The Securities and Exchange Commission is suing a 21-year-old Florida college student who is believed to be responsible for carrying out a sophisticated online "pump-and-dump" fraud scheme.
In the lawsuit, filed in U.S. District Court of Florida in Tampa Jan. 25, the SEC claims that Aleksey Kamardin, also of Tampa, masterminded a plot to break into online brokerage accounts and buy shares of low-priced stocks to inflate the price of the shares. By buying the stocks shortly before driving up the price via fraudulent trading—and then selling them at a premium—Kamardin bilked the stock market for almost $83,000 in just over a month, the suit claims.
While many pump-and-dump operators simply spam favorable information about penny stocks—typically valued at well under $1 per share—to large numbers of consumers in hopes that enough people will buy in, Kamardins alleged ploy illustrates the growing ability of savvy hackers to steal money from businesses, individuals and even financial markets, according to analysts.
The investigators contend that after opening an account under his own name with online broker E-Trade Securities July 17, 2006, Kamardin bought shares in 17 different thinly traded companies and used hijacked online brokerage accounts to increase the value of each stock before selling it. In each case, over a five-week period leading up to Aug. 25, either Kamardin or other unidentified parties broke into accounts hosted by E-Trade, Scottrade, TD Ameritrade, JPMorgan Chase and Charles Schwab, among others, SEC investigators said.
The alleged activity violated at least three SEC trading laws, the lawsuit claims. After clearing $82,960 from his trades, investigators said, Kamardin wired his profits from his online brokerage account to a domestic bank account and then transferred the funds to a second account owned by a Russian-born roommate. The roommate then immediately wired the money to a bank account in Riga, Latvia, the suit claims. Investigators said they believe Kamardin, a U.S. citizen and identified in the claim as a student, has fled to Russia to avoid prosecution.
The scheme allegedly run by Kamardin is almost identical to one believed to have been carried out by another target of the SEC named Evgeny Gashichev. On Dec. 19, the SEC froze the assets of Grand Logistic, a company in Talinn, Estonia, purportedly operated by Gashichev.