Man Convicted of Orchestrating Pump & Dump Scam

News coming in from the US reveals that Thirugnanam Ramanathan, a man of Indian origin, found guilty of breaching the security of online brokerage accounts to tamper with prices of stocks, and has been sentenced for two years imprisonment under the stock spam case.

Security investigators and analysts have been cautioning internet stockbrokers as well as internet stock buyers against pump-and-dump scam. They also explained that the traditional pump-and-dump spam scams worked by tricking potential investors into buying useless stocks based on artificially raised values through spam mails.

According to the security researchers, the scam that Ramanathan orchestrated was rather sophisticated as it included elements of both spamming and hacking. Use of this strategy prompted an additional accusation for which Ramanathan has been prosecuted under the US cyber-crime law.

Meanwhile, elaborating on the case, authorities connected with the investigations revealed that Ramanathan hacked into the investment accounts of customers who were associated with brokerage firms like E*Trade, TD Ameritrade and Fidelity. Ramanathan dumped means selling of the original shares in exchange of purchasing lightly traded shares; thereby, falsely raising their value for potential investors through share-promoting spam mails.

Meanwhile, according to reports, around 60 customers holding accounts with nine US brokerage companies fell prey to the pump-and-dump stock spam scam that Ramanathan executed during February-December 2006.

As per the reports, Ramanathan was arrested in Hong Kong and extradited after the FBI investigation tracked certain clues to the crime. The agency found that share prices were manipulated and spammed from an IP address of a Bangkok Hotel, which Ramanathan was boarding at the hour of his detention.

Over time, Ramanathan admitted to one instance of committing fraud through wire transfer, and identity theft and fraud via computer, relating to the scam way back in June 2008. Later at the hearing before Laurie Smith Camp, the US District Judge, Ramanathan was sentenced to three years of probation over and above the two years of imprisonment. He also has to compensate for his victims' losses by paying up $362,000, as reported byThe Register on September 10, 2008.

Related article: Man Sues and Wins against ISP for Spamming Mail

» SPAMfighter News - 9/23/2008