HOUSTON (KIAH) — Eight men, four of them from the Houston area, were federally indicted with conspiracy to commit securities fraud for a “pump-and-dump” scheme through social media, according to the Justice Department.
A federal grand jury in the Southern District of Texas indicted four Houston-area men, including Edward Constantinescu, aka Constantin, 38, of Montgomery; Perry “PJ” Matlock, 38, of The Woodlands; John Rybarczyk, 32, of Spring and Dan Knight, 23, of Houston.
The others that were indicted were Gary Deel, 28, of Beverly Hills, Calif.; Stefan Hrvatin, 35, of Miami; Tom Cooperman, 34, of Beverly Hills and Mitchell Hennessey, 23, of Hoboken, N.J.
According to court documents, the men allegedly engaged in a wide-ranging securities fraud conspiracy by hyping interest in particular securities on their Twitter and Discord accounts by posting false and misleading information to “pump” up the price, all the while looking to “dump” their shares in the securities at the artificially inflated prices.
The scheme lasted from around January 2020 to around April 2022, with the men profiting around $114 million, document said.
According to the indictment, the men had over 1.5 million followers on Twitter to allegedly spread false and misleading information about the securities that they had pumped and dumped as part of the scheme. The men also ran an online community for individual stock traders called Atlas Trading, which had a Discord chatroom to allegedly spread more disinformation.
As further alleged in the indictment, the defendants used their social media credibility to maximize their own profits at the expense of their followers, holding themselves out as skilled stock traders by posting pictures showcasing their profits and extravagant lifestyles, and encouraging people to follow them on social media in order to share in their financial gains.
All eight defendants face at least one charge of conspiracy to commit securities fraud, while Constantin faces three counts of securities fraud and one count of engaging in monetary transactions in property derived from specified unlawful activity.
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. Constantin also faces a maximum penalty of 10 years in prison if convicted of engaging in unlawful monetary transactions.
Matlock and Deel are both charged with five counts of securities fraud; Rybarczyk is charged with four counts of securities fraud; and Hrvatin, Cooperman, and Hennessey are each charged with two counts of securities fraud.
The defendants made their initial court appearances on Tuesday.
“Corporate fraud remains a priority for the FBI as it victimizes investors and erodes public confidence in the securities markets,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division. “The FBI and our law enforcement partners remain committed to identifying, investigating, and pursuing those who seek to undermine the U.S. financial market and investors.”
The FBI Houston Field Office is investigating the case.
If you believe you are a victim in this case, please contact the Fraud Section’s Victim Witness Unit toll-free at (888) 549-3945 or by email at firstname.lastname@example.org.