NEW YORK - It was one of the more dramatic stock moves of 1989. The
Lifeline Healthcare Group, a home health care company, saw its stock
rise from below $4 a share to above $30, then fall back to $15.
Lifeline, which provides nursing and other services to patients
at home, bitterly complained about the decline, becoming one of the
more vocal companies to denounce what it viewed as unfair tactics of
It set out to counter the short-sellers with one of the most
unusual strategies ever undertaken by a company - a stock split that
applied only to some shares.
Wednesday, the Securities and Exchange Commission stepped in and
halted trading in Lifeline for 10 days. But the SEC announcement
left the impression that it was not the short-sellers whose tactics
had aroused the ire of government regulators, but those of the
The SEC announcement cited, among other things, worries about
how the company had handled the stock split and about whether there
was complete disclosure regarding major owners of the stock.
Lifeline, based in Broken Arrow, Okla., has had its problems
with financial reporting. It has twice filed amendments to its
annual report, changing its reported balance sheet for Dec. 31,
Lifeline reported profits of 75 cents a share in the first
quarter of this year, compared with 63 cents a share for all of
1988, but attributed the bulk of the first-quarter earnings to
Those profits may be open to question. The SEC cited questions
about the value of company assets, the methods of accounting for
operations and the way Lifeline reported acquisitions.
For a period this year, Lifeline retained a felon to represent
it in the financial community, the company's lawyer, Cecil Mathis of
Dallas, said. He said the consultant, Charles J. Bazarian, had been
convicted in a Florida case involving fraud at a bank.
Bazarian, whose conviction was upheld by a federal appeals court
in May and who faces a two-year prison term, could not be reached
for comment. He has an unlisted telephone number in Oklahoma City.
Bazarian owns CB Financial Corp. of Oklahoma City.
Lifeline's president, Michael L. Anderson, said the company had
not known of Bazarian's past when he was retained but that he took
no action when he learned of it because ``those activities were not
involved with our company whatsoever.'' He said Bazarian was paid
with 400,000 common shares.
Lifeline first started getting substantial attention when its
stock began to zoom upward, amid talk of a short squeeze. …