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Four Men Plead Guilty to Manipulating Stock Scam

Three men from US and one from France have admitted guilt in court of manipulating a stock scam in which they sent out millions of spam mails to push up the share value of 15 odd companies, said the US DOJ (Department of Justice) on September 6, 2007. The four individuals netted $20 Million from the investors in their pump-and-dump scheme.

Lawrence J. Kaplan, 63, belonging to Scottsdale, Arizona, and Michael Saquella, 47, from Mesa, Arizona, both pleaded guilty in an Alexandria, Virginia Federal court to be involved in the stock manipulation act. 38-year old Henry J. Zemla also accepted guilt in a federal court for his participation in the scam.

Justin Medlin, 26, belonging to Paris, France too pleaded guilty in an Alexandria federal court. He had committed one count of e-mail fraud and another count of conspiring against 7 of the 15 companies to commit electronic mail and securities fraud.

According to the Department of Justice, the four defendants pleaded that they either directly invited a company or approached one through a co-conspirator's introduction. In most cases, the size of the companies was small that were privately owned. Since these companies were looking to raise funds, one of the gang members would pretend to offer help in raising money through sale of shares of a particular company.

Prosecutors found that the conspiring gang made the process possible by arranging to quote the company's stocks on the Pink Sheets, where prices are quoted for trading securities of small companies. While the conspirators manipulated the stock through a series of steps, they took control of all or a majority of the firm's shares, while the firm had no knowledge about it. The Department of Justice further found that the conspirators pulled up the stock prices significantly through deceptive and exaggerated statements about the company in press releases and through spam mails to millions of people.

In relation to this stock scam, the US SEC (Securities and Exchange Commission) has sued Kaplan and Saquella under civil charges of participating in the scam and manipulating the volume and value of the securities of the companies.

Related article: Free Web Host Services: spammer’s bull’s eye

» SPAMfighter News - 9/20/2007

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