A Texan is accused of organizing a ruse using a Russian hacker and a spam campaign to artificially inflate the value of certain stocks, according to the Justice Department.
Christopher Rad, 42, was arrested and charged yesterday with one count of conspiracy to commit securities fraud and transmit commercial email messages with fraudulent information.
According to the indictment and court documents, Rad allegedly conspired with stock promoters to manipulate the price and volume of particular stocks to later sell them at an artificially inflated price. After conspiring with the stock promoters, Rad organized others to manipulate the stock price.
During his plea hearing, co-conspirator James Bragg, 42, of Chandler, Ariz., admitted he hired hackers and spammers, including a person in Russia referred to as “B.T.,“ to spread viruses to infect computers globally and create botnets. The hackers then caused the botnets to distribute spam to promote the manipulated stocks.
The same hackers also broke into the brokerage accounts of third parties, liquidated the stocks in those accounts and then used those accounts to purchase shares of the manipulated stocks.
Last month, New York stock broker Gregg M. Berger was charged for his alleged role in a similar fraud to illegally “pump-and-dump“ thinly traded Chinese and Israeli stocks by sending spam promoting stocks to artificially inflate prices.