A federal grand jury in the Southern District of Texas returned an indictment that was unsealed yesterday charging eight men with conspiracy to commit securities fraud for a long-running, social media-based “pump and dump” scheme.
According to court documents, Edward Constantinescu, aka Constantin, 38, of Montgomery, Texas; Perry “PJ” Matlock, 38, of The Woodlands, Texas; John Rybarczyk, 32, of Spring, Texas; Gary Deel, 28, of Beverly Hills, California; Stefan Hrvatin, 35, of Miami, Florida; Tom Cooperman, 34, of Beverly Hills, California; Mitchell Hennessey, 23, of Hoboken, New Jersey; and, Dan Knight, 23, of Houston, Texas, allegedly engaged in a wide-ranging securities fraud conspiracy in which the defendants used their extensive social media presence on Twitter and Discord to hype interest in particular securities by posting false and misleading information in order to “pump” the prices of those securities, while concealing their intent to later “dump” their shares by selling them at the artificially inflated prices. From in or around January 2020 to in or around April 2022, the defendants profited at least approximately $114 million from their scheme.
“Securities fraud victimizes innocent investors and undermines the integrity of our public markets,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “As these charges demonstrate, the department will continue to prosecute those who defraud investors by spreading false and misleading information, including over social media, to line their own pockets.”
According to the indictment, the defendants collectively had over 1.5 million followers on Twitter to whom they allegedly disseminated false and misleading information about the securities that they pumped and dumped as part of the charged scheme. In addition to their Twitter presence, the defendants also allegedly ran an online community for individual stock traders called Atlas Trading, which defendants promoted as one of the largest, free online communities in the world for individual stock traders and which had a chatroom called Atlas Trading Discord. The defendants also allegedly used Atlas Trading Discord to disseminate false and misleading information about securities that they pumped and dumped as part of the charged scheme.
“We are committed to protecting the investing public from market manipulation schemes, regardless of how they are carried out,” said U.S. Attorney Alamdar S. Hamdani for the Southern District of Texas. “As some use advances in technology and social media to prey upon the public, our office will be on the cutting edge of prosecuting this area of fraud.”
According to the indictment, the defendants allegedly used the following aliases on Twitter and Discord to perpetuate the scheme:
Defendant
Twitter Handle
Discord Handle
Edward Constantinescu
@MrZackMorris
Zack Morris#0001
Perry “PJ” Matlock
@PJ_Matlock
PJ Matlock#0001
John Rybarczyk
@Ultra_Calls
Ultra#0374
Gary Deel
@notoriousalerts
Mystic Mac [emoji of four-leaf clover]#7345
Stefan Hrvatin
@LadeBackk
Lade Backk#6083
Tom Cooperman
@ohheytommy
TOMMY COOPS #5323
Mitchell Hennessey
@Hugh_Henne
HOODHUGHBEAR[emoji of an ox]#4034
Daniel Knight
@DipDeity
Dan, Deity of Dips#8114
As further alleged in the indictment, the defendants used their social media credibility to maximize their own profits at the expense of their followers, holding themselves out as skilled stock traders by posting pictures showcasing their profits and extravagant lifestyles, and encouraging people to follow them on social media in order to share in their financial gains.
“Corporate fraud remains a priority for the FBI as it victimizes investors and erodes public confidence in the securities markets,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division. “The FBI and our law enforcement partners remain committed to identifying, investigating, and pursuing those who seek to undermine the U.S. financial market and investors.”
"Financial crimes like securities fraud may not be violent, but they certainly are not victimless," said Special Agent in Charge James Smith. "The eight individuals arrested today are accused of costing investors, specifically their social media followers who trusted them, millions of dollars by a ‘pump and dump’ market manipulation scheme they allegedly carried out on popular social media platforms. As the lead agency investigating corporate fraud, the FBI was able to uncover their alleged manipulative activity and expose their coordinated pattern of securities fraud."
All defendants are charged with one count of conspiracy to commit securities fraud. Additionally, Constantin is charged with three counts of securities fraud and one count of engaging in monetary transactions in property derived from specified unlawful activity; Matlock and Deel are both charged with five counts of securities fraud; Rybarczyk is charged with four counts of securities fraud; and Hrvatin, Cooperman, and Hennessey are each charged with two counts of securities fraud.
The defendants made their initial court appearances yesterday. If convicted, each defendant faces a maximum penalty of 25 years in prison for conspiracy to commit securities fraud and each charged count of securities fraud. Constantin also faces a maximum penalty of 10 years in prison if convicted of engaging in unlawful monetary transactions. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
The FBI Houston Field Office is investigating the case.
Assistant Chief Scott Armstrong and Trial Attorney John J. Liolos of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Thomas “Heyward” Carter III for the Southern District of Texas are prosecuting the case.
If you believe you are a victim in this case, please contact the Fraud Section’s Victim Witness Unit toll-free at (888) 549-3945 or by email at victimassistance.fraud@usdoj.gov. You are also encouraged to visit our webpage for this case at https://www.justice.gov/criminal-vns/case/united-states-v-constantinescu-et-al.
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
I liked the part of "NOT FINANCIAL ADVICE" no longer being "admissible".
Maybe CornerSTONED is Canadian, eh? Thinking The FEDERAL U.S. & SEC LAWS don't apply to them, maybe? Mark should KNOW BETTER!!
Because, the NEXT time the SEC comes a calling: It's a REVOCATION!!
Why would FRONT-LOADERS care though? Lime Time wrote:
Buy it low, sell it high. I couldn't care less what the CEO does after Pink Current.
Seems like a completely legal way to pump and dump stock. Let it go to Expert Market, bring it current every other year and then repeat as many times as needed for self enrichment.
A sad sick new rules for the OTC Market.
Take advantage of it, then move right to the next ticker.
They'll be GONE, BABY GONE! I guess that's the thinking here!
But it is a SERIOUS ISSUE for shareholders.... Mark & CornerSTONED need to GET WISE!! -- or long-term shareholders ought to GET OUT! The RISK is never to be trading again! Mark ALREADY has a coupla strikes against him (at least) WHY TAKE THE STUPID RISK?
SEC Suspends (MIKP) Trading in the Securities of 16 Companies in Ongoing Effort to Combat Microcap Stock Fraud
The Securities and Exchange Commission (“Commission”) announced the temporary suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934 (the “Exchange Act”), of trading in the securities of the following issuers, commencing at 9:30 a.m. EDT on September 17, 2012, and terminating at 11:59 p.m. EDT on September 28, 2012:
AER Energy Resources, Inc. (AERN) Alto Group Holdings, Inc. (ALTO) BizRocket.com, Inc. (BZRT) Fox Petroleum, Inc. (FXPT) Geopulse Explorations, Inc. (GPLS) Global Technologies Group, Inc. (GTGP) KMA Global Solutions International, Inc. (KMAG) Mike the Pike Productions, Inc. (MIKP) Mobile Star Corp. (MBST) SavWatt USA, Inc. (SAVW, formerly SAVWD) Scorpex, Inc. (SRPX) Silver Dragon Resources Inc. (SDRG) Strategic Mining Corp. (SMNG) Surgline International Inc. (SGLN) Thrive World Wide Inc. (TWWI) Zamage Digital Art Imaging Inc. (ZMGD) The Commission temporarily suspended trading in the securities of the above-listed issuers because of questions regarding the adequacy and accuracy of information about the companies, including their assets, business operations, current financial condition and/or issuances of shares in company stock.
The Commission cautions broker-dealers, shareholders, and prospective purchasers that they should carefully consider the foregoing information along with all other currently available information and any information subsequently issued by the companies.
Further, brokers and dealers should be alert to the fact that, pursuant to Rule 15c2-11 under the Exchange Act, at the termination of the trading suspensions, no quotation may be entered unless and until they have strictly complied with all of the provisions of the rule. If any broker or dealer has any questions as to whether or not he has complied with the rule, he should not enter any quotation but immediately contact the staff in the Division of Trading and Markets, Office of Interpretation and Guidance, at (202) 551-5777. If any broker or dealer is uncertain as to what is required by Rule 15c2-11, he should refrain from entering quotations relating to the above-named securities until such time as he has familiarized himself with the rule and is certain that all of its provisions have been met. If any broker or dealer enters any quotation which is in violation of the rule, the Commission will consider the need for prompt enforcement action.
If any broker, dealer or other person has any information which may relate to this matter, they should immediately contact any of the following individuals:
Glenn S. Gordon, (305) 982-6360 or gordong@sec.gov, Associate Regional Director, Miami Regional Office
Elisha L. Frank, (305) 982-6392 or franke@sec.gov, Assistant Regional Director, Miami Regional Office
Andrew M. Calamari, (212) 336-0042 or calamaria@sec.gov, Associate Regional Director, New York Regional Office
Sharon Binger, (212) 336-0462 or bingers@sec.gov, Assistant Regional Director, New York Regional Office
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