UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Securities Act of 1933
CEASE-AND-DESIST PROCEEDINGS INSTITUTED AGAINST
The Commission has issued an Order Instituting Cease-and-Desist Proceedings and Notice of Hearing Pursuant to Section 8A of the Securities Act of 1933 (the "Order") against Lawrence M. Artz ("Artz"), Neurotech Corp. ("Neurotech"), Enhance Resources, Inc. ("Enhance") and Bruce W. Lynch ("Lynch"). Artz resides in Roslyn, New York, and Neurotech Corp. is located in Manhasset, New York. Enhance is located and Lynch resides in Brookline, Massachusetts.
In the Order, the Division of Enforcement ("Division") alleges that Artz and Lynch conducted a fraudulent Internet offering of notes in the nominal amount of $15 million, the proceeds of which were to be used to construct prefabricated hospitals in Turkey. The Division alleges that, beginning in June 1998, Artz falsely represented to Lynch that Neurotech had received purchase orders for five hospitals in Turkey. The Division further alleges that Artz falsely represented that three well-known Turkish banks had agreed to guarantee the notes, so that there would be no risk to investors that they would not receive repayments of principal or interest. The Division further alleges that Artz provided to Lynch three fake bank guarantees, which he claimed evidenced the banks' agreement to guarantee the notes. Beginning in August 1998, Lynch posted on two Internet websites that he created an offering of the $15 million notes. Without investigating whether Neurotech had received the Turkish hospital purchase orders or whether the three Turkish banks identified by Artz had agreed to guarantee the notes, Lynch attempted to solicit investors for the notes by publishing the false statements on the websites. In addition, Lynch went beyond Artz's representations by publishing revenue and earnings (before taxes) projections for a completed hospital of, respectively, $27 million and $4 million. Lynch's only basis for these figures was projections relating to a hypothetical, prefabricated hospital in Cambodia. The Division alleges that, by these activities, Artz, Neurotech, Enhance and Lynch violated Sections 5(c), 17(a)(1), and 17(a)(3) of the Securities Act of 1933.
A public hearing will be scheduled to determine whether the allegations against Artz, Neurotech, Enhance and Lynch are true and, if so, whether a cease-and-desist order should be issued pursuant to Section 8A of the Securities Act of 1933.