InvestorsHub Logo
Boards
News
Market Data
Markets
Discover
Discover
Subscribe Login/Register
S&P 500
5,222.68
(
0.16%
)
US TECH 100
17,650.00
(
0.05%
)
Dow Jones
39,512.84
(
0.32%
)
Brent Oil
82.59
(
0.00%
)
Bitcoin
61,207.24
(
0.67%
)
Post# of 3257
Next 10
Reply Private New
Public Reply Private Reply New Post
Keep Last Read
Keep Next 10 Report Keyboard Shortcuts
Next 10 Prev Next

PhillyPA65

Send PM Follow Ignore
Followers 12
Posts 1881
Boards Moderated 0
Alias Born 06/14/2006

PhillyPA65

Re: None

Friday, 09/14/2007 9:48:03 PM

Friday, September 14, 2007 9:48:03 PM

Post# of 3257
Guilty: The $20 million spammers who manipulated stock market
Pump-and-dumpers face up to ten years in jail

14 September 2007

http://www.sophos.com/pressoffice/news/articles/2007/09/saquella.html

The pump-and-dump stock spam gang face hefty jail sentences.

IT security and control firm Sophos has welcomed news that four men have pleaded guilty to being part of an international gang that used spam to manipulate the stock market, raising more than $20 million from investors.

According to the US Department of Justice, 47-year-old Michael Saquella (also known as Michael Paloma), 63-year-old Lawrence Kaplan, 38-year-old Henry Zemla and Justin Medlin, were members of a gang which spammed out fraudulent news stories to create artificial demand in stocks, pumping up the share price of 15 small companies (Beverly Hills Film Studios; Body Scan; Cor Equity Holdings; Courtside Products; eDollars, IFINIX; Integrity Messenger; Latin Heat Entertainment; Motion DNA; PokerBook Gaming; TKO Holding; Trans-Global Holdings; V3 Global; Xtreme Technologies; and Zuma Beach Entertainment).
The pump-and-dump gang then sold off their stock, netting more than $20 million in profits, some of which was shared with the companies that were having their share prices manipulated. Astonishingly, these firms were involved in the operation, although it is not believed they realised anything illegal was taking place.

26-year-old Medlin, from Paris, France, was one of the people hired by the rest of the gang to send out the spam messages.
Sophos experts report that pump-and-dump stock campaigns like this account for approximately 25 percent of all spam, up from 0.8 percent in January 2005.

All four men have pleaded guilty to counts of fraud and are facing between 5-10 years in prison when sentenced later this year. Saquella and Kaplan have also admitted multiple Securities and Exchange Commission (SEC) violations. Three other defendants, Steven P. Luscko, Gregory A. Neu, and Brian G. Brunette, have already been sentenced to between 1-5 years in prison.

Pump and dump stock campaigns work by spammers purchasing stock at a cheap price and then artificially inflating its price by encouraging others to purchase more (often by spamming "good news" about the company to others). The spammers then sell off their stock at a profit. Sophos experts report that pump-and-dump stock campaigns account for approximately 25 percent of all spam, up from 0.8 percent in January 2005.

"The facts of this case should make it clear to everyone that there are fortunes to be made from spam, but that the penalties if caught are considerable," said Graham Cluley, senior technology consultant at Sophos. "Pump-and-dump spam is a scourge in people's inboxes - not only does it clog up email servers but it risks putting the livelihoods of innocent individuals and small businesses in jeopardy."

According to Sophos, the public must also learn to exercise caution when deciding which companies to invest in and must learn to never trust an anonymous internet tipoff.

Earlier this year, Sophos reported how the US Securities and Exchange Commission (SEC) had suspended trading in 35 companies as they were found to be commonly referenced in pump-and-dump stock email campaigns.

In July, Sophos published its Security Threat Report, examining the latest trends in spam, malware and hacking.

http://www.sophos.com/pressoffice/news/articles/2007/09/saquella.html

Sell Into The Pump - Don't Get Stuck In The Dump

Public Reply Private Reply New Post
Keep Last Read
Keep Last Read Next 10 Report Keyboard Shortcuts
Next 10 Prev Next

Join the InvestorsHub Community

Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.

Sign Up