FBI Arrests Texas Leader of Pump-and-Dump Scheme

FBI agents have arrested Christopher Rad, a Texas man who is charged with one count of conspiracy to commit securities fraud and transmit email messages. Rad, 42, is the alleged ringleader of an international securities fraud group accused of working with botnet operators, hackers, and email spam in a pump-and-dump scam.

Between November 2007 and February 2009, Rad allegedly acted as the middleman between computer experts, who know how to inflate a stock’s value, and stock promoters. The FBI says that he agreed to work with others to trade manipulated stock between themselves to make it appear as if the stocks were active. The hackers that he worked with would break into third-party brokerage accounts, liquidate the stocks, and use the balance to buy shares of the manipulated stock. They also allegedly distributed viruses so that computers around the world became infected. This created a “botnet,” a virtual army of computers that would then send out spam to promote the manipulated stocks. The pump-and-dump scheme let the fraudsters obtain control of “penny stocks” that weren’t traded on major exchanges.

If convicted, Rad end up behind bars for five years. He faces a $250,000 fine.

Another man charged over his involvement in the pump-and-dump scheme, James Bragg, has pleaded guilty to hiring botnet operators and taking part in massive email campaigns to inflate the stocks’ value. He also has admitted to bringing in spammers and hackers.

If you were the victim of a pump-and-dump scam or any other type of securities fraud, our Texas securities fraud lawyers want to talk to you.

Related Blog Posts:
Organizer of international securities fraud ring charged in stock manipulation conspiracy using hackers and botnet operators, Justice.gov, March 21, 2011
Texas ringleader of pump-and-dump scam arrested, SC Magazine, March 22, 2011
US man arrested in hacker stock fraud scheme, AFP/Google, March 22, 2011
More Blog Posts:
Alleged Pump and Dump Stock Manipulation Scam Leads to Indictment of Six, Including a Securities Attorney, Institutional Investors Securities Blog, February 27, 2011
Dallas-Based Southwest Securities Settles for $500,000 FINRA Charges It Improperly Used Paid Consultants, Stockbroker Fraud Blog, March 17, 2011
Texas Securities Fraud: SEC Halts Alleged Ponzi Scheme in the Dallas-Fort Worth Area, Stockbroker Fraud Blog, March 2, 2011