SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 16988 /May 7, 2001

Accounting and Auditing Enforcement
Release No. 1392 / May 7, 2001

SEC v. JERRY M. WALKER AND CRAIG R. CLARK, U.S. District Court for the District of Arizona, No. CIV-99-1737-PHX-ROS (September 27, 1999)

SEC SETTLES CASE AGAINST FORMER CHIEF FINANCIAL OFFICER OF UNISON HEALTHCARE CORPORATION IN EARNINGS MANAGEMENT ACCOUNTING FRAUD

The Securities and Exchange Commission today announced that on April 11, 2001, the United States District Court for the District of Arizona permanently enjoined Craig R. Clark, the former Chief Financial Officer of Unison HealthCare Corporation (later known as Raintree HealthCare Corporation), from committing securities fraud and imposed a civil penalty of $15,000.

In its complaint, filed September 27, 1999, the Commission alleged that Clark and Jerry Walker, Unison's former Chief Executive Officer, instructed the company's former controller to make materially false adjustments to revenue and expenses by creating unsupported journal entries that, among other things, materially increased Medicare receivables and materially decreased expenses for the third quarter of 1996. The complaint alleged that these adjustments to Unison's third quarter financial statements artificially inflated revenue by material amounts and enabled Unison to meet its own previously announced estimate of earnings for that quarter. According to the complaint, the adjustments to revenues and to expenses enabled Unison to report positive net income of $1.2 million, or $.30 per share, rather than a loss of almost $4 million.

The complaint alleged that Unison issued press releases announcing the falsely inflated earnings figures and included the materially false figures in its Form 10-Q filed for the third quarter of 1996. According to the complaint, Clark knew or was reckless in not knowing that the Form 10-Q contained materially false and misleading information because Unison's financial statements included unsupported accounts receivable, revenues, and expenses.

Clark consented, without admitting or denying the allegations in the Commission's complaint, to the entry of a final judgment permanently enjoining him from committing violations of Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5 and 13b2-1, and enjoining him from aiding and abetting violations of Section 13(a) and Rule 13a-13. The judgment also orders Clark to pay a $15,000 civil penalty.

Clark, a certified public accountant, also consented to the entry of an administrative order pursuant to Rule 102(e) of the Commission's Rules of Practice, that will deny him the privilege of appearing or practicing before the Commission as an accountant, with the right to apply for readmission after three years.

With the entry of this judgment, all the defendants in this action will have settled with the Commission. See Litigation Release No. 16300 (September 28, 1999).