Sophos recently reported on the hefty jail sentences that the pump-and-dump stock spam gang faces today. 47-year-old Michael Saquella (also known as Michael Paloma), 63-year-old Lawrence Kaplan, 38-year-old Henry Zemla and 26-year-old Justin Medlin
have all pleaded guilty to being part of an international gang that spammed out fraudulent news stories to create artificial demand in stocks, pumping up the share price of 15 small companies (Beverly Hills Film Studios; Body Scan; Cor Equity Holdings; Courtside Products; eDollars, IFINIX; Integrity Messenger; Latin Heat Entertainment; Motion DNA; PokerBook Gaming; TKO Holding; Trans-Global Holdings; V3 Global; Xtreme Technologies; and Zuma Beach Entertainment) and raising more than $20 million from investors. The four men are now facing between 5-10 years in prison.
"Pump and dump stock campaigns work by spammers purchasing stock at a cheap price and then artificially inflating its price by encouraging others to purchase more (often by spamming "good news" about the company to others). The spammers then sell off their stock at a profit. Sophos experts report that pump-and-dump stock campaigns account for approximately 25 percent of all spam, up from 0.8 percent in January 2005. Earlier this year, Sophos reported how the US Securities and Exchange Commission (SEC) had suspended trading in 35 companies as they were found to be commonly referenced in pump-and-dump stock email campaigns."
Read the full article here.