Remarks as Prepared for Delivery by Assistant Director in Charge George C. Venizelos at the CodeSmart Press Conference
The following remarks were delivered by New York ADIC George Venizelos at the press conference regarding a market manipulation case.
Criminals have always preyed on the trust of individuals with offers too good to be true. While the schemes and the perpetrators of these crimes might change, the underlying greed does not. This is true about the indictment unsealed today involving seven subjects who manipulated the share price and trading volume of four publicly traded stocks for personal gain.
As outlined in the indictment, the defendants in this case engaged in a coordinated and sophisticated scheme to manipulate price and volume of traded shares of what have been identified in the indictment as the manipulated stocks. The defendants targeted the stocks of four different companies, acquiring interest in these target stocks at nominal costs.
After acquiring an interest in the stock, the defendants promoted the stock through various means. They used press releases containing false statements about the financial success of the companies and promoted exclusive partnerships with businesses and universities that never existed.
The defendants also filed false and misleading forms with the Securities and Exchange Commission regarding the financial viability of the target companies and offered kickbacks, “matched trades” or “wash sales,” so the trading volume and share price of the target stocks would artificially inflate.
As detailed in the indictment, the defendants worked in tandem to steal from unsuspecting investors. They “pumped” up the stock’s value and then “dumped” them.
The defendants in this case include securities brokers, traders, and even an attorney. These individuals are well versed in the rules of the financial market and knew or should have known that their actions were illegal. This lucrative scheme to manipulate our financial markets made the defendants money, while draining the bank accounts of innocent investors.
Today, the defendants find themselves under indictment for their market manipulation scheme. Their client-victims trusted them to manage their money as if it were their own, not to steal it. Financial fraud is not a victimless crime. The perpetrators of these crimes live lavish lifestyles, stealing their victims’ life savings and leaving them with uncertain financial futures.
The increase in the number of Americans investing in the U.S. financial markets, coupled with the creation of various investment vehicles and new technology, has expanded the opportunity for fraud to occur. While the FBI has been successful in investigating these schemes and putting those responsible behind bars, our work is ongoing.
We will continue to use traditional and sophisticated investigative techniques to successfully prosecute our adversaries and to find and stop criminals before they prey upon others. Together with our partners in both law enforcement and the private sector, we remain vigilant in identifying and bringing to justice those who look to profit at the expense of hard-working Americans.
I want to thank United States Attorney Loretta Lynch and her staff, to include Assistant United States Attorneys Shannon Jones, Walter Norkin and Winston Paes. I also want to acknowledge the Securities and Exchange Commission, who have been invaluable partners in bringing these cases. I also want to recognize and thank the tireless work of FBI Special Agents Michael Braconi and Constantine Voulgaris and Supervisory Special Agent Kathy Diskin, as well as the invaluable assistance we received from the Newark, New Haven, Las Vegas, and San Antonio Field Offices in support of this investigation. Thank you.