“State securities regulators have charged Bainbridge Island’s Health Maintenance Centers and owner Kevin Lawrence with selling some $9 million in unregistered stock, saying the company misrepresented facts and misled investors.The state issued a cease-and-desist order April 9, forbidding any more sales pending further investigation by the state. The order was released to the public online, posted to the web site maintained by the Securities Division of the Washington State Department of Financial Institutions.Delay in ordering the respondents to cease and desist from such violations would be hazardous to the investors and to the public, said a summary order signed by state Securities Administrator Deborah Bortner.An HMC company spokeswoman said Tuesday that attorneys were preparing a press release, but that it would not be available until after the Review’s publication deadline.Securities division attorneys Michael Stevenson and Martin Cordell said Tuesday that a number of inquiries from investors, potential investors and brokers triggered the investigation.We have been aware of the company for a year or more, Cordell said, but we are just beginning our investigation. It’s a rather large case involving hundreds of investors and millions of dollars.The gist of the complaint is the failure to provide adequate information, they said.According to the state attorneys, anyone who sells stock in Washington must register unless the seller can come within one of the exemptions. The purpose of the registration is to provide financial information about the selling company, and background information about the individuals involved.So far, we have found no prospectus, Cordell said.According to the tentative findings of fact set out in the order, Lawrence, a Bainbridge Island resident and former securities salesman, incorporated Health Maintenance Centers, Inc. in 1995. HMC operates a fitness club on Madison Avenue.The order says that from 1997 through March of 2001, shares of HMC stock were sold to more than 1,100 investors in Washington and elsewhere. The share price was $1, but investors were required to buy a minimum of 5,000 shares, the order says.According to the state’s preliminary findings, at least some of the investors were told that they would be able to exchange their HMC shares for shares in Znetix, Inc., another corporation formed by Lawrence in 1999.The order says investors were told that Znetix was going to be publicly traded, and that when Znetix went public, they could expect to double or even quadruple the value of their investment.The order alleges that HMC’s stock-sale activities violate two provisions of Washington law. First, regulators say that HMC was never registered with the state to sell its securities. The order also claims that HMC violated anti-fraud provisions of state law. Tracking the language of the state statute, the order asserts that HMC misrepresented material facts and omitted facts necessary to make their statements, in light of the circumstances in which they were made, not misleading.More specifically, the order claims that HMC did not provide information on how investor funds would be used, about the risk of the investment or about HMC’s financial situation.Similarly, the order says that inadequate information was provided about Znetix, and specifically about the risk that Znetix would not be able to go public within a few months.Znetix has not gone public, according to the order. Lawrence and HMC have 20 days from service of the order to request a hearing and defend against the allegations. Under state law, any purchaser of unregistered securities is entitled to return the stock and receive a refund of the purchase price with 8 percent interest, plus attorneys’ fees. “