Salem stock scammer gets 5 years in prison, gives up $700,000 and …

Salem stock scammer gets 5 years in prison, gives up $700,000 and …

A Salem man who made more than $1.7 million through a series of “pump-and-dump” stock-trading scams was sentenced Friday to five years in prison.

Alexander Hawatmeh, 25, admitted that he manipulated the share prices of four penny stocks, then sold off his holdings for enormous returns. Federal prosecutors said that in one March 2014 case, Hawatmeh made $1.27 million through the trading of Riverdale Oil & Gas, an Austin, Texas oil producer.

“When individuals like Alexander Hawatmeh engaged in such blatant criminal activity in the stock market, the average investor believes that the market is rigged for those freely willing to engage in fraud,” said a memo filed by prosecutors Justin Arnold and Katheryn Kim Frierson.

Hawatmeh’s Florida business partner, Christopher Mrowca, 25, was also sentenced Friday to three years behind bars for conspiring to commit fraud.

Court documents show the pair operated Money Runners Group, a firm that sent stock tips to email subscribers. Traders had no idea the men behind Money Runners stood to profit from the advice.

Hawatmeh once spent four months building up 2.6 million shares of a company called ISM International Inc. It traded under the ticker symbol ISML on over-the-counter markets. Some shares cost Hawatmeh less than a penny.

After he accumulated a significant stake, Mrowca alerted email subscribers in April 2012 that the stock was “in play.”

Investors took notice. The company’s market value spiked.

But not for long. Hawatmeh and his associates sold off their stakes in the company, sending ISM’s share price into a tailspin. Their actions left other investors with worthless stakes in the company.

Hawatmeh and his partners made $244,900 off the scheme. He generated another $519,100 through two similar schemes.

But his gains came at the loss of more than 1,000 investors, prosecutors said in the sentencing memo. One victim identified as CC described the emotional and financial toll of the scams. “I have worked many hours to save up to have over $25,000 to invest in my future and to lose it all in one or two days was devastating.”

Two Vancouver men linked to the “pump-and-dump” schemes have also pleaded guilty to fraud charges. Mikhail Galas will be sentenced later this month. Tovy Pustovit will be sentenced in September.

Pustovit, 21, admitted in May that he played a part in the ISM International scam by giving Hawatmeh control of a brokerage account opened in the name of Pustovit’s mother.

He didn’t stop there. He helped orchestrate at least four other stock schemes, raking in more than a quarter-million dollars by manipulating penny stocks. He oversaw one $83,000 scam as recently as February.

Court documents show it was Hawatmeh who tipped off federal investigators that Pustovit was still pumping up stock prices and dumping his holdings.

Citing Hawatmeh’s cooperation, prosecutors asked a federal judge in Washington to sentence him to five years in prison, well short of the 20 he was facing. He will serve the time at the Federal Correctional Institution in Sheridan.

He must also pay $1 million and forfeit $700,000 worth of property, mainly cash, coins and precious metals that prosecutors say he used to launder the profits of the stock scams. He also must give up 500 international postage stamps, 300 U.S. stamps, an encrusted gold watch and a Troy Aikman 1994 Super Bowl collector’s card.

Court documents don’t say how valuable the card might be, but a Beaverton sports memorabilia collector doubted that it was worth much. Rookie season cards, not Super Bowl cards, command the most money, said Rick Webb of The Sportsroom at Mitchell’s. “I wouldn’t even ask them to bring it in,” he said, unless it was an autographed or limited edition card.

Mrowca also agreed to forfeit $244,700 to the government.

The U.S. Securities and Exchange Commission continues to investigate all four men — Hawatmeh, Mrowca, Pustovit and Galas — linked to the trading scams.

— Molly Young

[email protected]
503-412-7056
@mollykyoung

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Salem stock scammer gets 5 years in prison, gives up $700,000 and …

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