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N.J. stock promoter admits to 'pump and dump' scheme

By Tim Darragh | NJ Advance Media for NJ.com
on February 16, 2016 at 5:31 PM

A Toms River stock promoter who was caught in a sting operation targeting market manipulators will spend 33 months in prison and pay a $1 million fine after being sentenced Tuesday.

Michael Affa, 36, was sentenced Tuesday by U.S. District Judge William G. Young in Boston after Affa pleaded guilty last September to conspiracy, securities fraud and wire fraud in what is commonly called a "pump-and-dump" scheme.

According to court records Affa, Andrew Affa of Huntington Station, N.Y., Mitchell Brown of Long Branch, and Christopher Nix and Christopher Putnam, both of Charleston, S.C., plotted to pump up the stock price of a shell company purportedly selling clothing and supplies for mixed martial arts fighters -- but which had no real operations. The conspirators created a false media campaign designed to increase the price of the stock in the company called Amogear, Inc., it said.

Affa and the other conspirators planned to sell the stock at artificially high prices from which they would profit, said office of U.S. Attorney Carmen M. Ortiz in Boston.

Michael Affa, 36, was sentenced Tuesday by U.S. District Judge William G. Young in Boston after Affa pleaded guilty last September to conspiracy, securities fraud and wire fraud in what is commonly called a "pump-and-dump" scheme.

According to court records Affa, Andrew Affa of Huntington Station, N.Y., Mitchell Brown of Long Branch, and Christopher Nix and Christopher Putnam, both of Charleston, S.C., plotted to pump up the stock price of a shell company purportedly selling clothing and supplies for mixed martial arts fighters -- but which had no real operations. The conspirators created a false media campaign designed to increase the price of the stock in the company called Amogear, Inc., it said.

Affa and the other conspirators planned to sell the stock at artificially high prices from which they would profit, said office of U.S. Attorney Carmen M. Ortiz in Boston.

Unbeknownst to Affa, however, Amogear was part of a sting operation being run by the FBI and its chief executive was an undercover informant.

Once the scheme was under way in February of 2014, federal authorities suspended trading in Amogear and arrested Affa and the others.

The FBI had set up the investigation in an attempt to identify potential fraud in the market of microcaps — small, publicly traded companies who stock trades for pennies per share.

The office said microcaps are frequently the source of stock fraud because many of them do not file financial reports with the U.S. Securities and Exchange Commission.

Andrew Affa, Brown, Nix and Putnam also pleaded guilty in 2015, according to court filings, and are awaiting sentencing.

Tim Darragh may be reached at [e-mail]. Follow him on Twitter @timdarragh. Find NJ.com on Facebook.

http://www.nj.com/ocean/index.ssf/2016/02/nj_stock_promoter_admits_to_pump_and_dump_scheme.html