67.4 F
San Diego
Sunday, Jul 21, 2024
-Advertisement-

Three Charged in Alleged ‘Pump and Dump’ Scheme

The Securities and Exchange Commission filed civil fraud charges April 30 against three people, including one San Diego resident, and three penny stock issuers for an alleged “pump and dump” stock market manipulation scheme.

An SEC complaint filed in U.S. District Court in Los Angeles alleged that defendants Stephen Luscko, 39, and Gregory Neu, 30, both of Florida; and Justin Medlin, 24, of San Diego, artificially inflated the stock price and trading volume of certain companies whose stock was traded on the over the counter market.

The complaint alleged that Luscko and Neu formed four companies, including defendants Emerging Holdings, Massclick and China Score, as well as an entity that is now defunct, and recruited friends and business associations to act as company officers.

The complaint alleged that Luscko and Neu arranged for the companies to transfer millions of shares of stock to their own or their friends’ brokerage accounts in a series of sham transactions designed to bypass SEC regulations that required the shares to be restricted from being resold into the open market.

The complaint also alleged that Luscko and Neu drafted false and misleading spam e-mails that were edited by Medlin, who conducted a spam e-mail campaign. Millions of e-mails were sent out that generated significant public interest and resulted in a rapid increase to the companies’ stock prices and volume, the complaint states.

Once the stock prices on the companies were sufficiently pumped up, the complaint alleged, the defendants and their friends dumped their shares into the open market, causing the stock prices to decline rapidly.

The SEC complaint said as a result of the trades in the four stocks, the three defendants netted $6.5 million.

In a related criminal action, the U.S. Department of Justice and the U.S. attorney for the Eastern District of Virginia filed charges against Luscko and Neu, who both pleaded guilty to conspiring to commit securities fraud and e-mail fraud.

Neu was sentenced to five years in prison and three years of supervised release. Luscko was sentenced to five years in prison and two years supervised release. Prosecutors have seized more than $3 million from bank accounts associated with Luscko and Neu.

, Mike Allen

-Advertisement-

Featured Articles

-Advertisement-
-Advertisement-

Related Articles

-Advertisement-
-Advertisement-
-Advertisement-