Federal authorities unsealed an indictment Feb. 1 in Detroit accusing stock broker Gregg M. Berger of New York of running a multimillion-dollar "pump-and-dump" scam for more than two years.
The superseding indictment accuses Berger, 47, of conspiring with Alan Ralsky, Francis Tribble, How Wai John Hui, Scott Bradley and others to carry out the scheme from January 2005 to December 2007. According to the indictment, Berger sold roughly 30 million shares of stock, making roughly $30 million for his co-conspirators and more than $600,000 in commissions for himself. Ralsky, Tribble, Hui and Bradley have all previously been convicted and sentenced for their roles in the case.
"Pump-and-dump schemes undermine the integrity of our stock markets," said Assistant Attorney General Breuer, in a statement. "When stock brokers exploit their trusted positions to enrich themselves at the expense of innocent investors, as Mr. Berger is charged with doing here, we will pursue them vigorously."
The charges arose after an investigation by the FBI, U.S. Postal Inspection Service and the Internal Revenue Service discovered the defendants were sending spam to manipulate thinly traded stocks, authorities said. According to the indictment, Berger's role was to act as the stock broker for the conspiracy, establishing brokerage accounts for trading the stocks that were illegally promoted, arranging for shares to be transferred into the brokerage accounts, executing stock trades at the direction of Tribble rather than the direction of the named account holders and transferring funds from the trading of the stocks to bank accounts controlled by the conspirators.
He is also accused of providing confidential account information, including trade amounts, prices, cash balances and wire transfer details, to Tribble, Bradley and others involved in the scheme who were not entitled to such information without authorization from the named account holders.
According to authorities, the artificially inflated stocks that were then sold by Berger and the others included China World Trade Corporation, Pingchuan Pharmaceutical Inc., China Digital Media Corporation, World Wide Biotech and Pharmaceutical Co., China Mobility Solutions and m-Wise.
The indictment charges Berger with one count of conspiracy to commit securities fraud and wire fraud. If convicted, he faces a maximum penalty of 25 years in prison and a $250,000 fine. He is scheduled to be arraigned on Feb. 8, 2011, in U.S. District Court in Detroit.
The U.S. Securities and Exchange Commission (SEC) has also filed civil fraud charges against Berger, seven other individuals and three companies involved in the scheme.