Montana Man Sentenced for Role in Penny Stock Pump-and-Dump Scheme
ALEXANDRIA, VA—Matthew Carley, 44, of Bozeman, Montana, was sentenced today to 24 months in prison, followed by two years of supervised release for his role in a stock manipulation scheme involving the securities of an Ashburn, Virginia, based company called Red Branch Technologies. Carley was also ordered to forfeit $789,478 in proceeds of his crime and ordered to pay $2.3 million in restitution to thousands of shareholder victims.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; and Andrew McCabe, Assistant Director in Charge of the FBI’s Washington Field Office, made the announcement after sentencing by U.S. District Judge Claude M. Hilton.
Carley pleaded guilty to conspiracy to commit securities fraud charges on December 4, 2014. According to court documents, in 2009, Carley and others participated in a stock manipulation scheme, commonly referred to as a “pump-and-dump” scheme, involving the securities of Ashburn-based Red Branch Technologies (“Red Branch”), which, at the time, had no real business operations and earned no actual revenue. As part of the conspiracy, Carley and others transformed Red Branch into a public company with common stock traded over the counter on the Pink Sheets, gained control of the company’s free trading shares, engaged in manipulative trading practices and in a publicity and touting campaign to promote the stock, and then sold their shares in the company to the investing public at artificially inflated prices. Carley’s role included supplying the publicly traded shell company into which Red Branch (then a private company) merged, funding press releases and an online promotional campaign for the company’s shares, and distributing company shares to others involved in the stock manipulation scheme. Over approximately a three-month period, the scheme caused Red Branch’s share price to rise from close to zero to a high of approximately seventeen cents per share. Carley’s total proceeds from his sale of stock at these inflated prices was approximately $789,478.
This case was investigated by the FBI’s Washington Field Office. Assistant U.S. Attorney Paul J. Nathanson is prosecuting the case. The department recognizes the substantial assistance of the Securities and Exchange Commission, Division of Enforcement.
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:14-cr-333.