13 December 2017
visit www.avoka.com

SEC charges two for penny stock spam scam

10 July 2007  |  6007 views  |  0 Statue of Liberty

The US Securities and Exchange Commission (SEC) has filed fraud charges against two Texan men who allegedly hijacked personal computers to launch penny stock e-mail scams that conned investors out of more than $4.6 million.

In a statement, the SEC claims that Darrel Uselton and his uncle, Jack Uselton, both from Texas, llegally profited during a 20 month "scalping" scam which involved the use of botnets that used hi-jacked PCs to forward spam e-mails touting 13 penny stock companies.

Recipients that fell for the scam drove up share prices and the men then sold off their own holdings. The SEC alleges that between May 2005 and December 2006, the Useltons obtained more than $4.6 million through the fraudulent scheme.

The SEC says the men were caught out when one of its own enforcement staff received one of the spam e-mails at work.

Along with the SEC, the Attorney General's Office for Texas and the Harris County District Attorney's Office have filed charges against the Useltons for engaging in organised criminal activity and money laundering. The Texas criminal authorities have also seized more than $4.2 million from bank accounts associated with the Useltons.

Commenting on the case, SEC chairman Christopher Cox, says: "The use of bots to spread investment spam at exponentially higher rates is making this type of fraud an even more virulent threat to ordinary investors. Not only are victims getting hit with get-rich-quick spam, but by turning the victims' computers into zombies, these fraudsters are sending out still more spam to others."

"Given estimates that up to one-quarter of all personal computers connected to the Internet are part of a botnet, and the thriving market in selling lists of compromised computers to hackers and spammers, the SEC is taking this very seriously," adds Cox.

US authorities have stepped up the fight against the hackers this year and in March prosecutors filed federal charges against three Indian nationals who allegedly hijacked online brokerage accounts in the US in order to conduct pump and dump scams.

Earlier the SEC obtained emergency court orders freezing funds contained in accounts held by a Latvia-based bank and an Estonian-based corporation that had allegedly been involved in market manipulation schemes. The regulator also suspended trading in 35 over-the-counter penny stocks that have been the subject of repeated spam e-mail campaigns.

Cox says the commission's anti-spam initiative "is intended to protect investors from fraud artists who would treat the investing public as their personal ATM machines".

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

US prosecutors file charges against offshore account hijackers

US prosecutors file charges against offshore account hijackers

12 March 2007  |  7035 views  |  0 comments
SEC freezes $3m in pump and dump fraud case

SEC freezes $3m in pump and dump fraud case

08 March 2007  |  5547 views  |  0 comments
Pump-and-dump stock phishing spam up 400% in 2006

Pump-and-dump stock phishing spam up 400% in 2006

15 January 2007  |  12476 views  |  0 comments
US online brokers hit by pump and dump fraud

US online brokers hit by pump and dump fraud

24 October 2006  |  14806 views  |  0 comments

Related company news

 

Related blogs

Create a blog about this story (membership required)
visit www.atos.netvisit www.solutions.lexisnexis.comvisit www.aciworldwide.com

Top topics

Most viewed Most shared
Saxo Bank's 'Outrageous Prediction': Bitcoin to peak at $60k next year before spectacular crashSaxo Bank's 'Outrageous Prediction': Bitco...
12140 views comments | 7 tweets | 7 linkedin
Deutsche Bank paper hails 'huge' blockchain potentialDeutsche Bank paper hails 'huge' blockchai...
9326 views comments | 16 tweets | 22 linkedin
PSD2: Laying the regulatory foundation for a new age in paymentsPSD2: Laying the regulatory foundation for...
7919 views comments | 17 tweets | 35 linkedin
Santander UK poaches Barclays innovation chief Michael HarteSantander UK poaches Barclays innovation c...
7334 views comments | 8 tweets | 17 linkedin
Alior Bank to use Open API platform and accelerator to create fintech marketplaceAlior Bank to use Open API platform and ac...
7167 views comments | 20 tweets | 11 linkedin

Featured job

Competitive base + commission + benefits
New York City, NY - USA

Find your next job