Feds: Ohio stock trader robbed Twitter users in pumping and dumping | Region
NEW YORK (AP) – An Ohio penny stock trader was arrested Tuesday on charges alleging he made more than $ 1 million illegally by repeatedly lying to his 70,000 followers on Twitter for them. get them to buy shares in what authorities are calling a new social network infused with a twist on an old game of stock manipulation.
Steven Gallagher, 50, of Maumee, Ohio, has been indicted in a New York federal court with securities fraud, wire fraud and market manipulation. He was arrested in Ohio. It was not immediately clear who would represent Gallagher in an initial Ohio court appearance.
US Attorney Damian Williams said in a statement that Gallagher “brought old-fashioned boiler room tactics to the age of Twitter and exploited a pump-and-dump social media scam that defrauded ordinary investors.” .
Ricky J. Patel, head of the New York bureau for homeland security investigations, said Gallagher had turned “lies into cash.”
“Inventory pumping and dump systems are distrustful in the market and have real victims who often invest large sums of money, only to have their hopes shattered by the greed of a fraudster,” Patel said.
Court documents in Manhattan alleged that Gallagher began defrauding followers of a Twitter account he opened in September 2019 under the pseudonym “Alex DeLarge,” a gang leader character who commits violent crimes in the novel by Anthony Burgess “A Clockwork Orange”. As of last week, the account had more than 70,000 subscribers.
Authorities have accused Gallagher of secretly buying a substantial number of shares in at least six thinly traded securities known as penny stocks, as they are typically worth less than $ 1 per share. They said he then praised them to his followers to get them to buy the stocks and increase their values.
Then Gallagher secretly sold his titles while continuing to promote them to his supporters so he could get the highest possible price for his own sales, according to a criminal complaint.
Meanwhile, he bragged about his stock picking prowess to his followers, regularly posting images of his brokerage account balance and earnings to his Twitter account to bolster his reputation and entice his followers. to do what he asked, according to the complaint.
Trading at a company Gallagher promoted online – Minnesota-based SpectraScience Inc. – was temporarily suspended in February by the Securities and Exchange Commission, which said “some social media accounts may be engaged in an attempt coordinated to artificially influence the course of action, âthe complaint said.
Kingston Moy, a Homeland Security officer who signed the lawsuit, wrote that he had spoken to at least two investors who lost thousands of dollars after taking Gallagher’s advice. The agent said investors were in awe of the number of followers Gallagher had and appeared to be posting his own financial positions.
The agent also said he interviewed Gallagher on Monday and Gallagher confirmed he controlled the DeLarge Twitter account and posted a tweet in July 2020 designed to increase the value of one of the stocks he promoted to of its subscribers.
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