In 2014, the leader of a “pump and dump” fraud scheme was sentenced to nine years in prison in Manhattan. This scheme employed the Internet and social networking sites to manipulate penny stock prices as well as a money-laundering scheme. The misleading promotional campaign generated a demand for stock and as a result, stock prices rose. They would repeatedly condone the scheme until company’s shares were valueless and company founders as well as executives would be hurt. But what is a pump and dump scheme and how do they work?
A “pump and dump” scheme is a type of white collar crime that involves stocks and securities in almost all cases. Somebody will essentially talk very well about a company, even sometimes making fake reviews. This makes the company appear as a “hot” stock on the market and people will invest money without knowing that they will be scammed out of their money. In many cases, the creators of the scheme will sometimes issue the stock to themselves, ultimately stealing money from others.
What Penalties Might I Face?
If you have been involved in a pump and dump scheme, you could face severe penalties as a result of your crime. For instance, you may receive misdemeanor or felony charges depending on the extent of the scheme. You may also face serious fines, jail or prison time, or a loss of business licensing in the future. Because of this, you may need an experienced attorney to help you with your case. Call us today for more information.