SEC target Brown protests "financial death sentence"
by Mike Caswell
June 1, 2011 - Street Wire
Read Here: http://www.stockwatch.com/News/Item....&news_region=C
Investors Hub operator Matthew Brown , recently ordered to forfeit $4.78-million to the U.S. government as part of his sentence for securities fraud and money laundering, has asked the judge to substantially reduce his penalty. (All figures are in U.S. dollars.) He says the figure amounts to a "lifetime financial death sentence" and exceeds by far his earnings from the scheme. He asks that the judge instead order him to forfeit his actual gain, which was $117,000.
The forfeiture order stems from a scheme in which Mr. Brown, 28, and others manipulated stocks with prearranged trades and posts on Investors Hub. The stocks included in the investigation were Ontario-based Playstar Corp. Mr. Brown, who faced a maximum of 50 years in jail, agreed to plead guilty to the charges in February, 2010, in return for a favourable sentencing recommendation.
Mr. Brown now says he received a surprise when he appeared for sentencing on May 18, 2011, before Delaware Judge Sue Robinson. As expected, she imposed a four-year jail term and ordered him serve three years of probation. The unexpected part, according to Mr. Brown, was a $4.78-million disgorgement order that came along with the jail term.
In a motion filed on May 27, 2011, Mr. Brown argues that the order is a violation of his plea agreement. As he sees it, he only agreed to forfeit gains that he realized from the scheme, which amounted to $117,000. The remainder of the penalty represents gains realized by others. Although he understood that the plea agreement was to his benefit, he did not know that he would be subject to a "monumental financial burden."
Mr. Brown further contends that the government failed to charge people that netted over $3-million from the scheme. "Instead of pursuing these individuals, [prosecutors] have sought to make Brown pay for everybody's gains, despite him having gained among the least amount of money," the motion reads. Mr. Brown says he is not disputing the fact that he must forfeit his illegal gains, he is only asking that the amount reflect the actual money he made.
The judge has not yet set a date to hear his motion.
Brown's indictment
Prosecutors initially indicted Mr. Brown, a resident of Aliso Viejo, Calif., on May 21, 2009, in the District of Delaware. They claimed that he and others dumped hundreds of millions of shares during illegal market manipulations in 2006 and 2007. While the overall investigation included four stocks, Mr. Brown only pleaded guilty to manipulating two companies.
The first was GH3 International Inc., a pink sheets listing that touted an anti-aging treatment. In 2006, he and others received hundreds of millions of GH3 shares through improper Rule 504 offerings, prosecutors claimed. When the manipulation began in December, 2006, they carried out several prearranged trades that were timed to coincide with boosterish news releases. The company claimed that it had revenue of $3-million in 2006, and that its revenue would exceed $6-million in 2007.
The stock, which was a thin trader prior to that month, went from 0.06 cent to 1.8 cents, and then quickly fell to 0.01 cent. Its daily volume went to nearly 300 million shares. (The U.S. Securities and Exchange Commission eventually halted the stock on Dec. 24, 2009, stating that publicly available information was questionable.)
The other manipulation was that of Asia Global Holdings Inc., a company that purportedly had the rights to the show "Who Wants to be a Millionaire" in China. According to prosecutors, Mr. Brown and his associates received millions of free-trading shares through improper Form S-8 offerings (which usually qualify shares issued to employees). They sold the stock while co-ordinating manipulative trades with misleading news.
The indictment listed several instant messages that Mr. Brown exchanged with one of his co-conspirators during the promotion. The messages explained how the men needed to control the price of the stock and "blow it up with news." They also described how the men were promoting the stock on-line. "I got the entire world on aagh, lol, willys room, panettas room, ihub," read an Aug. 14, 2006, communication.
Prosecutors claimed that Mr. Brown and others directed the buying and selling of 26.2 million Asia Global shares during the promotion. The stock, which had a 41-cent high in 2006, was last at 0.25 cent.
The charges that Mr. Brown pleaded guilty to also included an unusual interstate money transfer. Prosecutors claimed that he paid a driver $10,000 to take $146,000 in cash from California to Delaware. The indictment did not state the recipient, but documents filed in a related asset forfeiture case identified that person as Polish citizen Pawel Dynkowski, who was separately indicted for his role in the promotions.
(The asset forfeiture complaint, which sought several assets belonging to Mr. Dynkowski, described how a police officer in Texas happened upon the money. The officer stopped a rented car driven by a 25-year-old Florida man and, for reasons not stated, searched the car. After questioning the driver, police had him deliver the money to Mr. Dynkowski. They then searched Mr. Dynkowski's residence and discovered evidence of the market manipulations.)
While the case against Mr. Brown is mostly over, charges remain outstanding against some of his co-conspirators. These include Mr. Dynkowski, who police released after searching his home. They have not been able to find him since the market manipulation charges were filed, and consider him a fugitive. Two others, Marc Riviello and Jacob Canceli, both from California, have pleaded guilty but have not yet been sentenced. The final defendant, Florida resident Gerard D'Amaro, received three years in jail as well as a $1.49-million forfeiture order.
SEC Case
In addition to the criminal charges, Mr. Brown and the others are facing a parallel civil suit from the U.S. Securities and Exchange Commission. The case, filed on May 21, 2009, claimed that the men made $6.2-million pumping and dumping Playstar, GH3 International, Asia Global and Xtreme Motorsports of California Inc. That case has been mostly inactive while the various criminal cases complete.
http://www.stockwatch.com/News/Item....&news_region=C
=========================================
SEC target Matthew Brown must pay "financial death sentence"
July 27, 2011 - Street Wire
www.stockwatch.com
Matthew Brown, jailed operator of the Investors Hub website, has lost his bid to overturn a $4.78-million criminal penalty for a market manipulation scheme he aided. (All figures are in U.S. dollars.) Delaware Judge Sue Robinson, in an order handed down on Thursday, July 21, dismissed a motion by Mr. Brown to reduce his fine to the amount he actually made, which he calculated at $117,000.
The decision comes as Mr. Brown, 29, is serving a four-year jail sentence for the scheme. Prosecutors claimed that he and others manipulated stocks with prearranged trades and posts on Investors Hub. One of the companies included in the investigation was an Ontario-based pink sheets listing, Playstar Corp. Mr. Brown pleaded guilty to the charges in February, 2010, and the judge sentenced him to four years in jail and entered a $4.78-million forfeiture order.
Before he went to jail, Mr. Brown filed a motion in which he complained that the amount of his fine was excessive. As he understood it, by entering a guilty plea he was only agreeing to forfeit his personal gains from the scheme. He did not know that he would receive a "financial death sentence," he claimed.
He also argued that the government held him liable for profits made by people who were not even charged with anything. "Instead of pursuing these individuals, [prosecutors] have sought to make Brown pay for everybody's gains, despite him having gained among the least amount of money," the motion read.
The government, for its part, argued that the fine accurately represented Mr. Brown's plea agreement. In a response to Mr. Brown's motion filed on June 8, 2011, prosecutors said that Mr. Brown agreed to forfeit all proceeds from the scheme, not just the portion that he received. Moreover, he received notice of the forfeiture six days before his sentencing. The time to raise the dispute was then, and not days later.
In addition, prosecutors cited the substantial harm that Mr. Brown and others inflicted on investors. In one instance, they caused a stock to rise by more than 150 per cent in hours, and sold shares worth $747,609. The government also pointed out that the judge could have ordered Mr. Brown to forfeit as much as $9.4-million, or twice the total proceeds of the scheme.
Judge Robinson, in deciding for the prosecution, simply said that she did not have jurisdiction to alter her earlier forfeiture order. Presumably, this means that Mr. Brown's only option is to appeal the order to a higher court...
Posted On: 01/24/2013 2:36:19 PM
Post# of 251
(0)
(0)
Top 10 Most Recent Blog Posts
OpenAI Launches SearchGPT: A Game Changer in AI Search
Category: Business Total Views: 77
By : Henry Turner Updated: 07-26-2024
OpenAI Unveils SearchGPT: A New Era in Search Technology
Recently OpenAI revealed a prototype of its own search engine, SearchGPT. This instrument seeks to give users quick, accurate responses backed by pertinent, clear sources. Under alpha testing with a small group of users, SearchGPT promises to transform online information search. This tool is meant to be included into the viral chatbot ChatGPT so that a more natural and simple search experience is enabled. Like in a conversation, users w... Continue Reading
Canadian Stock Market Impacted by Wildfires and Earnings
Category: Markets Total Views: 77
By : Dominic Sanders Updated: 07-26-2024
Canadian Stock Market Hits Two-Week Low Amid Earnings Disappointments
Disappointingly low earnings from some economically sensitive companies caused Canada's main stock index to drop on Thursday to a two-week low. At 22,608.03 the S&P/TSX composite index of the Toronto Stock Exchange dropped 31.54 points, or 0.1%. Since July 11, this represented its lowest closing level. Important causes of the downturn were declines in metal mining and industrial shares. Chief investment strategist a... Continue Reading
China's Slowdown Affects Commodities and Global Markets
Category: Markets Total Views: 77
By : Caleb Price Updated: 07-26-2024
Tech Stocks Drive the 2024 Market Rally
Tech stocks have been especially helping the market surge in 2024. Leading the push are companies including Tesla, Alphabet, Microsoft, Meta Platforms, Amazon, and Apple. The market value of these companies taken together exceeds $9 trillion. Their share of the S&P 500 is five percent overall. Particularly driving this increase and producing a two-tier stock market is the artificial intelligence explosion. Most of the climb of the S&P 500 toward... Continue Reading
Future Economic Outlook: Potential Downshift Ahead
Category: Economy Total Views: 70
By : Riley Hayes Updated: 07-26-2024
U.S. Economy Surpasses Expectations with Strong Q2 Growth
The second quarter's U.S. economy expanded faster than expected. Gains in consumer spending and business investment drove this increase. The GDP showed a 2.8% annualized rise according to the Commerce Department's report. This outpaced economists' 2.0% projection. Growth in the first quarter was just 1.4%. This good performance allayed worries about the sudden stop of the economic growth. Though there was past slow expansio... Continue Reading
Understanding the Fundamentals of Business Process Optimization
Category: Business Total Views: 92
By : Hannah Lewis Updated: 07-26-2024
Introduction to Business Process Optimization
Efficiency isn't just an asset in business—it's a necessity. In a world where every second and cent counts, optimizing business processes can mean the difference between success and stagnation. This strategic fine-tuning not only boosts productivity but also enhances overall performance, setting a firm foundation for growth and innovation. In this blog, we will share key strategies and insights to help you grasp the essentials of bus... Continue Reading
Small-Cap Stocks and Dow Outperform Amid Market Rebound
Category: Stocks Total Views: 271
By : Addison Perry Updated: 07-25-2024
Wall Street Indexes Rebound on Strong GDP Data
Thursday's main indexes on Wall Street climbed in response to better than expected GDP data. While the Dow and small-cap stocks lagged, the Nasdaq and S&P corrected early losses. After the tech mauling of the last session, this rise brought relief. On route to recoup Wednesday's losses, the Russell 2000 jumped 2%. Investors questioned whether the recent turn to underperformance made sense. Most megacap stocks were set to prolong losse... Continue Reading
Magnificent Seven Stocks Hit Hard by Earnings Reports
Category: Stocks Total Views: 210
By : Lucas Young Updated: 07-25-2024
Tech Giants' Earnings Disappoint, Sparking Market Selloff
Significant market selloff was started by Tesla and Alphabet's latest earnings releases. Investors worried about Tesla's lowest quarterly profit margin in five years. Anxiety about growing AI infrastructure costs and YouTube competition eclipsed Alphabet's better-than-expected earnings. With a tech-heavy Nasdaq Composite falling 3.6%, its worst day since October 2022. The S&P 500 likewise slumped 2.3%. This response... Continue Reading
SK Hynix Reports Record Profit Driven by AI Chip Demand
Category: Stocks Total Views: 228
By : Evelyn Baker Updated: 07-25-2024
SK Hynix Reports Highest Quarterly Profit Since 2018
SK Hynix declared its highest quarterly profit since 2018. For the quarter April–June, the company declared an operating profit of 5.47 trillion won. From the loss of 2.9 trillion won a year before, this is a notable increase. The profit lines up with LSEG SmartEstimate's projections. Analyzes projected a good performance from SK Hynix. Three straight profitable quarters have come from the company. This represents a notable comeba... Continue Reading
June New Home Sales Drop Despite Easing Mortgage Rates
Category: Real Estate Total Views: 210
By : Owen Jenkins Updated: 07-25-2024
New Home Sales Drop to Seven-Month Low in June
June's sales of newly built single-family homes dropped to a seven-month low. With a 0.6% drop noted by the Census Bureau of the Commerce Department, the seasonally adjusted annual rate comes to 617,000 units. Since November, this represents the lowest level. May's sales pace, on the other hand, was raised from the earlier stated 619,000 units to 621,000 units. This surprising decline in June sales is unambiguous evidence that the recover... Continue Reading
Lineage Raises $4.45B in Historic IPO, Valued at $18B
Category: Stocks Total Views: 213
By : Logan Wright Updated: 07-25-2024
Lineage Achieves Historic IPO with $4.45 Billion Raise
With its U.S. initial public offering, Lineage, the biggest cold-storage warehouse operator in the world, raised $4.45 billion. This is the largest worldwide stock market debut of this year. Pricing almost 57 million shares at $78 apiece comprised the IPO. At the top of its stated range, $70 to $82, this price was The company first intended to offer 47 million shares. Still, great demand resulted in the sale of extra shares. The IPO value... Continue Reading