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Wow, this looks like a pretty serious manipulation game they were playing: > First, the defendants and their co-conspirators secretly amassed control of the va

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.

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.