A computer specialist in Arizona has pleaded guilty for his role in an Internet stock-fraud scheme, sources told a New York Criminal Lawyer. He has already been in prison for a similar charge.
The 41-year-old computer specialist admitted in federal court in Trenton that he misrepresented stock prices for thinly traded stocks between November 2007 and February 2009, promoting them through such means as spam and then taking over the brokerage accounts of third parties.
He also pleaded guilty in August 2009 for his part in a scheme lead by another man, this one from West Bloomfield, Michigan. Prosecutors labeled this man once as “the world’s most notorious illegal spammer.” The computer specialist was sentenced to a year in prison for that case and released in April 2010. His accomplice is currently serving a 51-month prison term.
“The conspirators may have updated the fraud with technology, but strip away the army of computers and this is a classic pump and dump scheme,” a U.S. Attorney told a New York Criminal Lawyer. The computer specialist pleaded guilty to conspiracy to commit securities fraud and fraud in connection with electronic mail. He could go to prison for five years, according to New York Criminal Lawyers.
The scheme used hackers and a large number of computers, called a botnet, to spread computer viruses worldwide. Stocks would be inflated in value, then the hackers would break into brokerage accounts, liquidate stocks, and buy shares of the stocks they had manipulated.
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