SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 17098 / August 9, 2001

United States of America v. Job Kjell Hovik, CR 01-732 (C.D. Cal.)

On August 2, 2001, the United States Attorney for the Central District of California announced the criminal indictment of Job Kjell Hovik on five counts of mail fraud and aiding and abetting mail fraud, one count of wire fraud and aiding and abetting wire fraud, and two counts of criminal contempt of injunctive orders entered against him in the Commission's prior action SEC v. David A. Colvin, et al., Civil Action No. SA98-135 (AHS) (EEx).

The indictment alleges that in or about December 1996, Hovik and others established Medical Advantage, Inc. (also a defendant in SEC v. Colvin) for the purported purpose of opening weight loss clinics throughout the United States, and that in about April 1997, Hovik entered into an arrangement with David Colvin whereby Colvin would provide financing for Medical Advantage through the sale of stock in the company. It is alleged that Hovik aided and abetted the fraudulent solicitation of investors by preparing false and misleading sales and marketing materials, making presentations to the telemarketers and speaking to investors about Medical Advantage. Among other things, Hovik falsely represented to investors that:

(1) Medical Advantage had thirty operating clinics when it never had more than three clinics;

(2) the clinics were profitable and successful;

(3) Medical Advantage would complete an IPO of Medical Advantage stock in the near future or had in fact completed the IPO;

(4) former United States Surgeon General C. Everett Koop was on the Board of Directors of Medical Advantage; and

(5) news anchor Tom Brokaw was a spokesperson for Medical Advantage.

The indictment further alleges that Hovik violated the Temporary Restraining Order issued on Febraury 20, 1998, and the Permanent Injunction entered against him on April 15, 1999, when he (1) made fraudulent representations to induce an investor to invest additional funds in Medical Advantage on March 5, 1998, in violation of the TRO and (2) offered and sold unregistered securities of Global Medical Informatics, Inc., on September 15, 1998, in violation of the permanent injunction.

Previously, on February 29, 2000, two other defendants in SEC v. Colvin, David A. Colvin and John Larson a/k/a John St. John, and a salesperson were indicted. All three were indicted on fourteen counts of securities fraud and eleven counts of mail fraud. Colvin was also indicted on eight counts of money laundering and one count of making an unlawful monetary transaction and aiding and abetting such a transaction. United States of America v. David A. Colvin, John Larson a.k.a. John St. John and Aldo Tarallo a.k.a. Al Tarall, CR 00-186 (C.D. Cal.)

For additional information, see Litigation Release Nos. 15651 (February 24, 1998), 15683 (March 25, 1998), 16142 (May 13, 1999); and 16255 (August 19, 1999).