A Dallas, Texas-based stockbroker was sentenced to 84 months incarceration after being convicted of heading a “pump and dump” investment scheme, according to a U.S. Department of Justice press release. The sentence is an immense proclamation that those who lie and manipulate the stock market will be caught and punished and their greed will be their downfall.
The convicted, Joshua Wayne Lankford, was connected to a “pump and dump” investment scheme where he and several other co-conspirators were charged and convicted for buying up penny stocks and fraudulently manipulating their value and selling them at an overinflated price. Essentially, the scheme consisted of selling overvalued stocks to honest investors that eventually fell well below even their original value.
U.S. Attorney Danny C. Williams Sr. of the Northern District of Oklahoma said “pump and dump schemes like these have a devastating financial impact on the victims and undermine public confidence in our nation’s financial system.”
Once the plan was developed, the conspirators “conducted massive promotional campaigns” where faxes and emails were shotgunned to millions of people. The e-mails and faxes boasted the fraudulent stocks, not revealing intent to sell the shares, and hornswoggled investors to buy stock in the companies.
The three companies whose stocks were manipulated were Deep Rock Oil & Gas Inc., Global Beverage Solutions of Tulsa, Okla., and National Storm Management Group Inc. of Ellyn, Ill.
Along with serving 84 months in prison, Lankford was ordered to forfeit $250,000, a portion of which will go to reimburse the victims. Lankford’s codefendants were also handed massive sentences. Fellow brokers David Gordon and Richard Clark were sentenced to 188 months and 151 months in prison, respectively.
According to the Justice Department, there have been over 10,000 financial fraud cases against nearly 15,000 defendants over the last three fiscal years. Just recently, seven people were arrested in New York in connection with a “pump-and-dump” scheme.
U.S. Attorney Preet Bharara of Manhattan said “as alleged, these defendants preyed on unsuspecting investors by manipulating the share price of a publicly traded in a classic ‘pump-and-dump’ scheme that they thought would reap big dividends.”
“Unfortunately, the verdict and sentence, while a good result and a deterrent to others who undermine our financial system, is an isolated win in the government’s war on financial crimes,” said Peter Mougey, securities litigation attorney with Levin, Papantonio, Thomas, Mitchell, Rafferty & Proctor, P.A. “Many of the criminals remain unprosecuted because they wear Armani suits and are in the boardrooms of the largest Wall Street banks.”
“Most of the fraudsters who made hundreds of millions by packaging toxic mortgages and selling them to unsuspecting investors remain at large,” said Mougey.
Joshua de Leon is a writer and researcher with Ring of Fire.