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A federal grand jury within the Southern District of Texas returned an indictment that was unsealed yesterday charging eight males with conspiracy to commit securities fraud for a long-running, social media-based “pump and dump” scheme.
In response to court docket paperwork, Edward Constantinescu, aka Constantin, 38, of Montgomery, Texas; Perry “PJ” Matlock, 38, of The Woodlands, Texas; John Rybarczyk, 32, of Spring, Texas; Gary Deel, 28, of Beverly Hills, California; Stefan Hrvatin, 35, of Miami, Florida; Tom Cooperman, 34, of Beverly Hills, California; Mitchell Hennessey, 23, of Hoboken, New Jersey; and, Dan Knight, 23, of Houston, Texas, allegedly engaged in a wide-ranging securities fraud conspiracy wherein the defendants used their in depth social media presence on Twitter and Discord to hype curiosity particularly securities by posting false and deceptive info with a view to “pump” the costs of these securities, whereas concealing their intent to later “dump” their shares by promoting them on the artificially inflated costs. From in or round January 2020 to in or round April 2022, the defendants profited not less than roughly $114 million from their scheme.
“Securities fraud victimizes harmless traders and undermines the integrity of our public markets,” mentioned Assistant Legal professional Basic Kenneth A. Well mannered, Jr. of the Justice Division’s Legal Division. “As these costs reveal, the division will proceed to prosecute those that defraud traders by spreading false and deceptive info, together with over social media, to line their very own pockets.”
In response to the indictment, the defendants collectively had over 1.5 million followers on Twitter to whom they allegedly disseminated false and deceptive details about the securities that they pumped and dumped as a part of the charged scheme. Along with their Twitter presence, the defendants additionally allegedly ran a web based neighborhood for particular person inventory merchants referred to as Atlas Buying and selling, which defendants promoted as one of many largest, free on-line communities on this planet for particular person inventory merchants and which had a chatroom referred to as Atlas Buying and selling Discord. The defendants additionally allegedly used Atlas Buying and selling Discord to disseminate false and deceptive details about securities that they pumped and dumped as a part of the charged scheme.
“We’re dedicated to defending the investing public from market manipulation schemes, no matter how they’re carried out,” mentioned U.S. Legal professional Alamdar S. Hamdani for the Southern District of Texas. “As some use advances in expertise and social media to prey upon the general public, our workplace will likely be on the chopping fringe of prosecuting this space of fraud.”
In response to the indictment, the defendants allegedly used the next aliases on Twitter and Discord to perpetuate the scheme:
Defendant |
Twitter Deal with |
Discord Deal with |
Edward Constantinescu |
@MrZackMorris |
Zack Morris#0001 |
Perry “PJ” Matlock |
@PJ_Matlock |
PJ Matlock#0001 |
John Rybarczyk |
@Ultra_Calls |
Extremely#0374 |
Gary Deel |
@notoriousalerts |
Mystic Mac [emoji of four-leaf clover]#7345 |
Stefan Hrvatin |
@LadeBackk |
Lade Backk#6083 |
Tom Cooperman |
@ohheytommy |
TOMMY COOPS #5323 |
Mitchell Hennessey |
@Hugh_Henne |
HOODHUGHBEAR[emoji of an ox]#4034 |
Daniel Knight |
@DipDeity |
Dan, Deity of Dips#8114 |
As additional alleged within the indictment, the defendants used their social media credibility to maximise their very own earnings on the expense of their followers, holding themselves out as expert inventory merchants by posting footage showcasing their earnings and indulgent life, and inspiring individuals to observe them on social media with a view to share of their monetary positive aspects.
“Company fraud stays a precedence for the FBI because it victimizes traders and erodes public confidence within the securities markets,” mentioned Assistant Director Luis Quesada of the FBI’s Legal Investigative Division. “The FBI and our regulation enforcement companions stay dedicated to figuring out, investigating, and pursuing those that search to undermine the U.S. monetary market and traders.”
“Monetary crimes like securities fraud will not be violent, however they actually aren’t victimless,” mentioned Particular Agent in Cost James Smith. “The eight people arrested right now are accused of costing traders, particularly their social media followers who trusted them, thousands and thousands of {dollars} by a ‘pump and dump’ market manipulation scheme they allegedly carried out on well-liked social media platforms. Because the lead company investigating company fraud, the FBI was capable of uncover their alleged manipulative exercise and expose their coordinated sample of securities fraud.”
All defendants are charged with one depend of conspiracy to commit securities fraud. Moreover, Constantin is charged with three counts of securities fraud and one depend of partaking in financial transactions in property derived from specified illegal exercise; Matlock and Deel are each charged with 5 counts of securities fraud; Rybarczyk is charged with 4 counts of securities fraud; and Hrvatin, Cooperman, and Hennessey are every charged with two counts of securities fraud.
The defendants made their preliminary court docket appearances yesterday. If convicted, every defendant faces a most penalty of 25 years in jail for conspiracy to commit securities fraud and every charged depend of securities fraud. Constantin additionally faces a most penalty of 10 years in jail if convicted of partaking in illegal financial transactions. A federal district court docket decide will decide any sentence after contemplating the U.S. Sentencing Pointers and different statutory elements.
The FBI Houston Subject Workplace is investigating the case.
Assistant Chief Scott Armstrong and Trial Legal professional John J. Liolos of the Legal Division’s Fraud Part and Assistant U.S. Legal professional Thomas “Heyward” Carter III for the Southern District of Texas are prosecuting the case.
For those who imagine you’re a sufferer on this case, please contact the Fraud Part’s Sufferer Witness Unit toll-free at (888) 549-3945 or by e mail at victimassistance.fraud@usdoj.gov. You’re additionally inspired to go to our webpage for this case at https://www.justice.gov/criminal-vns/case/united-states-v-constantinescu-et-al.
An indictment is merely an allegation. All defendants are presumed harmless till confirmed responsible past an inexpensive doubt in a court docket of regulation.
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