Manner and Means
7. It was a part of the conspiracy that defendant MATTHEW W. BROWN and P.D., J.M., J.C. and M.R., along with others known and unknown to the grand jury, sought to artificially inflate market demand for GH3 shares by manipulating sales in GH3 stock in a way that appeared to be the product of free and fair market forces. They did this in various ways, including the following:
a. Issuing hundreds of millions of non-registered shares into the marketplace through the misuse of SEC Rule 504 of Regulation D, which generally exempts from registration shares issued in a private placement to an accredited investor, which shares the investing public did not know existed;
b. Orchestrating, coordinating, and timing their trading activity to create the false impression of increased market demand for, and liquidity in, GH3 stock;
c. Engaging in manipulative and deceptive securities transactions to artificially increase the demand for GH3 shares;
d. Posting messages on on-line message boards regarding GH3 stock; and
e. Coordinating trading activity with the issuance of GH3 press releases containing false and misleading information;
Overt Acts
8. In furtherance of the conspiracy and to accomplish its objects, defendant MATTHEW W. BROWN and P.D., J.M., J.C., and M.R. and others known and unknown to the grand jury, committed the following overt acts, among others, in the District of Delaware and elsewhere:
h. On or about December 6, 2006, defendant BROWN and P.D. communicated via instant message about the terms of the GH3 deal.
i. Between on or about December 6 and December 13, 2006, P.D. and others known and unknown to the grand jury purchased shares of GH3, thereby increasing market volume in GH3 stock.
j. On or about December 7, 2006, defendant BROWN communicated via instant message with P.D. regarding P.D.'s posting of messages concerning GH-3's stock on IHUB internet message boards.
k. On or about December 7, 2006, defendant BROWN communicated via instant message with P.D. regarding future GH3 press releases.
1. On or about December 7 and 8, 2006, GH3 issued press releases claiming that the company's revenues for 2005 and 2006 exceeded $2.1 million and $3 million,
respectively.
m. On or about December 7, 2006, P.D. communicated via instant message with N.M. asking N.M. to post on internet message boards that there was a "short" in GH3 stock.
n. On or about December 7, 2006, defendant BROWN communicated via instant message with P.D. wherein P.D. told defendant BROWN to have GH3 issue another press release indicating that GH3 had ordered a non-objecting beneficial owners ("NOBO") list from its transfer agent to address unexplained short positions in GH3 stock and suggesting language for that press release.
o. On or about December 8, 2006, GH3 issued a press release about ordering a NOBO list, using some of the language suggested by P.D. in the December 7, 2006 instant message.
p. On or about December 11, 2006, GH3 issued yet another press release anticipating that the company's revenues for 2007 would exceed $6,000,000, a 100% increase over 2006 revenues.
q. Between December 4 and December 14, 2006, P.D. and other co-conspirators known and unknown to the grand jury had access to J.C.'s brokerage accounts at Spartan and Bishop Rosen, directed sales of GH3 shares out of the accounts, and controlled the timing of sales of GH3 shares from those brokerage accounts. All in violation of Title 18, United States Code, Section 371.
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Matthew W. Brown: 04/16/2009 3 REDACTED VERSION of 2 Indictment by USA as to Defendant Sealed. (rpg) (rpg). (Entered: 04/22/2009)
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