Securities Industry Commentator by Bill Singer, Esq

November 9, 2017

Day Trader Indicted in Computer Hacking and Securities Fraud Scheme Targeting Online Brokerage Accounts (DOJ Press Release) 

Federal prosecutors charged Joseph Willner with:

  1. conspiracy to commit wire fraud,
  2. conspiracy to commit securities fraud and computer intrusions,
  3. securities fraud and
  4. conspiracy to commit money laundering.

According to the filed Indictment, between September 2014 and May 2017, Wilner and others:

conspired to hack into victims' online securities brokerage accounts and used them to place unauthorized trades, at times fraudulently liquidating existing positions in the victims' accounts in order to fund the unauthorized trades.

The indictment further alleges that, as a part of the conspiracy, the defendant used brokerage accounts in his name to place "short sale" offers for publicly-traded companies' stock at artificially high, above-market prices.  Simultaneously, Willner's co-conspirators hacked into victims' online brokerage accounts and used them to place buy orders for the stock at the artificially high prices, matching Willner's short sale offers.  After using the victims' accounts to purchase the stock, Willner and his co-conspirators then re-purchased the stock from the victims' accounts at market or below-market prices.  This series of fraudulent trades usually took place within minutes, and Willner immediately profited based on the difference between his artificially high short sale price, and the lower price at which he subsequently re-purchased the stock.

According to the indictment, while discussing the scheme in private messages on Twitter, one of Willner's co-conspirators said: "legal trading too hard."  Willner responded that he would be a "good trading partner."  As a result of Willner and his co-conspirators' alleged actions, the affected brokerage firms lost more than $2 million.

NOTE: An Indictment contains merely allegations and defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law. Read the FULL TEXT  Willner Indictment

District Court Enters Order Against Los Angeles Area Telemarketing Companies and Their Executives (DOJ Press Release) 

There is no place in Hell that is hot enough for those jackasses who torment us with unwanted robocalls, particularly when we're on the National Do Not Call Registry. As such, it delighted me to learn that on March 10, 2016, the Department of Justice filed a Complaint alleging that KFJ Marketing LLC, Sunlight Solar Leads LLC, and Go Green Education (owned and operated by Franciso and Julio Salvat) had initiated at least 1.3 million telemarketing calls in violation of the Telemarketing Sales Rule.  

On Oct. 31, 2017, pursuant to a Stipulated Order for Permanent Injunction and Civil Penalty, the three corporate defendants and Francisco Salvat were banned from engaging in telemarketing activity.  Additionally, the order prohibits Julio Salvat from violating the Telemarketing Sales Rule and restricts his ability to place robocalls.  Defendants are required to pay a $1.4 million dollar civil penalty, all of which but $155,000 will be suspended based on defendants' inability to pay the entire penalty.

Download the FULL TEXT:

KFJ Signed Stipulation

KFJ Amended Complaint

KFJ Stipulated Final Order for Permanent Injunction

Members of International Bank Fraud Ring Sentenced to Prison for Role in Scheme (DOJ Press Release)

Rey Martinez-Lopez, 33; Anwar Barragan Flores, 39; Jorge Williams-Araiza, 38, and Javier Ramirez-Villegas, 36, all from Hermosillo, Sonora, Mexico, pleaded guilty to conspiracy to commit bank fraud and aggravated identity theft in connection with a conspiracy to purchase stolen personal, credit card account, and other financial information, credit card over the Internet from individuals located in Ukraine, Tajikistan, and Russia, among other countries. The Defendants used the stolen information to illegally manufacture fraudulent credit cards, which, in turn, were used to purchase gift cards and high-end merchandise in the United States and to transfer those goods to Mexico for future sale.

The sentences imposed upon the Defendants were as follows:

  • Anwar Barragan Flores: seven years in prison, five years supervised release;
  • Rey Martinez-Lopez: four years and six months in prison, five years supervised release;
  • Javier Ramirez-Villegas: four years in prison and five years of supervised release; and
  • Jorge Williams-Araiza: three years and two months in prison, five years of supervised release.

Five Not So Easy Thought Pieces About Pro Se FINRA Arbitration ( Blog)

You got your five easy pieces. Then you got your five not-so-easy thought pieces about Wall Street employees representing themselves in FINRA arbitrations against their former employers. In today's featured Blog commentary, our publisher Bill Singer, Esq. dissects a fairly mundane pro se Claimant's case against TIAA-CREF. Bill asks important questions about the pros and cons of such amateur hour lawsuits. If your finances are such that you can't afford a lawyer, consider some of the issues raised in the article. READ

Virginia Man Pleads Guilty In Manhattan Federal Court To $100 Million Market Manipulation Scheme Involving Fitbit Stock (DOJ Press Release)

Federal prosecutors allege that on November 8, 2016, Robert Walter Murray had:[

falsely purporting to be an officer at a China-based entity called ABM Capital, created an account on the SEC's Electronic Data Gathering, Analysis, and Retrieval (or "EDGAR") system.  The next day, MURRAY submitted a filing on EDGAR that reported that ABM Capital had offered to purchase Fitbit for approximately $12.50 a share, a significant premium to the price of Fitbit stock at the time.  This filing was made public on November 10, 2016, and, when it was, Fitbit's stock temporarily increased in response to the news.  While Fitbit's stock had closed at approximately $8.55 a share on November 9, 2016, it reached a high of approximately $9.27 per share, with significantly increased trading volume, after the false tender offer filing was made public.  MURRAY's filing, however, was entirely fictitious, and was instead meant only to increase the value of options in Fitbit stock that he had purchased just before filing the sham tender offer.

MURRAY, moreover, took significant steps to hide his connection to the tender offer filing.  He created a separate email account to register with the SEC and to file the sham tender offer, taking care to disguise his actual IP address when accessing it.manipulated the market for the stock of Fitbit, Inc. ("Fitbit") by filing with the Securities and Exchange Commission ("SEC") a sham tender offer falsely reporting a bid to purchase at a premium above prevailing market prices the outstanding shares of Fitbit. As a result of his scam, Murray sold for a profit options that had appreciated when he significantly increased the stock price to the extent of a temporary inflation of the market capitalization by over $100 million

In addition to agreeing to a forfeiture of the proceeds of the offense, Murray pled guilty to one count of securities fraud, which carries a maximum sentence of 20 years in prison and a maximum fine of $5 million.