A pump-and-dump sting that stretched from New York to San Diego netted 14 in connection with an alleged $147 million stock manipulation scheme, the Eastern District U.S. Attorney’s Office announced Wednesday.
The charges include conspiracy to commit securities fraud, conspiracy to commit wire fraud, conspiracy to commit money laundering, and substantive securities fraud in connection with the stock manipulation.
Prosecutors allege the group artificially controlled shares in at least five publicly traded companies by concealing their control of shares held in brokerage accounts under other people’s names. Insiders at the companies would provide below-market stocks to defendants that operated a Melville-based boiler room.
Manipulative patterns would ensue, including trades to push prices and cold-calling or emailing victims, many of whom were seniors, to pressure them to purchase stocks, prosecutors said. The defendants then allegedly sold off shares of the inflated stocks.
Five of the defendants—Jeffrey Chartier, Stephanie Lee, Lawrence Isen, Erik Matz and Ronald Hardy—sought to launder nearly $15 million in proceeds from the alleged scheme by transferring money from brokerage accounts they and their co-conspirators controlled by attempting to make them appear like legitimate business transactions.
“Today’s 14 arrests, in three states, reflect the scope of this fraud and our commitment to aggressively locating and bringing to justice those who abuse our financial markets in order to fraudulently enrich themselves,” Acting U.S. Attorney Bridget Rohde said in a statement.
A parallel U.S. Securities and Exchange Commission suit in the same matter was also filed in the Eastern District on Wednesday.
Assistant U.S. Attorneys Alicyn Cooley and Patrick Hein are in charge of the government’s prosecution.