NEW YORK, N.Y. – Two men were arrested Tuesday in Israel and a third was being sought after a New York indictment accused them of trying to cheat millions of people in a stock spam scam.
U.S. Attorney Preet Bharara announced the arrests by the Israel police of a man from Savyon, Israel, and another from Bat Hefer, Israel. The men, Israeli nationals, were arrested at their homes. A third defendant, a U.S. citizen who lives in Moscow and Tel Aviv, remained at large.
The men since 2011 had manipulated trading in U.S. securities from overseas, using fake identities to funnel millions of dollars in unlawful proceeds through a web of international shell companies, Bharara said.
The men sent false and misleading spam emails to millions of people about penny stocks in a pump-and-dump scheme, prosecutors said. Such schemes enable people to drive up the prices of stocks so they can sell at a peak before the truth about the securities is discovered and the prices plummet.
Charges in the case include multiple counts of conspiracy and securities fraud.
In a separate civil complaint, the Securities and Exchange Commission said the men controlled at least 20 stock promotion websites in which they sent multiple emails to people purporting to come from different and seemingly unrelated sources. In them, they urged that shares of various companies be bought as soon as possible, the lawsuit said.
It was unclear who is representing the men against the charges.