Federal agents have arrested the alleged organiser of an international securities fraud ring that employed hackers, botnet operators and e-mail spam distributors to artificially inflate the value of penny stocks.
Forty-two year old Texan Christopher Rad was arrested by FBI special agents on a federal Indictment charging him with one count of conspiracy to commit securities fraud and transmit multiple commercial e-mail messages with fraudulent information.
Alleged co-conspirator James Bragg, pleaded guilty in October for his role in hiring botnet operators and engaging in mass e-mail campaigns to pump up the value of stock prior to dumping shares.
According to today's indictment, Rad conspired with stock promoters in a pump-and-dump scheme that began in November 2007 and continued through February 2009.
During his plea hearing, Bragg admitted that as part of his conspiracy with Rad he hired hackers and spammers, to create a virtual army of computers to distribute spam to promote the manipulated stocks.
In addition to relying on unsuspecting investors to buy into the spam promotions, the hackers also hacked into the brokerage accounts of third parties, liquidated the stocks in those accounts, and then used those accounts to purchase shares and drive up their price.
Under the charges, Rad faces a maximum potential penalty of five years in prison and a $250,000 fine.