Stock Trader Pleads Guilty to Defrauding Investors in Medical Technology Company | takeover bid
A California man pleaded guilty yesterday to a scheme to defraud investors in the securities of a publicly traded company and manipulate the company’s share price.
According to court documents, Jason Nielsen, 48, of Scotts Valley, was a major shareholder in Arrayit, a publicly traded medical device company based in California. From around 2019 to April 2020, Nielsen engaged in an illegal “scalping” and “spoofing” scheme to manipulate the price of Arrayit securities. Nielsen has used online discussion forums to publicly post false and misleading information about the nature of its transactions in Arrayit securities, in order to induce others to purchase Arrayit securities and thereby drive up the price of the action, a practice known as “scalping”.
Nielsen admitted to placing orders to buy Arrayit shares which he intended to cancel before execution. The purpose of these orders was to mislead the public and Arrayit shareholders by signaling a demand for Arrayit securities that did not exist. This allowed Nielsen to sell its shares at artificially inflated prices, a practice known as “spoofing”. While engaging in these practices, Nielsen was secretly selling his own previously acquired shares at an artificially inflated price.
Nielsen pleaded guilty to one count of securities fraud. He is due to be sentenced on October 24 and faces a maximum sentence of five years in prison. A federal district court judge will determine any sentence after considering US sentencing guidelines and other statutory factors.
Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division; US Attorney Stephanie M. Hinds for the Northern District of California; Special Agent in Charge Steven Ryan of the Department of Health and Human Services – Office of Inspector General (HHS-OIG); Deputy Director Luis Quesada of the FBI’s Criminal Investigations Division; Special Agent in Charge Sean Ragan of the FBI’s San Francisco Field Office; Inspector in Charge Eric Shen of the United States Postal Inspection Service’s Criminal Investigations Unit; Special Agent in Charge Kim Lampkins of the Department of Veterans Affairs – Office of the Inspector General (VA-OIG), Mid-Atlantic Field Office; and Special Agent in Charge Bryan Denny of the Defense Criminal Investigative Service (DCIS) of the Office of the Defense Inspector General (DoD OIG) made the announcement.
The HHS-OIG San Francisco Regional Office and Detroit Regional Office, United States Postal Inspection Service, FBI, VA-OIG, and DCIS investigated the matter.
Acting Senior Deputy Chief Justin Weitz, Deputy Chief Jacob Foster and Trial Attorney Laura Connelly of the Criminal Division Fraud Section and Assistant U.S. Attorney Lloyd Farnham of the Northern District of California are pursuing the case.
The Fraud Section uses the Victim Notification System (VNS) to provide victims with case information and updates related to this case. Victims with questions can contact the Victim Assistance Unit in the Fraud Section by calling the Victim Assistance Hotline at 1-888-549-3945 or emailing victimassistance.fraud @usdoj.gov. To learn more about victims’ rights, please visit: https://www.justice.gov/criminal-vns/victim-rights-derechos-de-las-v-ctimas. If you believe you are a victim, please visit https://www.justice.gov/criminal-vns/case/Nielsen.