Three Defendants Named in Alleged Multi-Million Dollar Stock Scheme

The U.S. Attorney’s Office for the Southern District of New York announced the unsealing of federal charges against three defendants for their alleged role in a multi-million dollar stock manipulation or “pump and dump” scheme. Two of the men were arrested recently in Israel while one of the defendants remains at large.

According to the indictment, the three men allegedly orchestrated a scheme to manipulate the price and trading volume of numerous “penny stocks” in order to enable members of the conspiracy to sell their holdings in those stocks at artificially inflated prices. In furtherance of the conspiracy, it is alleged that Shalon and Aaron partnered with “promoters” who identified the companies whose stock would be targeted for manipulation. In doing so, Aaron allegedly acted as the scheme’s “front-man,” using the alias “Mike Shields” (including false identification and a Social Security Number belonging to another person) to communicate with the promoters and others at Shalon’s direction.

What is a pump and dump scheme?

While no two schemes are ever exactly alike, pump and dump schemes usually follow a general pattern that goes something like this:

  • The individual(s) running the scheme purchase stocks for cheap, usually penny stocks
  • The fraudsters start creating hype and buzz around their stocks
  • Investors take the bait, which raises the price of the stock
  • The fraudsters dump their shares for a profit while the remaining investors suffer substantial losses because the price of the stock then plummets

If you believe that you may have invested in a pump and dump scheme, we invite you to contact Meyer Wilson today for a free review of your case to learn your legal rights and options.


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