AUSTIN (KXAN) — On Tuesday, a federal grand jury in the Southern District of Texas indicted eight men on charges of conspiracy to commit securities fraud for a long-running, social media-based “pump and dump” scheme, according to the United States Department of Justice.
The DOJ said the scheme involved the defendants hyping interest in particular securities by posting false and misleading information in order to “pump” the prices of those securities while concealing their intent to later “dump” their shares by selling them at the artificially inflated prices.
A release said half the defendants were Texas residents. The DOJ identified them as:
- 38-year-old Edward Constantinescu, of Montgomery
- 38-year-old Perry “PJ” Matlock, of The Woodlands
- 32-year-old John Rybarczyk, of Spring
- 23-year-old Dan Knight, of Houston
The non-Texas residents included 34-year-old Tom Cooperman and 28-year-old Gary Deel, both of Beverly Hills, California, 35-year-old Stefan Hrvatin, of Miami, Florida, and 23-year-old Mitchell Hennessey, of Hoboken, New Jersey.
In addition to the conspiracy to commit securities fraud charges,
- Constantinescu was charged with three counts of securities fraud and one count of engaging in monetary transactions in property derived from specified unlawful activity.
- Matlock and Deel were both charged with five counts of securities fraud.
- Rybarczyk was charged with four counts of securities fraud.
- Hrvatin, Cooperman and Hennessey were each charged with two counts of securities fraud.
According to the DOJ, the defendants engaged in a wide-ranging securities fraud conspiracy where they used their social media presence on Twitter and Discord. Collectively, the defendants had more than 1.5 million followers on Twitter.
“From in or around January 2020 to in or around April 2022, the defendants profited at least approximately $114 million from their scheme,” the DOJ said.
According to the release, the defendants used their social media credibility to gain profits at the expense of their followers, portray themselves as skilled stock traders and encourage people to follow them on social media in order to share in their financial gains.
The eight defendants appeared in court Tuesday, according to the DOJ.
“If convicted, each defendant faces a maximum penalty of 25 years in prison for conspiracy to commit securities fraud and each charged count of securities fraud,” the DOJ said. “Constantin also faces a maximum penalty of 10 years in prison if convicted of engaging in unlawful monetary transactions.”
The release said the FBI Houston Field Office was investigating the case, and Assistant Chief Scott Armstrong, Trial Attorney John J. Liolos of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Thomas “Heyward” Carter III for the Southern District of Texas were prosecuting the case.
“Securities fraud victimizes innocent investors and undermines the integrity of our public markets,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division. “As these charges demonstrate, the department will continue to prosecute those who defraud investors by spreading false and misleading information, including over social media, to line their own pockets.”