U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19124 / March 8, 2005
SECURITIES AND EXCHANGE COMMISSION v. AMERICAN HEALTHCARE PROVIDERS, INC., ARTHUR W. WHEELER, LARS M. KRAM, ANGEL L. LORIE JR., LUIS F. LORIE, AND MICHAEL ANTHONY LESTER, 01 Civ 7649 (B.S.J) (S.D.N.Y)
District Court Sets Disgorgement, Pre-Judgment Interest, And Civil Money Penalties Against Remaining Defendant Luis F. Lorie; Judgments Against All Defendants Have Now Been Entered
The Securities and Exchange Commission ("Commission") announced that on February 2, 2005, District Court Judge Barbara S. Jones set Disgorgement, Pre-Judgment Interest, and Civil Money Penalties Against Defendant Luis F. Lorie in SEC v. American Healthcare Providers, Inc., et al., 01 Civ 7649 (S.D.N.Y.) (BSJ). Specifically, the Court ordered Luis F. Lorie to pay $1,451,802.76 in disgorgement, plus $371,828.29 in pre-judgment interest, for a total of $1,823,632.05. The Court also ordered Luis F. Lorie to pay a $110,000 civil money penalty.
In this case, the Commission charged American Healthcare Providers, Inc., Luis F. Lorie and four other individuals for their roles in an Internet market manipulation scheme. The Commission's complaint alleged that American Healthcare was a start-up company with "headquarters" in Wheeler's New York City apartment, and had virtually no business operations. The Commission charged that after pumping up the price of American Healthcare stock through an extensive campaign of false press releases and Internet message board postings, the defendants dumped their holdings of the stock on the unsuspecting public, reaping at least $1.47 million in illicit gains.
The District Court previously entered judgments against each of the other defendants charged in the scheme. On May 14, 2002, the Court entered final consent judgments against defendants Michael Anthony Lester and Lars M. Kram. On May 29, 2002, the Court entered a default judgment against American Healthcare Providers, Inc. and Luis F. Lorie ("Luis Lorie Judgment"). The Luis Lorie Judgment enjoined him from further violations of Sections 5(a), 5(c), and 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and barred him from serving as an officer or director of a public company, but deferred determination of those amounts, which have since been set in the Court's February 2, 2005 order. On December 15, 2003, the Court entered final consent judgments against Angel L. Lorie ("Angel Lorie") and Arthur W. Wheeler ("Wheeler").
Three of the defendants charged in the Commission's action have plead guilty to or been convicted of parallel criminal charges. On November 27, 2002, Luis F. Lorie pled guilty to one count of conspiracy to commit securities fraud for the same conduct alleged in the Commission's complaint. On April 1, 2003, Luis Lorie's father, Angle Lorie, pled guilty to one count of conspiracy to commit securities fraud and one count of securities fraud for the same conduct alleged in the Commission's complaint. Last, on April 14, 2003, in a parallel criminal proceeding, United States v. Arthur W. Wheeler, 02 Cr. 848 (S.D.N.Y.) (RMB), Wheeler was convicted of conspiracy to commit securities fraud and securities fraud following a jury trial.
For tips on how to avoid Internet "pump-and-dump" stock manipulation schemes, visit http://www.sec.gov/investor/online/pump.htm. For more information about Internet fraud, visit http://www.sec.gov/divisions/enforce/internetenforce.htm.
To report suspicious activity involving possible Internet fraud, visit http://www.sec.gov/complaint.shtml.