U.S.SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 18291 / August 18, 2003
UNITED STATES OF AMERICA v. KEVIN L. LAWRENCE, STEVEN J. REIMER, MICHAEL J. CULP, LARRY L. BEAMAN, HARVEY W. KUIKEN, ALEX LACSON, AND ALFONSO LACSON, JR., Criminal Action No. CR02-260P (W.D. Wash.)
KEVIN LAWRENCE PLEADS GUILTY IN ZNETIX STOCK FRAUD
The U.S. Attorney for the Western District of Washington announced that on July 28, 2003, Kevin Leigh Lawrence, 37, of Bainbridge Island, Washington, pled guilty in federal court in Tacoma, Washington to one count of securities fraud, one count of wire fraud and one count of conspiracy to commit securities fraud, wire fraud, mail fraud, unlawful sale of unregistered securities, money laundering, and engaging in monetary transactions with proceeds of unlawful activity. The U.S. Attorney will recommend the imposition of a 20-year prison sentence. Sentencing is scheduled for October 31, 2003 in federal court in Seattle, Washington.
As part of his plea, Lawrence waived any right to appeal, and agreed to cooperate fully with the U.S. Attorney and the receiver appointed as part of the Securities and Exchange Commission's related case in identifying assets. Additionally, Lawrence agreed to forfeit a number of previously-seized assets. Originally indicted on July 31, 2002 in a 64-count indictment, Lawrence admitted that over the course of about 7 years he intentionally, knowingly, and willfully defrauded thousands of investors out of approximately $100 million through conspiracy and scheme to defraud involving false representations and failures to disclose accurate information in connection with the sale of the securities of Znetix, Inc., Health Maintenance Centers, Inc., Cascade Pointe, LLC, and affiliated entities. He further admitted that he intentionally, knowingly, and willfully used the funds received from investors for his own personal use and benefit and for the use and benefit of his co-conspirators and others, including for the purchase of homes, cars, boats, merchandise, and travel. Finally, he admitted that he intentionally, knowingly, and willfully made false statements and directed others to make false statements to the State of Washington's Department of Financial Institutions, Securities Division, and to the Securities and Exchange Commission.
Previously, the Commission filed an emergency action on January 23, 2002, against Lawrence, as well as Znetix, Inc., Health Maintenance Centers, Inc., three related companies, their controlling executives, and several family members of Lawrence, alleging that Lawrence and other executives falsely promised investors lucrative profits from the supposedly imminent initial public offering of Znetix. Additionally, the Commission alleged that Lawrence spent more than $14 million of investor funds on personal expenses, such as luxury cars, real estate, jewelry and boats. On January 23, the Commission obtained an order freezing the assets of the defendants, and temporarily enjoining Lawrence and other controlling executives from future violations of the registration and antifraud provisions of the federal securities laws. On February 15, 2002, the federal court preliminarily enjoined the defendants from such future violations and appointed a permanent receiver over the companies. Without admitting or denying the Commission's allegations, the companies, on June 6, 2002, consented to the entry of a judgment permanently enjoining them from future violations of the antifraud and securities registration provisions. Subsequently, the Commission entered into settlement agreements with relief defendants Vicki Lawrence, Stacy Gray, and Bonnie Couch, the ex-wife, fiancée and mother of Lawrence, respectively.