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Ten members of international stock manipulation ring charged in Manhattan

• nerdponx 5y ago
  Wow, this looks like a pretty serious manipulation game they were playing: > First, the defendants and their co-conspirators secretly amassed control of the vast majority of the stock of certain publicly traded companies that were traded on the over-the-counter (“OTC”) market in the United States. Second, the defendants and their co-conspirators then manipulated the price and trading volume for these stocks, causing the share price and trading volume to become artificially inflated, through coordinated trading and false and misleading promotional campaigns that they funded. I'm curious about which stocks were actually involved. I'm also curious how much they profited on this scheme, and how much capital they had to amass to get it started. It seems like a big investment and a lot of hard work by a lot of people! It's too bad they were using it to defraud people.
  • DougMellon 5y ago
    Is this the same issue: https://www.nsnews.com/bc-news/vancouver-stock-promoter-davi https://www.nsnews.com/bc-news/vancouver-stock-promoter-davi... If so, it appears at least $145 million.
    • Scoundreller 5y ago
      Bad link, but a Canadian publication may have converted into CAD$ which will juice the number by ~26%
  • selecsosi 5y ago
    > The securities that the defendants and their co-conspirators sought to manipulate were issued by small companies, were thinly traded, and typically traded at less than $2 per share. These publicly traded shell companies frequently had few, if any, actual assets or actual business operations. While on paper the defendants and their co-conspirators had no connection to these companies, in reality they exercised substantial control, including installing management at the companies, financing the companies’ operations, and funding payments for attorneys in order to prepare public filings with OTC Markets Group, Inc. and the Securities and Exchange Commission (the “SEC”). In order to attract investor interest, the defendants and their co-conspirators, at times, caused private businesses to be merged or “vended” into the publicly traded shell companies. The private businesses were often in industries likely to attract the investing public’s interest
    • matwood 5y ago
      Wow, yeah. So not the normal pump and dump (buy, astroturf the stock, sell), but a full on fraud ring.
    • zionic 5y ago
      _Yawn_. They caught a few small-fish bad guys. While I'm glad they're going down (from my limited information on the subject) this pales in comparison to the active harm the SEC perpetrates against the average joe on a daily basis. I should be able to invest in _whatever I want_ no matter my net worth. It's my goddamn money and they have no right, after taking almost half of it, to then tell me that I can't spend it as I please. The worst part is I'm _paying_ (via taxes) for them to then tell me what I can't do.
      • wpietri 5y ago
        Nah. It's in society's interest to keep confidence in the markets up, because that's how you maximize total resources available for investment and economic growth. That confidence requires vigorous protection of investors, including the ones that think they're too smart to need protection. It's no coincidence that the US has strong enforcement and is also a top international destination for investment. If anything the SEC and the CFTC should be more vigorous, and I'm happy to pay to support them. If you personally really are too smart to need protection, they broadened the accredited investor definition last year, so there are a variety of ways to meet it: https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/updated-3 https://www.investor.gov/introduction-investing/general-reso...
        • psychlops 5y ago
          Society does not need higher and higher markets. In many ways it is the illusion of economic growth and treated as such. The brain and resource drain to financialization of everything from industries that actually produce something will be looked back upon poorly in the future.
          • 5y ago
  • ceejayoz 5y ago
    Penny stock pump-and-dump schemes are very common. You've probably got hundreds of emails in your spam folder trying to pull it off.
    • paulpauper 5y ago
      not really. go ahead and try to convince a stranger to buy a stock. way harder than it sounds, way harder now than 20 years ago.
  • rdtsc 5y ago
    > I'm also curious how much they profited on this scheme, and how much capital they had to amass to get it started. It seems like a big investment and a lot of hard work by a lot of people! It's too bad they were using it to defraud people "the defendants, collectively, made over $100 million by orchestrating ‘pump-and-dump’ stock manipulation schemes" It's also a rather international bunch. Wonder how they all found each other. > CURTIS LEHNER, a/k/a “Santa,” a citizen and resident of Canada, and COURTNEY VASSEUR, a/k/a “Black Water Resource Management,” a/k/a “Black Water,” a/k/a “Cyrill Vetsch,” a/k/a “Arctic Shark,” a/k/a “Oscar Devries,” Well he wins the most silly names accumulated award from the list.
  • kyleblarson 5y ago
    Penny stocks have super low floats and huge spreads so they are ripe for manipulation.
    • paulpauper 5y ago
      but liquidity is a problem. you still have to cash out. Also, greater signal to noise ratio, so abnormal trades still stick out easier.
  • qiskit 5y ago
    > Wow, this looks like a pretty serious manipulation game they were playing: It's a basic pump and dump. Nothing new nor interesting. It's been done for decades. There have been many movies on it - boiler room being one.
    • deleted 5y ago
      [deleted]
    • kube-system 5y ago
      My first thought was: https://en.wikipedia.org/wiki/The_Wolf_of_Wall_Street_(2013_film) https://en.wikipedia.org/wiki/The_Wolf_of_Wall_Street_(2013_...
    • girvo 5y ago
      > While on paper the defendants and their co-conspirators had no connection to these companies, in reality they exercised substantial control, including installing management at the companies, financing the companies’ operations, and funding payments for attorneys in order to prepare public filings with OTC Markets Group, Inc. and the Securities and Exchange Commission (the “SEC”). In order to attract investor interest, the defendants and their co-conspirators, at times, caused private businesses to be merged or “vended” into the publicly traded shell companies. The private businesses were often in industries likely to attract the investing public’s interest Slightly more interesting than your average pump and dump.
  • wpietri 5y ago
    > It seems like a big investment and a lot of hard work by a lot of people! It's too bad they were using it to defraud people. A great deal of the financial industry uses a lot of money and brainpower to play zero or negative-sum games. The more egregious of those negative-sum games are eventually made illegal, and some of the people playing them get punished. But speaking as somebody who used to write software for financial traders, it's a relatively short trip from "zero-sum game that is currently legal" through "negative-sum game that could well be legal" to "negative-sum game where we think we won't get caught". It's true that one can societally justify a fair bit of that effort by pointing at things like more liquid markets, reduced trading costs, more accurate pricing, and the like. But approximately nobody trading for a living gets into the business because they care about any of those things enough to devote their lives to them. They're there to make money, and things like marketplace sanctions, regulatory investigations, and criminal enforcement are just another part of the cost-benefit analysis. When I was in the industry floor trading was still the focus. One slow day at the Chicago Board of Trade there was a guy in a polar bear suit walking around the trading pits. One trader turns to another, says, "I'll give you $100 if you punch the polar bear." The second one shrugs, takes the money, walks over, and punches the bear. Turns out the person in the mascot suit was wearing glasses, so they end up with a cut on their face and blood trickling down. It also turns out that the bear was there to raise money for the zoo, and some CBOT bigwig was on the board of the zoo. If I recall rightly, the punching trader was banned for life. The colleague who told me this story just smiled and, referring to the $100 gained, said, "Bad trade." I'm sure that there are plenty of people in the industry who look at these 10 guys and don't say, "What an outrage against the investors," or "I'm shocked that they'd tarnish the name of our industry that requires public confidence to function", but instead just smile and say, "Bad trade."
    • hangonhn 5y ago
      I used to work on the tech side of finance too. The hedge fund where I worked had a number of PIPE related violations where they ended up eventually settling and paying a fine without admitting guilt. For them it was just the cost of doing business. Breaking the rule and profiting minus the cost of the fines would just be a "good trade" to them.
    • 5y ago
  • hackernewds 5y ago
    $AMC and $GME
  • paulpauper 5y ago
    I am sure they would have made more money just making fake YouTube crypto livestreams impersonating Saylor and Vitalik Buterin. No arrest risk either. I dunno why anyone would manipulate stocks or insider trade. Your adversary is the US federal government, the most powerful entity in the world with near unlimited resources at its disposal. Also, being busted for one trade means you will be busted for all of them because it's all recorded. I'm also curious how much they profited on this scheme, and how much capital they had to amass to get it started. It seems like a big investment and a lot of hard work by a lot of people! It's too bad they were using it to defraud people. Criminals generally have poor risk v. reward assessment, even white collar ones. 5 guys work together to rob a bank..if they just put 1 year of work at a 30-50k/year at a legit job, they would have same amount with no risk. They are not the smart, hence crime.
  • dan-robertson 5y ago
    Typically the stocks that trade in OTC markets (aka pink sheets) are for small or defunct companies not the kinds of big public companies you may be familiar with. Buying a lot of some penny stock, hyping it up, and then dumping it on people is not a particularly sophisticated or new way of defrauding people, though in this case the scheme was a little more involved. You don’t need billions of dollars to buy a lot of the shares of one of these companies.
    • lupire 5y ago
      Yeah OTC trading is almost exclusively fraud. It's the model for crypto trading. A knowledgeable investor has no reason to invest in OTC, and naive investors don't even know how.
      • anonu 5y ago
        I disagree with your blanket statement on fraud. Pink sheets are a portion of what trades OTC. There are other types of securities like F-shares (foreign listings that trade in USD) and other trusts. GBTC: the only bitcoin fund in the US trades OTC. (NB: trades at a massive premium so you're better off trading the underlying)
      • trompetenaccoun 5y ago
        OTC exists in all markets, it's called a "dark pool". It's funny how little people know about more traditional markets but everyone thinks crypto is full of fraud. If you guys did more stock trading you'd know how bad it is. A former chairman of NASDAQ called Bernie Madoff is literally a convicted ponzi scammer.
        • tome 5y ago
          Some of us know that crypto must be full of fraud because there’s so much fraud in traditional markets, despite regulation and oversight that crypto doesn’t have at all.
          • 5y ago
  • Ekaros 5y ago
    This is the type of stuff regulators are effective against, in grand scheme of things quite meaningless activity and enforcement. And affecting those who no one should even be touching without very good reasons or deep understanding...
  • anonu 5y ago
    Pump and dump is as old as the stock market. What is more impressive is the they got involved at the corporate level, getting private companies to merge into OTC shells as well as issuing official SEC filings in target industries (probably blockchain or crypto in recent years). Press release says they made $100m since 2015.
  • cascom 5y ago
    You’d be shocked by the trash equities that are, check QKLS (no idea what it is) but it has market cap of less than $10k. Sure we could but the whole thing for not a ton more. $1m would be plenty.
  • traceroute66 5y ago
    >I'm curious about which stocks were actually involved. I'm also curious how much they profited on this scheme, and how much capital they had to amass to get it started. The clue is in the very extract you posted.... "certain publicly traded companies that were traded on the over-the-counter (“OTC”) market in the United States" OTC shares are the bottom of the barrel shares, too illiquid to be dealt with via the exchanges and so traded via market makers instead. Which then answers your second question. With illiquid shares you don't need much capital or to make much effort to make a profit in questionable ways. I haven't read the detail, but I imagine they were basically running a coordinated pump & dump.
  • newswasboring 5y ago
    > I'm also curious how much they profited on this scheme, and how much capital they had to amass to get it started. It seems like a big investment and a lot of hard work by a lot of people! It's too bad they were using it to defraud people. Every time a report like this comes out I wonder if the stock market is of any actual value to society. One answer people have given me is that companies can use it to raise money for future ventures, but is that actually true? Most of the times I hear of IPOs they seem like cash outs rather than raising capital.
• ncmncm 5y ago
  If you found out about such a ring and got visibility into what they were doing, and used what you discovered to profit at their expense (without doing any of your own manipulations, i.e. just buying and selling), would you be in trouble?
  • kube-system 5y ago
    I suspect that if you knew about the scheme, and executed trades as a result of that knowledge, you would probably run afoul of this?: https://www.law.cornell.edu/uscode/text/18/1348 https://www.law.cornell.edu/uscode/text/18/1348
    • ceejayoz 5y ago
      No, you wouldn't be executing the fraud. Reading the statute that way would make companies like https://en.wikipedia.org/wiki/Hindenburg_Research https://en.wikipedia.org/wiki/Hindenburg_Research illegal.
      • ElevenLathe 5y ago
        Matt Levine said it best: "Everything everywhere is securities fraud." https://www.bloomberg.com/opinion/articles/2019-06-26/everything-everywhere-is-securities-fraud https://www.bloomberg.com/opinion/articles/2019-06-26/everyt...
        • IAmEveryone 5y ago
          You can’t take it literally in this sense. Among other things, investors cannot commit securities fraud, only executives can. Als, relatedly, Matt Levine’s take regarding insider trading may be relevant here.
          • kube-system 5y ago
            > investors cannot commit securities fraud, only executives can. The very story you're commenting on is an example of a securities fraud scheme (pump and dump) that can be committed by investors.
• nradov 5y ago
  The entire OTC stock market is a swamp filled with alligators. Market manipulation and scams are rife, and many of the underlying companies are little more than scams. The SEC and Justice Department only find a fraction of the problems. There is the potential to make huge gains but individual investors should be very careful and do extensive research before trading.
  • blantonl 5y ago
    I recall there being a Pizza place in New Jersey or something that was a publicly listed company on the OTC worth tens of millions of dollars. Prime example.
    • otherjason 5y ago
      Close; it is a deli. https://www.nytimes.com/2021/06/02/magazine/your-hometown-deli.html https://www.nytimes.com/2021/06/02/magazine/your-hometown-de... And recently the company announced they will be merging with a bioplastics firm: https://www.bloomberg.com/opinion/articles/2022-04-04/elon-musk-bought-some-twitter https://www.bloomberg.com/opinion/articles/2022-04-04/elon-m...
• ricardobeat 5y ago
  I can’t help but think that this now looks like pocket money compared to the amount of fraud going on in the cryptocurrency market.
  • JohnWhigham 5y ago
  • mistrial9 5y ago
    .. which in turn is also pocket money compared to some Federal programs around the world, institutional use of retirement funds, inflated property values and insider loans.. all absolutely without one bit of cryptocurrency in them. smell the coffee, fraud is everyday
    • ShivShankaran 5y ago
      ...which is pocket money compared to the federal reserve teasing the rate increase for the last 12 months while the stock market is whipsawing and mopping up excess money from the retailers.
    • joshenders 5y ago
      Ransomeware wouldn’t exist to the same degree without crypto. Crypto’s killer app is quite obviously fraud and illegal activity.
      • RustyConsul 5y ago
        Looked another way, it may make our security systems more robust. Much rather have to pay money to some hacker to get my data back then wait for some future where a nationstate does it to cause harm.
    • blantonl 5y ago
      My goodness wait until all this machine learning we've heard about happening with PPP loans starts to peel back the onion. Lots of shell companies out there...
• mcdonje 5y ago
  They'll be fined 1M and sentenced to 90 days house arrest.
• hristov 5y ago
  I wish these indictments would list the companies involved. I read the indictments and they refer to the companies as Company 1 - x. I also wish they would list the actual promotional material the defendants used. It would be very helpful to investors to see which articles are paid for by pump and dumpers, which authors write such articles, which websites publish them, etc.
  • ajsharp 5y ago
    too risky. any named companies' share price would plummet immediately.
    • hackernewds 5y ago
      yes even though they were the victims. that would be unwarranted
    • caymanjim 5y ago
      These companies have no real value to begin with and have been fully taken over by the fraudsters.
  • deleted 5y ago
    [deleted]
  • gdz 5y ago
    See section "relevant entities" https://www.sec.gov/files/litigation/complaints/comp-pr2022-61-shah.pdf https://www.sec.gov/files/litigation/complaints/comp-pr2022-...
• lizardactivist 5y ago
  Only large American banks and financial institutes are allowed to play that game.
  • intrasight 5y ago
    And US legislators too ;)
• tomatowurst 5y ago
  I wonder if these guys were on r/wallstreetbets, I am seeing more and more blatant pump-and-dump schemes, this time in claiming "short squeeze" and writing call options that never materialize.
  • IAmGraydon 5y ago
    WSB is basically a marketing forum for pump and dump schemes now. There are hundreds if not thousands of entities trying their hand at it. I mean - even Elon Musk is doing it. Remember what Michael Burry said before the 2008 crash: one hallmark of a bubble about to collapse is fraud running rampant. It happened in the late 1920s, in the runup to 2008 and it's happening again now.
    • gralx 5y ago
      > ... one hallmark of a bubble about to collapse is fraud running rampant. Famous shortseller Jim Chanos says the same.
  • ShivShankaran 5y ago
    There was one couple of days back about a grilling company: New account, evoking emotions, hundreds of awards in couple of minutes, promising short squeeze. Other than that the whole subreddit is just retailers losing all their money.
    • swarnie 5y ago
      If i recall that post was called out pretty quickly, the top post on the sub for that day was informing others about the scam thread. I'm not saying WSB hasn't got a moderation/quality problem but some people on that sub aren't total idiots.
• paulpauper 5y ago
  RONALD BAUER was arrested in the United Kingdom. CURTIS WILLIAM LEHNER, COURTNEY VASSEUR, and JULIUS CSURGO were arrested in Canada. ANTHONY KORCULANIC was arrested in Spain. PETAR MIHAYLOV was arrested in Bulgaria. Finally, DOMENIC CALABRIGO was arrested in the Bahamas. The United States intends to seek the extradition of BAUER, LEHNER, VASSEUR, CSURGO, KORCULANIC, MIHAYLOV, and CALABRIGO to the United States. CRAIG AURINGER, a citizen of Canada and resident of the United Kingdom, HASAN SARIO, a citizen and resident of Turkey, and DANIEL FERRIS, a citizen of the United Kingdom and resident of Monaco, were also charged and remain at large. The arm of justice is looong. I hope Turkey and others resist the extradition orders though and say "too bad" or as a joke not "until you investigate pelosi". Yeah I hate crime as much as the next guy, but the US cannot play world police forever.
  • zeruch 5y ago
    Extradition treaties work in more than just the direction of the US, and serve a functional purpose, for the same reason that foreign nationals who commit crimes in a jurisdiction CAN be adjudicated in that jurisdiction AND/or in their home jurisdiction.
    • swarnie 5y ago
      I'm not convinced. Historically you've been able to pick up British citizens at will but nothing much is forthcoming in return. Still waiting on Anna Sacoolas whenever you get around to it.
      • zeruch 5y ago
        "I'm not convinced" I'm happy for you. When I was at Uni, the previous extradition agreement between the US and UK was lopsided but still the UK was able to get US citizens extradited under sufficient evidence. As far as I know, when the agreement was re-negotiated in the early 2000s little changed, and looks like there is at least some evidence (at least from the 2003-2012 period) to confirm this from the UK home office: https://www.whatdotheyknow.com/request/details_of_numbers_of_us_citizen https://www.whatdotheyknow.com/request/details_of_numbers_of... As far as the Sacoolas case, I didn't realize I was on the hook for sending her back to the UK to spend some time in the dock.
• koreanguy 5y ago
• ggfdh 5y ago
  > COURTNEY VASSEUR, a/k/a “Black Water Resource Management,” a/k/a “Black Water,” a/k/a “Cyrill Vetsch,” a/k/a “Arctic Shark,” a/k/a “Oscar Devries,”
• gdz 5y ago
  Related SEC filling https://www.sec.gov/files/litigation/complaints/comp-pr2022-61-shah.pdf https://www.sec.gov/files/litigation/complaints/comp-pr2022-...
• e_carra 5y ago
  This reminds me of Varga's organization in season 3 of Fargo: https://en.wikipedia.org/wiki/Fargo_(season_3) https://en.wikipedia.org/wiki/Fargo_(season_3)
• jacquesm 5y ago
  This sounds Wolf-of-Wallstreet like.
• tanto 5y ago
  Is this worse than what citadel did? How is that going? Anyone in prison yet? /s
• moneywoes 5y ago
  Wow some people from my area in BC, crazy stuff
• nobodywillobsrv 5y ago
  What stocks? Where is this information and why is it not on the top of this list or in the filings?