SEC Charges Eleven in Stock Manipulation Ring

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Taken together, the indictments allege that, between September 2006 and September 2008, defendants Dynkowski, Mangiapane, Riviello, Brown, Canceli, and D'Amaro sought to fraudulently inflate market demand for, and thus the prices of, shares of various companies traded through the "pinksheets" and on the over-the-counter bulletin board by manipulating sales of those stocks in a way that appeared to be the product of free and fair market forces.

To accomplish this, the indictments allege that the defendants used sham conversions of corporate debt, postings on on-line message boards, and manipulative trading (such as wash sales and matched orders).

As alleged in the indictments, these actions were often timed to coincide with false and/or misleading press releases from the issuers, which were at times orchestrated by the defendants. Once the fraudulent market demand was created, the defendants would sell off large blocks of shares that they had acquired, generating millions of dollars in profits at the expense of unwary investors.

The indictments further allege that the proceeds from these stock sales were laundered through various individuals' and entities' bank accounts, both inside and outside the United States.

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Each count of securities fraud, wire fraud, money laundering, and conspiracy to commit money laundering carries a maximum penalty of twenty years imprisonment, and fines ranging from $250,000 to $5,000,000. Each count of conspiracy to commit securities fraud carries a maximum penalty of five years imprisonment and a $250,000 fine. The maximum penalties for perjury and obstruction of justice are five and ten years imprisonment, respectively, and a $250,000 fine per count.

Acting U.S. Attorney Weiss praised the cooperative law enforcement effort that resulted in these charges. The investigation, which began in 2007, has been pursued jointly by local ICE, IRS, and DSP authorities, with assistance from local and federal investigators in Orange County, California, Ft. Lauderdale, Florida, and New York City. Acting U.S. Attorney Weiss also thanked the SEC for its willingness to provide invaluable assistance to the federal authorities. Acting U.S. Attorney Weiss stated that the investigation is continuing.

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http://www.usdoj.gov/usao/de/press/index.html