New lawsuits filed v. HMC

While the federal Securities and Exchange Commission’s lawsuit against Bainbridge-based HMC and Znetix may be the biggest problem facing those companies and their founder, Kevin Lawrence, other litigation is ongoing.

While the federal Securities and Exchange Commission’s lawsuit against Bainbridge-based HMC and Znetix may be the biggest problem facing those companies and their founder, Kevin Lawrence, other litigation is ongoing.

In the last three months, a total of five lawsuits have been filed against HMC, Lawrence and others in King County Superior Court, some since the SEC’s action.

In a suit filed Feb. 4, Stephen and Christine Gerdes of Lynnwood demand a return of the $28,000 they invested with HMC.

The suit claims that the couple went to a meeting in September of 2000, where two men made a sales pitch for HMC, which included the representation that Znetix was about to buy out HMC.

“Mathematically, the plaintiffs were assured a return of between 160 to 1 and 420 to 1,” the suit says.

According to the suit, the Gerdes were told they had to make a quick decision, because the stock being offered was Lawrence’s own HMC stock, which he was selling to make way for the Znetix public offering.

In a suit filed on Jan. 15, Thomas and Beverly Sprague and two other couples claim that they invested a total of $72,000 in HMC, based on promised 10- to 30-fold returns when Znetix went public.

After the state Division of Financial Institutions issued a cease-and-desist order barring further stock sales, the investors contacted HMC and demanded their money back with interest, the suit says. HMC attorneys agreed, but no payments were made, the suit says.

In another investor suit, Ok Ae Lee and Nina McFall seek return of $20,000 they invested in unregistered HMC securities. In answering that suit, attorneys for HMC admitted that the securities were not registered, and also admitted to the amounts the plaintiffs claimed to have invested.

But in the most recent filing in that suit, attorneys for HMC and Lawrence withdrew as counsel. No reason was given. In their withdrawal notice, they directed that pleadings be sent directly to the parties, giving no indication that any new attorneys had been named.

In an action filed Jan. 31, former HMC employees Susannah Couch and Deborah Oliver seek back pay from HMC, Znetix, Lawrence and other employees.

According to the suit, Oliver was human resources manager at an annual salary of $90,000, and Couch was a bookkeeper at $50,000 per year. The suit says they were paid late on six occasions in 2001, including all four pay periods between Sept. 14 and Nov. 2, and were not paid at all thereafter.

They are suing for $27,000 in back wages, including penalties provided by Washington law.

And in a suit filed Nov. 13, Paul “Pasha” Thomas complains both as employee and investor. According to the suit, Thomas bought $5,000 in HMC shares in 1999, then was hired as an employee at $7,500 per month.

In lieu of some of his compensation, Thomas was given additional HMC shares, the suit said.

The suit seeks unpaid wages in the amount of $11,250, and also seeks to return to the company $120,000 in stock. According to the complaint, the defendants agreed to settle the case in November for $150,000, which Thomas accepted. But the money was never paid.

Another lawsuit against Lawrence and HMC, previously reported as resolved, has reportedly been reinstated, according to counsel for the claimants.

In that suit, Shane McDermott sought severance pay he claimed he was due after he was terminated from his $12,500-a-month job as physiology director for Znetix.

That suit was tentatively settled for an undisclosed sum, according to Andy Maron, McDermott’s attorney. But the settlement check bounced, Maron said.