SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17104 / August 16, 2001
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 CV 7649 (BSJ) (S.D.N.Y) (August 16, 2001)
SEC Charges American Healthcare Providers, Inc. and Five Individuals for Roles in Internet Pump-and-Dump Scheme
The Securities and Exchange Commission announced that it filed a civil injunctive action charging American Healthcare Providers, Inc. and five individuals for their roles in an Internet market manipulation scheme. The Commission's complaint alleges that American Healthcare was a start-up company with "headquarters" in the New York City apartment of one of the defendants, and had virtually no business operations. The Commission charges that after pumping up the price of American Healthcare stock through an extensive campaign of false press releases and Internet message board postings, certain of the defendants sold their American Healthcare stock to the public, reaping at least $1.47 million in illicit gains.
Charged in the Commission's complaint filed in the U.S. District Court for the Southern District of New York, were the following:
 | Angel L. Lorie, age 58, of Miami, Florida, a recidivist securities law
violator and a purported "consultant" to American Healthcare;
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| Luis F. Lorie, age 35, of Miami, Florida, the son of Angel Lorie;
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| Arthur W. Wheeler, age 53, of New York City, the Chairman and Chief
Executive Officer of American Healthcare;
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| Lars M. Kram, age 63, of New York City, President of American Healthcare
and a member of its Board of Directors until September 2000;
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| Michael Anthony Lester, age 41, of Huntsville, Alabama, an "investor
relations" and Internet consultant and, after September 2000, President of
American Healthcare; and
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| American Healthcare, a Delaware corporation headquartered in Wheeler's apartment. |
The Commission's complaint alleges as follows:
As the defendants disseminated false information to investors, American Healthcare issued more than 5.8 million shares of unrestricted stock in unregistered transactions, approximately 3.4 million of which was directly issued to nominee companies of the Lories. The Lories, through their nominee companies and relatives, sold at least 3.26 million of these shares to the public for at least $1.47 million.
The Commission seeks the following relief: (i) permanent injunctions from further violations of the antifraud, registration, and antitouting provisions of the federal securities laws (Sections 5 (a) and (c), and 17(a)and (b) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10(b)(5) thereunder); (ii) a permanent injunction against Angel Lorie from further violations of a Commission Order prohibiting Angel Lorie from participation in a penny stock offering and from Section 15(b) of the Securities Exchange Act of 1934; (iii) disgorgement from Wheeler, Kram, Angel Lorie, and Luis Lorie; (iv) civil monetary penalties against Wheeler, Kram, Angel Lorie, Luis Lorie, and Lester; and (v) an order barring Wheeler, Kram, Angel Lorie, Luis Lorie, and Lester from serving as officers or directors of a public company.
On June 15, 2000, the SEC issued a ten-day suspension of trading in the securities of American Healthcare because of questions raised about the accuracy of publicly disseminated information concerning American Healthcare. The trading suspension followed a press release by American Healthcare in May 2000 in which American Healthcare announced an exclusive multi-million dollar contract with the New York City Link program, a service that seeks to ensure that mentally ill patients from New York City prisons receive necessary treatment and medication. The Commission's complaint alleges that the press release was false and that no such contract ever existed.
The Commission thanks the New York City Health and Hospitals Corporation for their cooperation in this matter.