Justice Department files charges against local penny stock traders …
The stakes have become decidedly higher for two of the three local stock traders accused of running a penny stock pump-and-dump scheme.
A federal grand jury has indicted Alexander Hawatmeh of Salem on charges of conspiracy to commit securities fraud and money laundering. It charged Mikhail Galas of Vancouver, Wash. with conspiracy to commit securities fraud.
Galas pleaded not guilty Thursday at his arraignment in U.S. District Court in Tacoma, Wash.
Hawatmeh did not attend the arraignment. He’s been in the Lincoln County jail since April 14 on a reckless driving charge. He was sentenced to 180 days and is scheduled to be released until Oct. 10, a jail spokesman said.
The Securities and Exchange Commission on Aug. 5 filed a civil suit against them and two others on similar securities law violations charges.
Also charged in the criminal case and the SEC civil case was Christopher Mrowca, of Bradenton, Fla.
Prosecutors allege the three men promoted the stock of ISM International, an obscure Clearwater, Fla.-based company that claimed to specialize in “innovation, technology and manufacturing organic products,” as well as green energy and film and television production.
In reality, ISML’s only source of revenue was a flea market it operated. It consistently lost money, according to complaint. It’s stock traded for fractions of a penny.
While Hawatmeh, Galas and Mrowca allegedly sent out blast emails through promotional websites to boost the stock, federal prosecutors allege they were also buying hundreds of thousands of shares. By April 2012, Hawatmeh had accumulated 2.6 million shares.
The trio allegedly engaged in a series of “matched trades,” a strategy typical of stock promoters. By entered sell and buy orders at the same time, they can create the impression of public demand and trading volume for the stock.
In its civil complaint, the SEC alleges Hawatmeh, Galas and Mrowca and a fourth defendant not named in the criminal case made more than $2.5 million on the ISML trades and other similar penny stock promotions.
Galas is a 25-year-old native Ukrainian who has lived in the U.S. since he was 4 years old, said Casey Arbenz, the Tacoma lawyer appointed to defend him. Galas was released on his personal recognizance.
He’s been working on his own as a day trader, Arbenz said. A condition of his release is that he refrain from any activity in the stock market.
— Jeff Manning
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Justice Department files charges against local penny stock traders …
