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Market Manipulation Schemes Unravel
LOS ANGELES – Federal authorities have arrested 14 people named in two federal indictments that allege long-term schemes to manipulate stock prices that led to more than 20,000 investors losing over $30 million when artificially inflated stock prices collapsed.
According to court documents, the defendants are serial market manipulators who carried out several fraudulent deals each year, each of which generated several million dollars. The defendants generally targeted marginal companies operating in areas they believed could easily be touted as generating breakthroughs or deals that would explain sudden increases in trading volume and price, including companies purportedly involved in pharmaceuticals, hair restoration, green technologies, entertainment, oil and gas development, and e-commerce websites.
The indictments allege that increased trading volume and higher stock prices were actually the result of the defendants’ fraudulent actions. A company CEO brought into one of the schemes summed up a typical deal during a wiretapped call: “There’s nothing in there, there’s nothing to the company. It’s monkey business.”
The indictments allege that the schemes collectively engaged in five specific deals that defrauded more than 20,000 investors around the world and generated more than $30 million in illegal profits. This case has dismantled a far-reaching stock market manipulation scheme run with ruthless efficiency and operated with one goal in mind – to steal money from the investing public.
One indictment alleges a scheme led by Sherman Mazur and his nephew, Ari Kaplan, charging that they “perpetrated a multimillion-dollar scheme to fraudulently inflate the prices and trading volumes of public company stocks and then sell millions of shares of those companies at the fraudulently inflated prices to the investing public for substantial profits.” The indictment alleges that the scheme involved a number of companies, but focuses on deals involving two businesses – GenMed, which purported to develop, manufacture and distribute generic pharmaceuticals; and Biostem, which purported to develop and license regenerative stem cell treatments, including hair regrowth technology.
The 32-count Mazur indictment charges nine defendants, all of whom were taken into custody yesterday morning. They are:
Sherman Mazur, 63, of the Westwood district of Los Angeles, who controlled a company called the London Finance Group, Ltd.;
Ari Kaplan, 40 of Venice, who is Mazur’s nephew and was his partner in the London Finance Group, as well as in a series of other companies;
United States Attorney André Birotte Jr. said, “This case has dismantled a far-reaching stock market manipulation scheme run with ruthless efficiency and operated with one goal in mind – to steal money from the investing public.”
This type of predatory behavior cheats the average investor, erodes overall confidence in the markets, and has a devastating impact on companies and their employees, Birotte Jr. added.
RELATED: Long Island Boiler Room Operator Gets 2 Years for $147M Scam
Key Facts
- State: California
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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