A California man has been sentenced to four years in prison after he pleaded guilty to charges of securities fraud and money laundering. 27-year-old Matthew Brown was also ordered to pay $50,000 in fines and forfeit nearly $4.8 million.
Brown along with his co-conspirators, manipulated stock prices in order to increase the price of the stock, which the group would later sell. According to the indictment, the scheme was implemented in 2006 and 2007. The group manipulated the price of publicly traded stocks to generate interest in them. By doing so, they hoped to create public interest in the stocks, therefore inflating the price. Later, Brown and his partners sold significant holdings in these stocks.
According to the plea agreement, the group made millions of dollars in this manner. The securities included Asia Global Holdings Corp. and GH3 International Inc. The group made overall profits of more than $4 million.
In 2007, investigators began probing penny stocks, and came upon the fraud. Agents in Delaware together with officers from the United States Immigration and Customs Enforcement, Internal Revenue Service, Homeland Security, as well as local and federal investigators from California, conducted the investigation.
Securities fraud can include the purchase and sale of unregistered securities, insider trading, and falsifying statements with the intention of defrauding investors. These are white-collar crimes and federal crimes. In the case of securities fraud, it's not just the person at the head of the food chain who may be charged with fraud. Investment brokers and executives as well as other mid-level or lower-level employees who had knowledge of the fraud, or aided and abetted the fraud in any way, may also be charged with these crimes.
Being convicted of securities fraud can mean a sentence in federal prison. If you are being investigated by the Securities and Exchange Commission, protect your interests early on by consulting with a California white-collar criminal defense lawyer.