Delaware courts: Key cog in stock scheme admits role
Another plea expected in $6M scam
By SEAN O'SULLIVAN • The News Journal •
February 18, 2010
WILMINGTON -- A key player in a massive,
multimillion-dollar stock fraud that was operated
through Delaware admitted in Delaware District
Court on Wednesday to two counts of conspiracy to
commit securities fraud and two counts of
conspiracy to commit money laundering.
Matthew W. Brown, 27, of Aliso Viejo, Calif., who
operated the Web site InvestorsHub.com, told Judge
Joseph J. Farnan Jr. that he worked with others to
fraudulently manipulate the price of certain stocks
and then laundered the cash proceeds.
It was called a "pump and dump" scheme, in which
conspirators work with officials from a targeted
company to "pump up" a stock price -- with bogus
press releases and manufactured stock activity and
Internet buzz -- and then "dump" all their shares for
a profit once a certain profitable level has been
reached.
In court, Assistant U.S. Attorney Keith M. Rosen
described Brown as the conduit between officials of
at least two companies who were willing to
participate in the fraudulent activity -- GH3
International Inc. and Asia Global Holdings Inc. --
and Pawel Dynkowski of Newark, who orchestrated
the scheme.
Dynkowski, 24, has been charged but remains at
large, according to prosecutors.
At least one other person involved in the scheme,
which netted an estimated $6 million from 2006
through 2008, is expected to enter a similar plea in
the coming weeks.
Outside court, Brown and his attorney, Michael J
Amador, had no comment.
Brown faces up to five years in prison on each
securities fraud count and up to 20 years in prison
on each of the money laundering counts, in
addition to potentially millions in fines when he is
sentenced later this year.
According to court papers, GH3 was a Nevada
business that purported to market anti-aging
products; Asia Global, also based in Nevada,
claimed to have the rights to the TV game show
"Who Wants to Be a Millionaire" in China.
Rosen and Assistant U.S. Attorney Shannon Hanson
said the conspirators, working with company
officials, would coordinate the issue through
positive press releases with manufactured stock
activity to make it appear there was investor interest
and activity.
They would also plant positive items about the
company in investor chat rooms on the Internet and
send out positive spam e-mails about the
companies. |
