US authorities Monday arrested and charged a Texas man accused of masterminding a scheme using a Russian hacker and an email spam campaign to pump up the value of fledgling companies, the Justice Department said.
Christopher Rad, 42, of Cedar Park, Texas, was arrested by FBI agents on a federal indictment charging him with one count of conspiracy to commit securities fraud and transmit commercial email messages with fraudulent information.
The scheme employed hackers, including at least one in Russia, to distribute computer viruses to infect computers around the world and create so-called "botnet" computers that were used to manipulate stocks, a Justice Department statement said.
"In addition to relying on unsuspecting investors to buy into the spam promotions, the hackers also hacked into the brokerage accounts of third parties, liquidated the stocks in those accounts, and then used those accounts to purchase shares of the manipulated stocks," the statement said.
"This created trading activity in the manipulated stocks and increased the volume of shares being traded, further creating an impression that the manipulated stocks were worth purchasing."
Rad is the second person charged in the so-called "pump and dump" scheme. The conspiracy count with which Rad was charged carries a maximum potential penalty of five years in prison and a $250,000 fine.
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