilion’s action is one of a number of recent instances in which a Lawrence company resolved a claim against it after suit was filed, according to court records in Kitsap and King counties.

Other instances include:

l Shane McDermott of Bainbridge Island sued Lawrence and other defendants in Kitsap County Superior Court in November over an employment contract. According to the complaint, McDermott was hired by Znetix as “national physiology director” in March 2000 at a salary of $12,500 per month. The contract said that if McDermott were terminated, he would receive 12 months’ severance pay, the complaint said.

The complaint alleges that McDermott was terminated in August 2001, and was asked to sign a contract calling for two months’ severance pay. When he refused to sign the contract, Znetix did not give him his last week’s check, nor did it pay him any severance.

That suit has been tentatively resolved, said Andy Maron, McDermott’s attorney. The terms are confidential, Maron said.

l A company called Aleutian Spray Fisheries, Inc., and four individuals who claimed to have invested $120,000 in HMC, used the courts to seek return of their money. They claimed that HMC’s attorneys agreed to a refund and signed a contract to that effect, then failed to follow through. That suit, filed in August in King County, was settled in late October and the complaint dismissed.

l Kitsap County records also show that on Dec. 21, Bainbridge architect Peter O’Connor filed a lien against the main HPC facility on Madison Avenue for over $24,000 in architectural services.

Under state law, certain classes of people who perform work that benefits real property can file a lien against that property, and if the debt is not paid, can foreclose on the property and be paid out of the proceeds of the sale.

The health club property is not actually owned by HPC, but by The Landing on Bainbridge Island, Inc., which lists former islander Dick Bowen, now a Whidbey Island resident, as its principal.

Several similar complaints were filed last year, alleging non-payment of rent or other obligations.

In August 2001, Znetix was sued to evict the company from offices the Rainier Tower in downtown Seattle. According to court papers, over $30,000 in rent was overdue. Shortly before a scheduled hearing in King County Superior Court, the back rent was paid, according to attorneys for the landlord.

And in May 2001, a company called MBI Systems sued Znetix in King County, claiming it was owed almost $50,000 for office furniture. Znetix failed to respond, and a judgment by default was entered against it, court records show. Two weeks later, that action was compromised and settled.

Similar financial problems have extended to Lawrence and his wife Vicki, according to Kitsap County records.

Viking Fence and Lydell Construction have filed liens for more than $18,000 on residential property the Lawrences own on Miller Road. The two-home, two-carriage house spread on eight acres – described on a realty flier as a “family compound” – is currently listed for sale for $1 million.

And Snyder Electric and Drury Construction have placed liens for more than $8,000 on property the couple owns in Poulsbo.

Lien claimants are required to file releases when their claims are satisfied, and as of last week, no such releases appeared in the county records.

Staff Writer Douglas Crist contributed to this report.

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