Vancouver, Washington Man Pleads Guilty to ‘Pump and Dump’ Stock Fraud Scheme
A Vancouver, Washington resident who was a minor participant in an earlier ‘pump and dump’ stock scheme, pleaded guilty today to running his own stock fraud scheme in the months following the earlier investigation, announced U.S. Attorney Annette L. Hayes. TOVY PUSTOVIT, 20, faces up to 20 years in prison when sentenced by U.S. District Judge Ronald B. Leighton on September 14, 2015. Under the terms of the plea agreement, prosecutors have agreed to recommend a sentence no greater than 63 months in prison.
According to the facts admitted in the plea agreement, PUSTOVIT participated in a 2012 scheme with Alexander Hawatmeh, Mikhail Galas and Christopher Mrowca to manipulate the stock of ISM International, Inc. PUSTOVIT was not originally charged criminally in that stock manipulation scheme, but following the arrest of the other defendants, investigators uncovered additional information about PUSTOVIT’s participation and about his continuing to scheme to manipulate penny stocks.
In August 2014, Judge Leighton entered a preliminary injunction barring PUSTOVIT and the other defendants from engaging in stock fraud in a civil enforcement action brought by the U.S. Securities and Exchange Commission. In November 2014 PUSTOVIT conspired with another individual in a ‘pump and dump’ scheme involving three companies in the over-the-counter market. PUSTOVIT and his co-conspirator sought to manipulate the value of Brightech, Inc. (ticker symbol BRTE), General Environmental Management, Inc. (ticker symbol GEVI), and Green Street Capital Corp. (ticker symbol JAGR). The co-conspirator lined up various apparently unrelated accounts and funded them to purchase the penny stocks. After substantial amounts of stock had been purchased, the two sent out e-mail blasts from various stock promotion websites they controlled: Infinity Stock Picks, Zeus Alerts and Hulk Alerts urging others to buy the stocks. When the price rose further, the two dumped their shares making significant profit.
Specifically, they manipulated GEVI in early 2015, accumulating some 2.7 million shares. On February 5, 2015 they sent out e-mail blasts from the three different companies touting the stock as being “ready to soar” in value. The stock price rose sharply on the promotion, and the men sold their stock reaping $83,096 in net profits. In the days that followed the price of the shares collapsed harming numerous investors who had been defrauded.
PUSTOVIT has agreed to forfeit to the U.S. $266,373 as criminal proceeds from the scheme.
The original coconspirators in the trading of ISM International, Inc., Alexander Hawatmeh and Christopher Mrowca, are being sentenced on June 5, 2015.
The case is being investigated by the FBI. The Securities and Exchange Commission (SEC) is conducting a parallel civil investigation. The case is being prosecuted by Assistant United States Attorneys Justin Arnold and Katheryn Kim Frierson.