Securities trader charged with securities fraud in Twitter pump-and-dump scheme

What would you like to know

  • An Ohio OTC stock trader reportedly ran a pump-and-dump program that grossed him $ 1 million in illegal proceeds.
  • The accused has been arrested and faces a maximum of 85 years in prison if convicted on all four counts.
  • The SEC filed an urgent action and obtained an injunction and an asset freeze against it.

A Maumee, Ohio-based stock trader was arrested Tuesday and charged with securities fraud, wire fraud and market manipulation after using his Twitter account to operate a pump-and-dump system involving OTC stocks over the counter, according to Damian Williams, US attorney for the Southern District of New York.

Steven Gallagher, 50, was arrested in the Northern District of Ohio but has been charged in a lawsuit filed in U.S. District Court for the Southern District of New York, Williams said in a press release describing the accused as an “active day laborer”.

The accused faces a maximum of 85 years in prison if convicted on all four counts. He has been charged with two counts of securities fraud, one of which carries a maximum sentence of 20 years in prison and the other a maximum of 25 years, and one count each of fraud. electronics and market manipulation, each punishable by a maximum sentence of 20 years, according to the Justice Department.

“Alex Delarge”

Gallagher, using the aliases “Alex Delarge” and “@ AlexDelarge6553”, created an equity promotion account on Twitter in September 2019 that attracted over 70,000 followers and grossed him over $ 1 million in revenue. illegal, according to the complaint.

His pseudonym was a nod to the main character in Anthony Burgess’ novel “A Clockwork Orange” and the classic Stanley Kubrick film of the same name in which actor Malcolm McDowell played him.

Gallagher used the Twitter account to tout certain over-the-counter penny stocks and to spread false and misleading information about his trading in those stocks in order to trick his followers into buying those stocks and raising their prices, according to the complaint.

From at least May 2020 or around, to and including in or around the present, in the Southern District of New York and elsewhere, Gallagher “willfully and knowingly” designed and executed the scheme to defraud investors , according to the complaint.

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