Eight finance influencers indicted in $100-million stock manipulation scheme
The promise was simple: Follow them and get rich.
Eight influencers, based from California to Florida, promoted themselves on social media as financial gurus who could pick winning stocks.
But in reality, federal authorities said, it was a “pump and dump†scheme, in which the perpetrators work to inflate the prices of stocks while pushing them as good investments before dumping them for profit.
In parallel cases filed by the U.S. attorney’s office for the Southern District of Texas and the U.S. Securities and Exchange Commission, authorities said the eight influencers raked in more than $100 million by selling the stocks they’d promoted at artificially inflated prices.
With a combined 1.5 million followers on Twitter, the defendants used their social media reach to send out “false and misleading information†about the stocks they pumped and dumped as part of the scheme, federal prosecutors said Wednesday.
“In addition to their Twitter presence, the defendants also allegedly ran an online community for individual stock traders called Atlas Trading, which defendants promoted as one of the largest, free online communities in the world for individual stock traders and which had a chatroom called Atlas Trading Discord,†prosecutors said.
Authorities believe that the defendants made at least $114 million through the scheme from January 2020 to April 2022.
The maximum potential prison exposure from the eight-count criminal indictment filed against Bankman-Fried is 115 years, according to prosecutors.
According to the SEC, seven of the defendants — including Beverly Hills residents Thomas Cooperman, 34, and Gary Deel, 28 — carried out the scheme by coordinating the acquisition of shares, promoting shares to followers and dumping them for “substantial profits.â€
The SEC also alleged that an eighth defendant co-hosted a stock-trading podcast that promoted the other defendants as expert traders and “provided a platform for other defendants to deceptively promote the stocks they intended to dump.â€
On Twitter, Cooperman and Deel billed themselves as multimillionaire day traders and co-founders of the YouTube channel “Goblin Gang.â€
“As further alleged in the indictment, the defendants used their social media credibility to maximize their own profits at the expense of their followers, holding themselves out as skilled stock traders by posting pictures showcasing their profits and extravagant lifestyles and encouraging people to follow them on social media in order to share in their financial gains,†prosecutors said.
All eight defendants have been charged with conspiracy to commit securities fraud.
The bank provides deposit, payment and security services to the digital currency industry, which has been reeling from high-profile bankruptcies.
Edward Constantinescu, aka Constantin, 38, of Montgomery, Texas, also faces three counts of securities fraud and one count of engaging in monetary transactions in property derived from specified unlawful activity, prosecutors said.
Deel and Perry “PJ†Matlock, 38, of the Woodlands, Texas, are both charged with five counts of securities fraud, prosecutors said. John Rybarczyk, 32, of Spring, Texas, faces four counts of securities fraud.
Cooperman; Stefan Hrvatin, 35, of Miami; and Mitchell Hennessey, 23, of Hoboken, N.J., were each charged with two counts of securities fraud, authorities said.
The defendants made their first court appearance Tuesday, prosecutors said. If convicted, they face maximum sentences of 25 years in federal prison, prosecutors said.
Constantinescu faces an additional maximum penalty of 10 years in prison if he’s convicted of engaging in unlawful monetary transactions, authorities said.
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