Authorities from the Southern District of Texas accused eight men of committing securities fraud by participating in a “pump and dump” scheme.
The scammers were running the fraud scheme on social media and managed to earn $114 million before they were discovered.
How the “Pump and Dump” Scheme Worked
The eight men used social media platforms like Discord and Twitter (their accounts had over 1.5 million followers), to raise public interest in certain securities.
By spreading fake information among their followers about some securities, they managed to “pump” their prices. Then the criminals would “dump” their shares, selling them at a very high price artificially created by their posts.
“In order to gain credibility and earn more followers, they would share pictures of their lavish lifestyle and luxurious belongings, posing as expert stock traders”, according to Cyber News.
The revenues from this scam were as high as $114 million between January 2020 and April 2022.
The defendants also created an online platform for stock traders called Atlas Trading. This was, as they describe it, “one of the largest, free online communities in the world”, but it was used to further carry the deceiving of users.
Each one of the eight men is charged with one count of conspiracy to commit securities fraud. And Edward Constantinescu, or Constantin, 38, in addition, has been accused of three counts of securities fraud and one charge of engaging in monetary transactions in property generated from specific illicit behavior.
Perry “PJ” Matlock, 38 and Gary Deel, 28 were charged with five counts of securities fraud, John Rybarczyk, 32 was charged with four, and Stefan Hrvatin, 35, Tom Cooperman, 34, and Mitchell Hennessey, 23 were charged with two.
For these charges, the defendants can receive a maximum sentence of 25 years in prison, while Constantin’s separate charges could mean another 10 years.
Financial crimes like securities fraud may not be violent, but they certainly are not victimless. The eight individuals arrested today are accused of costing investors, specifically their social media followers who trusted them, millions of dollars by a ‘pump and dump’ market manipulation scheme they allegedly carried out on popular social media platforms.
Special Agent in Charge James Smith via Cyber News.