Internet Implicated in Stock-Fraud Arrests in California
By GRETCHEN MORGENSON
Two California men were charged yesterday with conspiracy to commit securities fraud in a case that shows both how easy it is to inflate the price of stocks artificially on the Internet and, prosecutors say, how quickly such culprits can be identified.
The United States attorney in Los Angeles and the Securities and Exchange Commission contend that the men -- Arash Aziz-Golshani and Hootan Melamed, both 23 years old and recent college graduates -- sent bogus messages over the Internet to pump up the price of stock in an obscure bankrupt company. The share price rose from 13 cents to more than $15 in less than two trading days last month, prosecutors say, reaping $364,000 in profits for Mr. Aziz-Golshani, Mr. Melamed and a third man.
On Friday, Nov. 12, according to prosecutors, Mr. Aziz-Golshani, Mr. Melamed and the third man, Allen Derzakharian, 26, sat down at public
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