Daniyar Zhaxalyk, Money Laundering, Texas 2012

A sophisticated ‘hack and dump’ stock scheme has reaped over $400,000 in losses for unsuspecting victims, with a Kazakhstani national pleading guilty to laundering the ill-gotten gains.

Daniyar Zhaxalyk, 25, a citizen of Kazakhstan who entered the United States on a student visa, pleaded guilty today in Houston to one count of money laundering, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Kenneth Magidson for the Southern District of Texas.

According to the indictment, Zhaxalyk and three co-conspirators were charged in December 2011 for their roles in the scheme, which saw compromised brokerage accounts used to purchase borrowed shares of stock at above-market prices.

The indictment charged that Zhaxalyk’s co-conspirators then repurchased the borrowed shares at the considerably lower market price, returned the borrowed shares to the stock lender and claimed as profit the difference between the market price and the inflated price paid by the compromised victim accounts.

Zhaxalyk admitted that he received and made wire transfers and withdrawals of the funds generated from the fraudulent stock sales and supervised other Houston-based students recruited into the scheme to launder funds.

A co-defendant, Alexey Li, also a citizen of Kazakhstan who entered the United States on a student visa, previously pleaded guilty in Houston on March 2, 2012, and is awaiting sentencing. Two other defendants remain at large.

At sentencing, Zhaxalyk will face a maximum penalty of 10 years in prison and a $250,000 fine.

This case was investigated by the St. Louis, San Francisco and Houston offices of the FBI. The case is being prosecuted by Trial Attorney Ethan Arenson of the Computer Crime and Intellectual Property Section in the Criminal Division and Assistant U.S. Attorney Mark McIntyre of the Southern District of Texas.

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