Organizer Of International Securities Fraud Ring Sentenced To Prison For Using Hackers To Falsely Inflate Stock Prices
TRENTON, N.J. – The central organizer of a worldwide conspiracy to manipulate stock prices through a “botnet” network of virus-controlled computers was sentenced today in Trenton federal court to 71 months in prison, New Jersey U.S. Attorney Paul J. Fishman announced.
Rad, 44, of Cedar Park, Texas, was previously convicted, following a 9-day jury trial, of six counts arising from the fraud scheme: conspiring to further securities fraud using spam; conspiring to transmit spam through unauthorized access to computers; and four counts of transmission of spam by unauthorized computers.
The sentence was imposed by U.S. District Judge Joel A. Pisano, who also presided over the trial.
“Rad’s use of hackers to drive his pump-and-dump scheme illustrates a trend toward the modern mechanization of old-school scams,” said U.S. Attorney Fishman. “Law enforcement is constantly anticipating and adapting as criminals operate in a more virtual – and more global – world. As a result, Rad will spend years in prison for manipulating our markets to steal his millions.”
According to documents filed in this case and statements made in court:
Rad conspired with stock promoters in a scheme to manipulate the price and volume of dozens of particular stocks, including stocks with ticker symbols RSUV, QRVS, VSHE, SVXA and ASIC, in order to later sell them at an artificially inflated price – a practice known as a “pump and dump” scheme. The scheme began as early as November 2007 and continued through February 2009.
As part of the scheme, Rad organized others to manipulate the stock prices. He sought out and engaged spammers, then sent them precise language to include in their spam campaigns.
The spammers included two individuals who distributed spam through botnets. To create a botnet, viruses were sent out to infect computers around the world, creating a virtual army of hijacked computers. The spammers then caused the botnets to distribute spam to promote the stocks Rad wanted to manipulate. Infected computers were found in New Jersey, Europe, Russia and elsewhere. The botnet was controlled from command and control servers located overseas, including in Russia and China