A U.S. District Court judge in Seattle sentenced three stock salesmen in the Znetix case yesterday, a scam that bilked several thousand...
A U.S. District Court judge in Seattle sentenced three stock salesmen in the Znetix case yesterday, a scam that bilked several thousand investors out of $91 million and stands as the largest securities fraud in state history.
Larry L. Beaman, Michael J. Culp and Harvey Kuiken, all convicted on conspiracy and fraud charges last May, are among 14 people being sentenced.
In sentencing Beaman to 12 ½ years, Culp to nearly eight years and Kuiken to nine years, Judge Marsha Pechman said she was holding each man accountable for the amount of money he collected from investors.
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In the case of Beaman, who is 63, Pechman said she decided to keep his sentence a bit shorter than she otherwise might have because of his age and his daughter’s plea to not let him die in prison.
Pechman did, however, take note of a secret bank account Beaman set up during and after his trial. Pechman ordered him to pay nearly $5.3 million in restitution.
She has not determined restitution for Culp and Kuiken.
Kevin L. Lawrence, founder of the Bainbridge Island company, admitted misleading investors and is serving a 20-year prison sentence. He has been ordered to repay the lost money.
Pechman described Lawrence as the kingpin whose “mad desire for greed” fueled the scheme.
Lawrence promoted Znetix as a franchiser of unique medically based fitness centers, and he and his associates told investors that major sports stars had agreed to buy licenses and that a lucrative initial public offering was forthcoming.
In fact, Lawrence and others at Znetix spent most of investors’ money on homes, cars, jewelry and other luxuries for themselves. The scam collapsed in 2002, after the Securities and Exchange Commission sued Znetix.
Kuiken, Beaman and Culp were the only three to go to trial. Their lawyers argued yesterday that the three should not get longer prison terms than many who cooperated with prosecutors because that would penalize them for exercising their right to stand trial.
The last defendant — stock salesman Alfonso Lacson Jr., who pleaded guilty to securities fraud — is scheduled to be sentenced next month.
Beth Kaiman: 206-464-2441 or email@example.com