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Lawrence gets 20 years in prison

Kevin Lawrence will spend the next 20 years living life in the slow lane.

A federal judge Tuesday sentence island businessman Lawrence, age 37, to 20 years in a federal penitentiary, for bilking thousands of investors nationwide in the Znetix securities scam.

The sentencing hearing in a Seattle federal courtroom was something of a formality, after Lawrence’s guilty plea in July to three felony counts of fraud.

In that deal, prosecutors agreed to recommend a 20-year sentence, while Lawrence will forego any appeals and help a receiver track down any remaining Znetix assets.

The plea agreement spared Lawrence a possible life sentence, given the hundreds of fraud-related charges that he once faced.

“I’m very satisfied,” said Jeff Coopersmith, U.S. assistant district attorney and lead prosecutor in the case. “I think that 20 years is one of the longest, if not the longest plea resolution in a white-collar case (in Washington state history).”

Lawrence was the founder of Znetix and Health Maintenance Centers, and claimed to be developing a new paradigm integrating physical fitness and medical care.

Investors were promised that the company would soon be publicly traded, giving a many-fold return on their investments.

Lawrence and associates sold unregistered securities to an estimated 5,000 dupes nationwide, raising $90-$100 million – money that was then spent on luxury automobiles, homes and jewelry for Lawrence, friends and family members, and high-profile promotions for a company that was not actually doing any business.

While it leased office and warehouse space all over the island and in Seattle, the outfit’s only tangible operation was a small health club on Madison Avenue.

Lawrence was arrested in August 2002, following complaints by investors and an investigation by state regulators and federal law enforcement agencies. He has been in federal lock-up since then.

At Tuesday’s hearing, Lawrence offered no statement in his own behalf. But a one-time Znetix investor read a statement rebuking Lawrence for his “greed.”

Neither did Lawrence find sympathy from federal Judge Marsha Pechman.

“Her comment on the bench was that she found him arrogant and not contrite,” Coopersmith said.

Where Lawrence will wind up next is up to the federal Bureau of Prisons. Lawrence asked that the judge recommend he be incarcerated at a facility in Pensacola, Fla., but she refused to do so, suggesting that it would seem lenient.

“She conjured up images of (Lawrence) ‘going to the sun’ somewhere, and she didn’t think that was appropriate given what he’d done,” Coopersmith said.

Lawrence was also ordered to pay $91 million in restitution, which Coopersmith conceded was “unrealistic.”

A court-appointed receiver has spent the last 15 months marshaling Znetix assets to repay creditors and investors.

But several huge auctions of vehicles, artwork, and the $330,000 engagement ring Lawrence gave to fiance Stacy Gray have failed to recoup more a small fraction of the investor funds he squandered.

Nearly a dozen Lawrence associates still await trial or sentencing on crimes stemming from the securities scam. Those cases may not be the end of the prosecutor’s work.

“We’ve said before and I’ll say now that the investigation is continuing,” Coopersmith said.

“The scope of this thing is just extraordinary.”

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