Plaintiff, for his class action complaint (the "Complaint") alleges upon information and belief (said information and belief being based, in part, upon the investigation conducted by and through his undersigned attorneys), except as to those paragraph s relating to the plaintiff, his purchases of U.S. Diagnostic, Inc. ("USDII or the "Company") common stock, and his suitability to serve as a class representative, which is alleged upon personal knowledge, as follows:

1. This Court has jurisdiction over the subject matter of this action pursuant to Section 27 of the Securities Exchange Act of 1934 (the "Exchange Act"), 15 U.S.C. § 78aa.

2. The claims asserted herein arise under Sections 10(b) and 20(a) of the Exchange Act, 15 U.S.C. §§ 78j(b) and 78t(a); and Rule lOb-5 promulgated thereunder by the Securities and Exchange Commission (the "SEC"), 17 C.F.R. §240.10b-5.

3. Venue is proper in this district pursuant to Section 27 of the Exchange Act and 28 U.S.C. § 1391(b) because many of the alleged acts, transactions and conduct constituting violations of law, including the issuance and dissemination to the inves ting public of materially false and misleading information, occurred, at least in part, in this district.

4. In connection with the acts alleged in this Complaint, defendants, directly and indirectly, used the means and instrumentalities of interstate commerce, including the mails, telephone communications and the facilities of the national securities exch anges.

5. This action is brought as a class action on behalf of all persons or entities who purchased the common stock of USD between March 15, 1996, and December 23, 1996 (the "Class Period"), to recover damages caused to plaintiff and the Class, defined bel ow, by defendants' violations of the federal securities laws.

6. During the Class Period, defendants engaged in a course of conduct that was designed to, and did: (i) deceive the investing public, including plaintiff and other members of the Class, concerning the criminal activity of one of the members of USD's m anagement team; (ii) artificially inflate the market price of USD's common stock during the Class Period; and (iii) cause plantiff and other members of the Class to purchase USD's common stock at inflated prices. In futherance, of this plan and course of conduct, defenders took the actions as set forth herein.

7. In June 1993, defendant Keith Greenberg, one of the Company's founders and its Director of Marketing, Mergers and Acquisitions, agreed to a permanent injunction issued by the SEC enjoining him from violating the federal securities laws. In September 1994, defendant Greenberg pled guilty to two counts of fraud stemming from an August 1994 indictment. He was sentenced to thirty days in jail, two years of probation and ordered to perform 300 hours of community service. These facts were concealed from the public during the Class Period, defined below, by defendants despite their obligations to make such disclosure in documents publicly filed with the SEC, including reports on Forms 10-K and 10-Q and Registration Statements.

8. In fact, in their public filings prior to and throughout the Class Period, defendants failed to disclose that Greenberg was even an officer of USD. This omission, in and of itself, was materially misleading since Greenberg's responsibilities for th e Company's mergers and acquisitions activity made him arguably its most valuable employee because the Company had engaged in approximately 25 such transactions between 1993 and the beginning of the Class Period.

9. In December 1996, Bear, Stearns & Co. ("Bear Stearns"), a securities analyst firm that actively followed USD,for an annual salary of $200,000, a bonus of $50,000 in the first year and an automobile allowance.

10. During the Class Period, plaintiff and each member of the Class purchased shares of USD common stock in the open market without knowledge of the misconduct of defendants alleged in this Complaint and suffered damages as a result. Plaintiff and eac h member of the Class directly or indirectly relied upon the individual defendants' and USD's public reports, press releases, and other public statements, as more fully described below, and/or upon the integrity of the market for USD common stock.

11. Plaintiff Ira Levine purchased 2,000 shares of USD common stock on October 24, 1996, at $12-3/16 per share.

12. Defendant USD is a corporation organized and existing under and by virtue of the laws of the State of Delaware. Its principal offices and corporate headquarters are located at 777 South Flagler Drive, West Palm Beach, Florida. Prior to October 19 96, USD was known as U.S. Diagnostic Labs, Inc.

13. Defendant Jeffrey A. Goffman ("Goffman"), one of the Company's founders, is and was, at all relevant times, Chief Financial Officer and Chairman of the Board of Directors of defendant USD. According to USD's Schedule 14A Proxy Statement filed,with the SEC on or about September 6, 1996 (the "1996 Proxy"), in October 1993, the Company entered into a five-year employment agreement with defendant Goffman, which was amended in August 1994 and August 1995, which provides for an annual base salary of $185,000, an incentive bonus of up to $65,000 and an automobile allowance.

14. Defendant Robert D. Burke ("Burke") was named President and a Director of defendant USD in June and January 1994 respectively, and retained these positions until July 1, 1996. According to the 1996 Proxy, in June 1994, the Company entered into a f ive-year employment agreement with defendant Burke. This agreement, as amended in October 1995, provides for annual compensation of $120,000 and an automobile allowance. For 1995, defendant Burke was entitled to a bonus of up to $100,000 per year based on increases in the Company's net income from the prior year. Effective July 1, 1996, Burke resigned as President and became a consultant to the Company and is still being compensated pursuant to the terms of his employment agreement.

15. Defendant Joseph A. Paul ("Paul") has been, since July 1, 1996, President and a Director of defendant USD. According to the 1996 Proxy, Paul's employment agreement provides plaintiff and other members of the Class to purchase USD's common stock at inflated prices. In furtherance, of this plan and course of conduct, defendants took the actions as set forth herein.

16. Defendant Amos F. Almand, III ("Almand"), is and was, at all relevant times, Senior Vice President and a Director of defendant USD. Pursuant to a three-year employment agreement entered into in July 1995, Almand receives a base salary of $120,000 a year and received a $100,000 signing bonus.

17. Defendant Keith G. Greenberg ("Greenberg"), a cofounder of the Company, was, at all relevant times, Executive Vice President and Director of Marketing, Mergers and Acquisitions of the Company. Greenberg's consulting company, Coyote Consulting & F inancial Services LLC ("Coyote"), located in Palm Beach Gardens, Florida, purportedly provides financial marketing and acquisition related consulting services to other businesses. On December 1, 1994, USD entered into a five-year consulting agreement wit h Coyote, which was amended in October 1995, pursuant to which the Company pays Coyote annual base consulting fees of $185,000, an annual bonus of up to $65,000, a 2% finder's fee of any acquisitions referred by Coyote, reimbursement for all expenses for up to two automobiles, reimbursement for all medical and dental insurance premiums paid for its two employees, and reimbursement for any additional employees Coyote hires up to an amount not to exceed $100,000. For 1996, USD paid Coyote cash compensation of approximately $3.8 million, which represented 2% of the purchase price of transactions introduced by Coyote. USD also granted Coyote 100,000 options to purchase common stock at an exercise price of $7.125, and 55,000 shares of restricted stock, and p aid Coyote $27,919 in 1996 for Coyote's automobile allowance.

18. Elise Nulman Greenberg is and was, at all relevant times,, the wife of defendant Greenberg and the only employee of Coyote other than her husband.

19. The above defendant officers and directors of USD (the "Individual Defendants"), as the senior operating executive officers of USD, had day-to-day responsibilities for managing and supervising the operations of USD. As officers, directors and/or c ontrolling persons of a company that is, and at all relevant times was, registered with the SEC under the federal securities laws, the Individual Defendants had a duty to disseminate complete, accurate and truthful information with respect to the Company' s operations and management, to correct any previously issued statements that had become materially misleading or untrue, so that the market price of the Company's publicly traded securities would be based upon truthful and accurate information. Under rul es and regulations promulgated by the SEC under the Exchange Act, specifically Item 401 of Regulation S-K, the Individual Defendants also had a duty to identify each of its officers, directors and significant employees and to report with respect to each s uch individual and any control person, all criminal convictions or pending criminal proceedings within the past five years, and any order, judgment or decree en3oining such individual from engaging in any activity in connection with the purchase or sale o f any security or in connection with any violation of federal or state securities laws. The Individual Defendants' statements and omissions during the Class Period violated these specific requirements and obligations, among others.

The Individual Defendants Were Control Persons Of USD

20. By reason of their financial interests, their business relationships and their status as members of USD's management and/or Board, the Individual Defendants were, at all relevant times, "controlling persons" of USD within the meaning of Section 20( a) of the Exchange Act and had the power and influence (which they exercised) to cause USD to engage in the unlawful conduct complained of herein. Because of their positions of control, the Individual Defendants were able to and did, directly and/or indi rectly, control the conduct of USD's business, and the information about its business contained in its public statements, filings with the SEC, and presentations to securities analysts concerning the Company. Throughout the Class Period, the Individual D efendants were provided with copies of, reviewed and approved, and/or signed public reports that were to be filed with the SEC and had the ability and opportunity to prevent their issuance or to cause them to be corrected. As a result, each of these defe ndants was responsible for the accuracy of the public reports, releases and statements detailed herein as "group published" information and are therefore responsible and liable for the representations contained therein.

21. Each of the Individual Defendants had knowledge of and/or access to the adverse non-public information concerning the criminal conduct of defendant Greenberg as described more fully below. This information was obtained by or available to the Indiv idual Defendants by conversations and contacts with corporate officers and employees, attendance at meetings of management, the Board and various committees thereof, and access to reports and other information provided in connection therewith.

22. Through their access to and receipt of some or all of this information, the Individual Defendants knew or recklessly disregarded the adverse non-public information about defendant Greenberg particularized below. Except to the extent set forth in t his Complaint, plaintiff and other members of the Class had no access to such information, which was and remains solely under the control of defendants.

23. Each of the defendants knew and/or recklessly disregarded that each of the statements or omissions for which such defendants are sued was materially false and misleading and/or had been issued without a reasonable basis.

24. In committing the wrongful acts alleged herein, all of the defendants pursued a scheme and course of conduct with one another by issuing materially false and misleading statements to the public and by concealing material adverse information from th e public. The scheme was designed to and did: (i) deceive the investing public, including plaintiff and the other Class members, regarding the management of USD; (ii) artificially inflate and/or maintain the market price of USD common stock during the Cl ass Period in order to, among other things, enable USD to issue an offering of convertible debentures and common stock,in June 1996; and (iii) cause plaintiff and the other members of the Class to purchase USD common stock at artificially inflated prices.

25. As direct participants in the wrongs complained of herein, each of the named defendants is jointly and severally liable for the damages suffered by plaintiff and other purchasers of USD common stock during the Class Period for the violations of Sec tions 10(b) and 20(a) of the Exchange Act and Rule lOb-S promulgated thereunder.

26. Plaintiff brings this action as a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure on behalf of a class (the "Class") consisting of all persons and entities who purchased USD common stock between March 1S, 1996, and December 23, 1996, inclusive (the "Class Period") and were damaged thereby. Excluded from the Class are the defendants, members of the immediate family of each of the Individual Defendants, any entity in which any defendant has a controlling interest, and the le gal representatives, heirs, successors, predecessors in interest, affiliates or assigns of any defendant.

27. The Class is so numerous that joinder of all Class members is impracticable. While the exact number of Class members is unknown to plaintiff at this time and can only be ascertained from the records maintained by USD or its agents, as of October 3 1, 1996, there were more than 23 million shares of USD common stock outstanding held by hundreds of shareholders of record throughout the United States.

28. Plaintiff's claims are typical of the claims of the members of the Class since all members of the Class purchased shares of USD common stock during the Class Period and sustained damages arising out of defendants' wrongful conduct in violation of f ederal securities laws as alleged herein.

29. Plaintiff will fairly and adequately protect the interests of the members of the Class. Plaintiff has retained counsel competent and experienced in class action and securities litigation and plaintiff has no interests antagonistic to or in conflic t with the other members of the Class.

30. A class action is superior to other available methods for the fair and efficient adjudication of this controversy. Joinder of all Class members is impracticable. The likelihood of individual Class members prosecuting separate claims is remote. S ince the damages suffered by individual Class members may be relatively small, the expense and burden of individual litigation makes it impossible for Class members individually to seek redress for the wrongs done to them. It is desirable for all concern ed to concentrate this litigation in this particular forum. No unusual difficulties are likely to be encountered in the management of this class action.

31. There are questions of law and fact common to the members of the Class which predominate over any questions affecting any individual members. These common questions of law and fact include, among others:

(a) whether defendants violated Sections 10(b) and 20(a) of the Exchange Act and SEC Rule lOb-5;

(b) whether defendants participated in the common course of conduct complained of herein;

(c) whether documents, releases, reports and statements disseminated to the investing public and stockholders of USD during the Class Period omitted to state or misrepresented material facts about the management of USD;

(d) whether defendants acted with knowledge or with reckless disregard for the truth in omitting to state and/or misrepresenting material facts about the management of USD;

(e) whether, during the Class Period, the market price of USD's common stock was artificially inflated due to the non-disclosures and/or material misrepresentations complained of herein; and

(f) whether the members of the Class have sustained damages and, if so, the proper measure thereof.

32. Plaintiff will rely, in part, upon the presumption of reliance established by the fraud-on-the-market doctrine in that:

(a) defendants made public misrepresentations during the Class Period as alleged in this Complaint;

(b) the misrepresentations were material;

(c) shares of USD common stock were traded on a developed national stock exchange, namely the NASDAQ National Market System which is an efficient market within the meaning of that term in the context used in this Complaint; and

(d) plaintiff and the other members of the Class purchased their USD shares between the time defendants made the misrepresentations and the time the truth was at least partially revealed, without knowledge of the falsity of the misrepresentations.

33. Based upon the above, plaintiff is entitled to a presumption of reliance upon the integrity of the market for the purposes of class certification. Similarly, plaintiff is also entitled to a presumption of reliance with respect to the omissions all eged in this Complaint.

Background

34. USD, which was founded in 1993 by, among others, defendants Goffman and Greenberg, is a physician practice management ("PPM") provider specializing in the acquisition, operation and management of multi-modality diagnostic imaging centers and relat ed medical facilities. Diagnostic imaging procedures are used to diagnose various diseases and physical injuries through the use of magnetic resonance imaging, computed axial tomography, mammography, X-ray, ultra-sound and other technologies. The Compan y's stated objective is to be the largest and most profitable network of diagnostic imaging centers in the United States. In order to accomplish this objective, USD's operating and growth strategy is to acquire imaging centers from (i) radiologist owner/ operators seeking management expertise, access to managed care contracts and/or other resources offered by PPM'S, (ii) physicians who may be required by law to divest such facilities, and (iii) owners seeking to leave the imaging business for various reas ons.

35. The person most responsible for the Company's acquisition activity and implementing this growth strategy was defendant Greenberg, who was at all relevant times USD's Director of Marketing, Mergers and Acquisitions.

36. On June 23, 1993, Greenberg agreed to the entry of an Order of Permanent Injunction in an action commenced by the SEC in the United States District Court for the Southern District of New York pursuant to which he agreed to be permanently enjoined a s a principal or aider and abettor from the (i) offer or sale of any securities by the use of interstate commerce employing any device, scheme or artifice to defraud, (ii) use of interstate commerce in the offer or sale of securities by means of any untru e statement of a material fact or omitting to state a material fact necessary to make the statements made, in light of the circumstances in which they were made, not misleading, or engaging in any transaction which would operated as a fraud or deceit upon purchasers or prospective purchasers of securities, and (iii) in connection with the purchase or sale of a security,using the mail or interstate commerce to employ any device, scheme'or artifice to defraud, making any untrue statement of a material fact or omitting to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading, or engaging in any act, practice or course of business which operates or would operate as a frau d or deceit upon any person. At no time during the Class Period did defendants disclose the entry of the permanent injunction.

37. Approximately 13 months later, on August 4, 1994, defendant Greenberg was indicted for (1) one count of conspiracy to commit mail fraud and to defraud the Internal Revenue Service, and (2) one count of conspiracy to commit mail fraud in the United States District Court for the Southern district of New York. On September 13, 1994, Greenberg pled guilty to both counts. He was sentenced one year later to thirty days in jail and two years of supervised probation, and ordered to perform 300 hours of c ommunity service. At no time during the Class Period did defendants disclose these facts to the public.

38. On October 20, 1994, USD completed its initial public offering of 1.7 million units -- each unit consisting of one share of common stock, one Class A warrant and one Class B warrant -- at $5.00 per unit. Defendant Greenberg's criminal conduct, pri son sentence and SEC injunction were not disclosed in the registration statement or prospectus filed with the SEC and disseminated to the public in connection with the offering.

Defendants' Misstatements During The Class Period

39. Throughout the Class Period, defendants made several statements to the public, including public filings with the SEC, which failed to disclose the criminal record and SEC censure of defendant Greenberg. In fact, defendants' went to great lengths i n their public filings to avoid any reference to Greenberg.

40. On March 15, 1996, the beginning of the Class Period, USD filed with the SEC its Annual Report on Form 10-KSB for the year ended December 31, 1995, which was signed by defendants Goffman, Burke and Almand. This Report, which includes a section ide ntifying Directors, Executive Officers, Promoters and Control Persons, makes no mention of defendant Greenberg.

41. The Company's 1995 Annual Report to Shareholders, which was disseminated on or about April 26, 1996, does make reference to Greenberg. However, the Annual Report does not discuss his criminal conduct. It states, among other things, that, "[slinc e inception, it has been US Diagnostic's philosophy to build a senior management team that is comprised of seasoned executives with diverse professional backgrounds.,, In the Annual Report's section entitled "Team Management," six individuals are listed, among them, Keith G. Greenberg. The biographical data about Greenberg states as follows:

[He] is a co-founder of US Diagnostic and serves as Director of Marketing, Mergers and Acquisitions. Mr. Greenberg was previously President of Yearwood Investments Ltd., a New York City - based banking company. Mr. Greenberg was President, CEO and Executive Vice President of QTV Communications, and P.O.P. Radio, companies engaged in interactive communications and alternative media applications.

(Emphasis added.)

42. The Annual Report also states that, "In October 1995, the Consulting Agreement with Coyote Consulting and Financial Services LLC was amended and extended for four years and provides for a $185,000 base cost, bonus of 35% up to $6S,000 based on cert ain acquisition growth targets and a 3% finder fee of any acquisitions referred." The 1995 Annual Report does not explain that Coyote is actually the alter ego of Greenberg.

43. Notwithstanding this identification of Greenberg as one of the six members of the Company's "senior management team," and his obvious importance to the Company's primary business objective -- acquisitions -- Greenberg's name is conspicuously absent from the Company's SEC filings, including the 1995 10-K Report, discussed above.

44. On or about May 15, 1996, the Company filed its Form 10-QSB for the period ended March 31, 1996, which was signed by defendant Goffman. This Report makes no mention of defendant Greenberg.

45. On or about June 6, 1996, USD filed with the SEC a Form S-3 Registration Statement and Prospectus for an offering of up to $57,500,000 worth of the Company's 9% subordinated Convertible Debentures Due 2003 and 880,445 shares of USD common stock, si gned by, among others, defendants Burke, Goffman and Almand. According to this document, defendant Greenberg had no responsibilities for the management of the Company. In the section of the Registration Statement describing the "Directors and Executive Officers," Greenberg is not listed. In fact, the only oblique reference to Greenberg is a discussion of the Company's consulting agreement with Coyote. Note 14 to USD's consolidated financial statements merely states, without mentioning Greenberg's name , that:

In October 1995, the Consulting Agreement with Coyote Consulting and Financial Services LLC ["Coyote"] was amended and extended for four years and provides for a $185,000 base cost, bonus of 35% up to $65,000 based on certain acquisition growth targets an d a 3*i finder fee of any acquisitions referred.

46. On or about August 14, 1996, the Company filed with the SEC its 10-Q Report for the period ended June 30, 1996, signed by defendant Goffman. This report was broken down into two parts, Part I discussing "Financial Information" and Part II discussi ng the merger with Medical Imaging Centers of America, Inc. ("MICA"). In fact, the Agreement and Plan of Merger was attached to the 1996 Second Quarter Form 10-Q Report. Nevertheless, the Report makes no mention of defendant Greenberg who, as head of ac quisitions, played a major role in the MICA Merger.

47. On or about November 14, 1996, the Company filed with the SEC its Form 10-QSB Report for the period ended September 30, 1996, signed by defendant Goffman. In this 1996 Third Quarter 10-Q Report, the Company listed the 28 acquisitions completed bet ween October 1993 and the date of the 10-QSB Report and described how these transactions affected the Company's Results of Operations. Nowhere, however, is defendant Greenberg mentioned in this report despite the fact that, as Director of Acquisitions, h e played an integral role in many, if not all, of the acquisitions discussed in USD's Third Quarter 10-Q Report.

48. The documents discussed above, which were all filed with the SEC and disseminated to the investing public during the Class Period were false and/or misleading because they failed to explain that one of USD's founders and one of its members of senio r management, had pled guilty to charges of fraud, served time in jail as a result, and agreed to an order of injunction by the SEC. In addition, USD's regularly filed reports with the SEC failed to even mention that Greenberg is an officer of the Compan y.

The Truth Is Revealed

49. Indeed, six weeks after defendants disseminated USD's 1996 Third Quarter 10-Q Report, on December 23, 1996, Greenberg's criminal background was revealed when Bear Stearns disseminated an analyst report stating that it was "Removing our Buy Rating a nd Discontinuing Coverage." The report stated inter alia, that:

We have learned information regarding the prior experiences and background of an individual associated with U.S. Diagnostic, Inc. that has caused us to lose confidence in our ability to assess ongoing developments at the company. This individual, Kei th Greenberg, has, over the last year, been introduced to us and described in written material published by [the] company as a cofounder of USDL and a member of the management team (in the 1995 Annual Report and at meetings with a representative of Bear Stearns on November 1, 1996). In the September 19, 1996 proxy statement, Mr. Greenberg has been described as providing services to U.S. Diagnostic through Coyote Consulting, which has a five year agreement with the company. We have learned that Mr. Gree nberg plead guilty in the U.S. District Court in the Southern District of New York on September 13, 1994 to 1) Conspiracy to Defraud the United States and 2) Fraud and Conspiracy to Defraud. Mr. Greenberg was sentenced to 30 days imprisonment with two ye ars of supervised probation on August 24, 1995 and ordered to perform 300 hours of community service.

Since the information we have learned was not disclosed to us by the company and we believe it is material, we have lost confidence in our ability to assess on-going developments at U.S. Diagnostic. As a result, we are removing our BUY rating and disc ontinuing coverage of U.S. Diagnostic, Inc. The issue we have uncovered relates specifically to prior experiences of company management.

50. Based on the Bear Stearns' revelation, on December 23, 1996, USD's stock price dropped more than 20% from $12-1/16 per share to $9-3/8 per share on unusually heavy volume of 4 million shares.

51. Bear Stearns' release, defendant Goffman stated, as reported on the Dow Jones Business Wire on December 23, 1996, that "Keith has been a consultant to the company from inception and has been responsible for finding acquisitions. Keith has never been an officer or director of USDL and has been compensated solely on an incentive basis for completed transactions." (Emphasis added.)

52. Similarly, on December 24, 1996, The Wall Street Journal reported that USD executives admitted that "Mr. Greenberg has pleaded guilty to mail fraud. However, the company added that he had no influence over day-to-day operations and th at he owns less than one-tenth of l% of the company's shares. 'His relationship has always been disclosed as an outside consultant,' Joseph Paul, U.S. Diagnostic's president, said."

53. These statements, however, stand in sharp contrast to the other public representations of defendants that Greenberg was a co-founder of the Company and its Executive Vice President in charge of Mergers and Acquisitions.

Defendants' Admissions Of Keith Greenberg's
Status As An officer Of USD

54. Defendants' after-the-fact rationalization that disclosure of Greenberg's criminal conduct was not required because Greenberg was not an officer of the Company, is belied not only by the statements contained in USD's 1995 Annual Report, discussed a bove, but by various public statements of defendants, between February 1995 and August 1996 wherein Greenberg is referred to as an officer of the Company. For example, on February 24, 1995, according to a Company Press Release disseminated over the PR Newswire, USD described Greenberg as "Director of Strategic/Planning Acquisitions."

55. On September 8, 1995, in a story appearing in the South Florida Business Journal, Greenberg is called the Company's "executive vice president." That article states, among other things, that:

Keith Greenberg travels the map scoping out doctors who no longer want to own and operate their own diagnostic laboratories. So far, Greenberg says he has found some pretty good deals. But the executive vice president of West Palm Beach based U .S. Diagnostics Labs says he won't be making many South Florida acquisitions -- the local market is too competitive. Greenberg got into the business with Jeffrey Goffman, who is chairman of the board and chief financial officer. Both were, Greenberg said, "two businessmen who didn't know imaging." USDL is making acquisitions at a rate of about one per month and expects to continue to make acquisitions at the rate of one every other month. . . . "There are 3,000 outpatient diagnostic imaging centers in the U.S. We don't expect to own all 3,000 of th em" Greenberg said. "But a company that continues to grow its bottom line and have access to capital, we think has a unique opportunity."

(Emphasis added.)

56. Similarly, a February 26, 1996 story appearing in the Charleston, South Carolina Post and Courier, reporting on USD's purchase of Charleston Diagnostic Imaging, listed Greenberg as "executive vice president."

57. On May 29, 1996, The Wall Street Journal ran an article entitled, "As Medical-Imaging Sector Grows, AnalystsFocus on Florida Firms," which featured USD. Among other things the story stated that:

Keith Greenberg, a U.S. Diagnostic Vice President, says that two years ago, the Company first projected reaching $100 million in revenue by 1996. But that brought questions from the Securities and Exchange Commission about whether the stock was being overhyped by the company, Mr. Greenberg says. Mr. Greenberg says the agency didn't follow up on its questioning, and he now boasts, "the reality is we're going to blow that [$100 million figure] away."

(Emphasis added.)

58. A May 1996 USD investor relations package contains a document with the heading "Directors and Executive Officers.,, The document lists "Keith Greenberg, 37, Executive Vice President," as one of the "Directors and Executive Officers of the Company." Defendant Greenberg's biography states as follows:

Keith G. Greenberg, co-founder of USDL and a consultant since the company's inception, became full time Executive Vice-President in December, 1994. Greenberg was previously president of Yearwood Investments, Ltd., a New York City-based investment banking company, where he was responsible for financing and consulting for companies engaged in energy, recycling, and retailing.

59. On August 19, 1996, Dow Jones Business Wire stated, with respect to USD's offer (which was withdrawn days later) to purchase Alliance Imaging Inc. that, "Keith Greenberg, responsible for USDL's Mergers and Acquisitions, added: 'Our abi lity to have this acquisition opportunity is purely a result of the value added by combining these two companies. Ultimately,this transaction should create more shareholder value then any of our other transactions.'"

60. Thus, Greenberg was hardly a mere "consultant" to the Company and was in fact, the officer primarily responsible for all of the Compaiiy's merger and acquisition activity during the past three years. Nevertheless, in an effort to avoid the negativ e market fallout which defendants knew would occur -- and did, in fact, ultimately occur -- in response to the revelations of Greenberg's guilty plea to fraud charges, defendants never disclosed Greenberg's criminal past.

61. On January 29, 1997, USD announced that it terminated its relationship with Coyote and defendant Greenberg, and would agree to vest previously granted and unvested stock options and restricted shares owned by Coyote, advance Coyote 50% of the $1. 24 million fee due Coyote upon the closing of two acquisitions, and agree to pay Coyote a 20% fee on the 32 transactions that Coyote had previously introduced to the Company. The Company stated in a press release that:

Greenberg, through Coyote, served as the company's director of mergers and acquisitions and marketing. In addition, Greenberg both executed documents and was mentioned in public statements, in which he was identified as a vice pre sident or an executive vice president of the company. Although certain officers of the company and outside counsel apparently knew of certain of these instances, Greenberg was never elected an officer of the company by its board of directors or a director of the company by the board or its stockholders.

(Emphasis added.)

62. USD also announced that it had formed a "special committee of independent directors to review the Company's prior relationship with Coyote Consulting and Keith Greenberg and its prior disclosure regarding them."

63. Thus, defendants have belatedly admitted that USD's disclosures may have been deficient and that defendant Greenberg was, in fact, the Director of Mergers and Acquisitions and Marketing for USD. Further, defendants admit that USD was on notice tha t Greenberg was, at times, held out to the public as an officer of the Company. Finally, defendants effectively admit that they knew of Greenberg's criminal past, but chose to conceal that information from the public during the Class Period.

64. Plaintiff incorporates by reference and realleges paragraphs 1 through 63 above, as though fully set forth herein.

65. This claim is asserted by plaintiff and the Class against all defendants and is based upon Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule lOb-5 promulgated thereunder.

66. During the Class Period, these defendants, individually and in concert, directly and indirectly, engaged and participated in a continuous course of conduct to conceal adverse material information regarding USD and defendant Greenberg as specified herein. Defendants knowingly and/or recklessly employed devices, schemes, and artifices to defraud and knowingly and/or recklessly engaged in acts, practices, and a course of conduct as herein alleged in an effort to maintain artificially high market pri ces for the common stock of defendant USD. This included the formulation, making of and/or participating in the making of untrue statements of material facts and the omission to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.

67. Defendants' acts and practices operated as a fraud and deceit upon plaintiff and other members of the Class by concealing the known criminal conduct of one of the Company's key members of management, in connection with the purchase of USD's publicl y traded securities by plaintiff and the other members of the Class.

68. The market price of USD's common stock was artificially inflated throughout the Class Period by defendants' omissions and misrepresentations.

69. The statements particularized above were false and misleading when made by the Individual Defendants, and/or in the name of USD. By making these statements, the defendants created a false and misleading impression which artificially inflated the m arket price of USD's common stock throughout the Class Period. Defendants, who were under a duty to make truthful and complete disclosures, instead misrepresented or concealed material facts throughout the Class Period.

70. During the Class Period, USD made the statements identified above which were materially false and misleading in violation of Section 1O(b) of the Exchange Act and Rule lOb-5 thereunder. These statements were materially false and misleading and om itted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.

71. In direct or indirect reliance on the aforesaid false and misleading statements, plaintiff and the other members of the Class purchased USD common stock during the Class Period at artificially inflated prices and were damaged thereby.

72. Relying upon the integrity of the marketplace and the market price of USD's common stock, plaintiff and the other members of the Class purchased USD common stock at artificially inflated prices and were damaged thereby. Defendants, conduct as alle ged has damaged plaintiff and the other members of the Class in an amount which cannot presently be ascertained.

73. Had plaintiff and the other members of the Class known of the materially, adverse information which was not disclosed by defendants, they would not have purchased USD common stock at all, or not at the artificially inflated prices they did, and wou ld not have sustained damages.

74. Plaintiff incorporates by reference and realleges paragraphs 1 through 73 above as though fully set forth herein.

75. This Count is asserted against the Individual Defendants and is based on Section 20(a) of the Exchange Act. The Individual Defendants acted as controlling persons of USD within the meaning of Section 20 of the Exchange Act. By reason of their posi tions as senior officers and directors of USD, the Individual Defendants had the power and authority to cause or to prevent the wrongful conduct complained of herein.

76. By reason of such wrongful conduct, the Individual Defendants are liable to plaintiff and the Class pursuant to Section 20 of the Exchange Act. As a direct and proximate result of defendants' wrongful conduct, plaintiff and the other members of th e Class suffered damages in connection with their purchases of USD common stock during the Class Period.

WHEREFORE, plaintiff prays for judgment as follows:

A. An order certifying the Class as set forth herein and designating plaintiff as the representative thereof;

B. A judgment declaring the conduct of the defendants to be in violation of law as set forth herein;

C. A judgment awarding plaintiff and the other members of the Class compensation for the damages which they have sustained as a result of the defendants' unlawful conduct stated above;

D. A judgment awarding plaintiff's reasonable attorneys' fees, experts' fees, interest and cost of suit; and

E. Granting such other and further relief as this Court may deem just.

I, Ira Levine, certify under penalty of perjury that:

1. I have reviewed the Complaint and authorized its filing.

2. I did not purchase the security that is the subject of this action at the direction of plaintiff's counsel in order to participate in any private action arising under this title.

3. I am willing to serve as a representative party on behalf of a class and will testify at depostition and trial, if necessary.

4. My transactions in the security that is the subject of this litigation during the Class Period set forth in the Complaint are as follows:

Purchase of 2,000 shares of U.S. Diagnostic Inc. common stock on October 24, 1996, at $12-13/16 per share; and

Sale of 2,000 shares of U.S. Diagnostic Inc. common stock on December 23, 1996, at $10.025 per share.

5. I have not served as or sought to serve as a representative party on behalf of a class under this title during the last three years.

6. I will not accept any payment for serving as a representative party, except to recieve my pro-rata share of any recovery or as ordered or approved by the Court, including the award to a representative plaintiff of resonable costs and expenses (inclu ding lost wages) directly relating to the representation of the class.

The foregoing are, to the best of my knowledge and belief, true and correct statements.