IN THE MATTER OF LUIS LORIE
On December 12, the Commission issued an Order Instituting Public
Administrative Proceedings and Notice of Hearing Pursuant to Section
15(b) of the Securities Exchange Act of 1934 (Exchange Act) against Luis
F. Lorie (Lorie). In the Order, the staff alleges that Lorie is
enjoined from future violations of the antifraud and registration
provisions of the securities laws and has pled guilty to criminal
charges resulting from his participation in a "pump and dump" scheme
that utilized the Internet to create and maintain a market for the
common stock of American Healthcare Providers, Inc. (American
Healthcare), a start-up company with virtually no business operations.
The Commission instituted this administrative proceeding after a
district court in the Southern District of New York found Lorie liable,
on May 29, 2002, for his role in the American Healthcare fraud, granted
the Commission's motion for a default judgment, and enjoined Lorie from
future violations of Sections 5(a), 5(c), and 17(a) of the Securities
Act of 1933 (Securities Act) and Section 10(b) of the Exchange Act and
Rule 10b-5 thereunder. See SEC v. American Healthcare Providers, Inc.,
et al., 01 cv 7649 (B.S.J.). In addition, on Nov. 27, 2002, Lorie pled
guilty to criminal securities fraud charges concerning the American
Healthcare fraud.
The complaint in the Commission's injunctive action against Lorie
alleged that Lorie participated in editing and drafting press releases
that he knew, or was reckless in not knowing, contained false
information about American Healthcare. Using the screen name
Dr_Analyst, Lorie also posted false and misleading messages about
American Healthcare on Raging Bull, an Internet message board. Despite
knowing, or recklessly disregarding, that his statements were false and
misleading, Lorie misled investors about American Healthcare. Between
March 1999 and June 15, 2000, American Healthcare issued at least
5,802,880 shares of unrestricted common stock in unregistered
transactions, increasing its float by 2633%. Of the 5.8 million
unrestricted shares issued, at least 3,393,111 shares were directly
issued to 6 companies related to Lorie or his father (the Lories).
Within days of American Healthcare issuing unrestricted shares to their
nominees, the Lories placed these shares into several securities trading
accounts in the United States and Canada, transferred shares between the
nominee companies, and sold them to the investing public. The Lories
received a total of at least $1,469,957.31 from the sale of shares of
American Healthcare.
In the Order, the Commission deems that it is in the public interest to
institute public administrative proceedings to determine whether the
allegations in the Order are true and what, if any, remedial sanctions,
including a penny stock bar, against Lorie are appropriate in the public
interest pursuant to Section 15(b) of the Exchange Act. The Commission
directed that an administrative law judge shall issue an initial
decision in this matter within 210 days from the date of service of the
Order Instituting Proceedings. (Rel. 34-48915; File No. 3-11355) |
