SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17148 / September 21, 2001
SEC V. CHRISTOPHER A. LOWRY, ET AL., U.S. District Court for the District of Minnesota, Case No. 00-348 (MJD/JGL), filed February 15, 2000
The Securities and Exchange Commission obtained disgorgement of over $176,000 from Christopher A. Lowry, a registered investment adviser in St. Paul, Minnesota, which was the full amount the Commission had alleged Lowry misappropriated from investors and used to buy his own home. The disgorgement was part of the settlement of the enforcement action the Commission brought last year against Lowry and Fountainhead Retirement Plan Services, Inc. d/b/a 401(k) University, a start-up company controlled by Lowry. Under the terms of the settlement, which was entered by the United States District Court for the District of Minnesota on December 7, 2000, Lowry and 401(k) University, without admitting or denying the allegations made in the Commission's Complaint, consented to the entry of an order that permanently enjoins them from violating the antifraud provisions of the federal securities laws, and orders Lowry to pay $156,500 in disgorgement plus approximately $20,000 in prejudgment interest. In accordance with the settlement, Lowry repaid $176,627.23 on February 20, 2001, which was disbursed to investors according to court order.
In its complaint, filed on February 15, 2000, the Commission alleged that Lowry and 401(k) University raised approximately $488,000 from 14 individuals who purchased stock of 401(k) University. All the investors are located in the Minneapolis/St. Paul area of Minnesota. Lowry raised the money through the sale of 401(k) University stock, claiming that investor proceeds would be used as 401(k) University start-up capital. The Commission charged that Lowry and 401(k) University misrepresented the use of investor proceeds and misappropriated a significant portion of investor funds. In particular, the Commission alleged that Lowry omitted to tell investors that he was going to use approximately one-third of the proceeds to purchase his personal residence. The Complaint alleged that as a result of the conduct described above, Lowry and 401(k) University violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.