Issue Date: IR Alert - July 15, 2009
Stock Scandal: Seattle Lawyer Faces Charges of Running a “Pump and Dump” Scheme Built Around Fake Product
The Securities and Exchange Commission has charged Seattle attorney David Otto and several others with running a “pump-and-dump” stock scheme related to a “non-existent” anti-aging product. The SEC said the fraudulent scheme touted the benefits of MitoPharm Corp., of Seattle, which claimed to use a berry used in traditional Chinese medicine. But the product was only in the “developmental stage,” according to the SEC, the Puget Sound Business Journal reports.
Participants in the scheme touted the product using fake descriptions and false statements. The promotional materials, according to the SEC, caused MitoPharm’s stock to rise above $2.30 per share, and Otto sold his shares for more than $1 million. The massive sale of stock, the SEC said, caused the stock to fall to 5 cents per share by November 2007.
“Otto and his firm used phony documents to corner the market in a startup company’s stock, and then profited at the expense of unsuspecting investors when the stock-promoting campaign caused the share price to briefly skyrocket before plummeting back down to earth,” said Marc Fagel, director of the SEC’s San Francisco regional office, in a statement.
Also charged were Otto’s associate Todd Van Siclen of Seattle, Houston-based stock promoter Charles Bingham and his firm, Wall Street PR Inc., and MitoPharm CEO Pak Peter Cheung of Vancouver, British Columbia.
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