U.S. Securities & Exchange Commission
SEC Seal
Home | Previous Page
U.S. Securities and Exchange Commission

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 49073/January 14, 2004

Admin. Proc. File No. 3-11355


In the Matter of

LUIS F. LORIE


:
:
:
:
:
:
:

ORDER MAKING FINDINGS AND IMPOSING SANCTIONS BY DEFAULT

SUMMARY

This Order bars Luis F. Lorie (Lorie) from participating in an offering of penny stock. Lorie was previously convicted of securities fraud and enjoined against violations of the securities laws based on his wrongdoing in a pump-and-dump scheme. Lorie perpetrated the fraud by disseminating false and misleading information via the Internet.

I. BACKGROUND

The Securities and Exchange Commission (Commission) issued its Order Instituting Proceedings (OIP) against Lorie on December 12, 2003, pursuant to Section 15(b) of the Securities Exchange Act of 1934 (Exchange Act). The OIP alleges that he was convicted of, and enjoined from, securities fraud, based on his wrongdoing in 1999 and 2000 while participating in an offering of stock of American Healthcare Providers, Inc. (American Healthcare). The only sanction authorized by the OIP is a penny stock bar. Lorie was served with the OIP on December 24, 2003. He failed to file an Answer, due twenty days after service of the OIP, that is, January 13, 2004. See, 17 C.F.R. 201.220(b); OIP at 5. A respondent who fails to file an Answer to the OIP may be deemed to be in default, and the administrative law judge may determine the proceeding against him. See, 17 C.F.R. 201.155(a), .220(f); OIP at 5. Thus, Lorie is in default, and the undersigned finds that the allegations in the OIP are true.

II. FINDINGS OF FACT

Lorie was convicted of securities fraud and is currently in prison, serving a fifty-one month sentence. United States v. Lorie, 02-CR-20962 (S.D. Fla. Feb. 24, 2003). He was also permanently enjoined from violating the antifraud and registration provisions of the federal securities laws. SEC v. American Healthcare Providers, Inc., 01 CV 7649 (BSJ) (S.D.N.Y. May 29, 2002). The wrongdoing that underlies his conviction and injunction occurred during 1999 and 2000. Lorie, of Miami, Florida, and his father (the Lories) orchestrated a pump-and-dump scheme, using the Internet, to create and maintain a market for the common stock of American Healthcare. American Healthcare was a start-up company with no business operations, and its stock was penny stock. In furtherance of the scheme, Lorie wrote various press releases and other Internet postings containing false and misleading information about American Healthcare and his relationship to it. American Healthcare, which the Lories controlled, issued shares to their nominees. The Lories received at least $1,469,957.31 from the sale of these shares to the investing public. Lorie attempted to continue the fraud even after the Commission suspended trading in American Healthcare securities on June 15, 2000.

III. CONCLUSIONS OF LAW

Lorie has been convicted, within ten years of the commencement of this proceeding, of a felony that "involves the purchase or sale of any security" within the meaning of Sections 15(b)(4)(B) and 15(b)(6)(A)(ii) of the Exchange Act. Additionally, he has been permanently enjoined "from engaging in or continuing any conduct or practice in connection . . . with the purchase or sale of any security" within the meaning of Sections 15(b)(4)(C) and 15(b)(6)(A)(iii) of the Exchange Act. Further, American Healthcare stock was a penny stock within the meaning of Exchange Act Section 3(a)(51) and Rule 3a51-1, and in the wrongdoing that underlay his conviction and injunction, Lorie was a "person participating in an offering of penny stock" within the meaning of Exchange Act Section 15(b)(6)(C).

IV. SANCTION

Lorie will be barred from participating in an offering of penny stock. Thus, he will be barred from acting as a promoter, finder, consultant, or agent; or otherwise engaging in activities with a broker, dealer, or issuer for purposes of the issuance or trading in any penny stock, or inducing or attempting to induce the purchase or sale of any penny stock. This sanction will serve the public interest and the protection of investors, pursuant to Section 15(b) of the Exchange Act. It accords with Commission precedent and the sanction considerations set forth in Steadman v. SEC,, 603 F.2d 1126, 1140 (5th Cir. 1979), aff'd on other grounds,, 450 U.S. 91 (1981). Lorie's unlawful conduct was recurring and egregious, extending over a period of many months. There are no mitigating circumstances.

V. ORDER

IT IS ORDERED that LUIS F. LORIE IS BARRED from participating in an offering of penny stock.

By the Commission.

Carol Fox Foelak
Administrative Law Judge


http://www.sec.gov/litigation/admin/34-49073.htm


Modified: 01/16/2004