2. Fraudulently Inflating the Price and Trading Volume of the Manipulated Companies' Stocks
17. After obtaining secret control of the manipulated companies' free trading shares, defendants POSSINO, NIX, MENDIRATTA, ANGELASTRI, HARRIS, MOYAL, SCARPELLO, SPITARI, DUNN, MACKEY, and DAVIS, together with others known and unknown to the Grand Jury, used the following methods, among others, to generate interest in the companies and fraudulently inflate the price and trading volume of the companies' shares:
a. Defendants POSSINO, NIX, and ANGELASTRI, together with others known and unknown to the Grand Jury, bought shares of the companies on the open market shortly before the promotion campaigns were launched. To the investing public, these trades appeared to be purchases by investors not affiliated with the companies, and gave the false appearance that there was an increasing market demand for the shares.
b. Defendants POSSINO, NIX, MENDIRATTA, and ANGELASTRI secretly cross traded the companies' shares back and forth between accounts that they controlled, in order to create the false appearance that there was an active market for the companies' shares so that:
i. The DTC would approve the electronic transfer of the shares through the DWAC program, thereby enabling the conspirators to manipulate the shares' prices and trading volumes more rapidly and effectively; and
ii. The investing public would take interest in the companies and purchase the shares.
c. Defendants POSSINO, NIX, MENDIRATTA, ANGELASTRI, HARRIS, MOYAL, SPITARI, DUNN, MACKEY, and DAVIS, together with others known and unknown to the Grand Jury, fraudulently promoted the companies' stocks through the following means, among others:
i. Paying stock promoters, including defendants HARRIS, MACKEY, and DAVIS, to tout the companies' performance and prospects, including through mass emails and mailings, television and internet advertisements, celebrity endorsements, promotional events, infomercials, and other media outlets;
ii. Giving, and offering to give, defendants MENDIRATTA, ANGELASTRI, MOYAL, and MACKEY, as well as others known and unknown to the Grand Jury, shares of the companies, or a portion of the profits from the manipulation campaigns, in exchange for funding the promotion campaigns; and
iii. Paying stock analysts and recommendation websites, many of which purported to offer independent and unbiased analyses of companies' stocks, to recommend the companies as favorable investments.
Defendants POSSINO, NIX, MENDIRATTA, ANGELASTRI, HARRIS, and MOYAL took steps to conceal from the public that they were the source of the funds paid to these stock analysts and recommendation websites.
d. Defendants POSSINO, NIX, MENDIRATTA, ANGELASTRI, SCARPELLO, and DAVIS worked with certain officers at the companies, including but not limited to defendants SPITARI and DUNN, and Unindicted Co-Conspirator 1, to issue press releases that the defendants knew contained materially false and misleading information, and omitted material information necessary to make the press releases not false and misleading, regarding:
i. The companies' business operations, products that the companies had supposedly developed or were developing, hiring of new employees, projected earnings, and growth potential;
ii. The defendants' ownership and control, through various nominees, of a substantial portion of the free trading shares of the manipulated companies' stocks;
iii. The defendants' payments to promoters to tout the manipulated companies' stocks;
iv. The defendants' artificial manipulation of the price and trading volume of the manipulated companies' stocks through, among other methods, cross trading shares of the manipulated companies between accounts that the defendants controlled; and
v. The defendants' intention to sell their shares of the manipulated companies' stocks at the same time that they were paying promoters to encourage the investing public to buy and hold shares of those companies' stocks.
Doc 1 PDF file http://www.scribd.com/doc/125529135/US-v-Possino