A Vancouver man was among three charged Tuesday in U.S. District Court in Tacoma with manipulating penny stocks and laundering more than $230,000 in proceeds. Mikhail Galas, 24, was arrested in Long Beach, Calif., when he arrived on a flight from Portland.
Galas allegedly participated in the “pump and dump” scheme with Alexander Hawatmah, 23, of Salem, Ore., and Christopher Mrowca, 24. They face charges of conspiracy to commit securities fraud and conspiracy to launder monetary instruments, according to U.S. Attorney Jenny Durkan.
Galas will appear in court in Los Angeles. Hawatmah is already incarcerated in Oregon on an unrelated charge and will appear in federal court at a later date. Mrowca was arrested in his hometown of Bradenton, Fla., and will make a first appearance in Tampa.
According to the criminal complaint, between December 2011 and April 2012, the three men made it appear as though a penny stock was being actively traded. The accused accounted for 85 percent of the trades to a purported flea market business in Florida, Durkan said. One of them would sell shares while the other bought them to make it appear as though investors were interested in the company.
The penny stock actually had little value and no business that would generate a lot of revenue, Durkan said.
The three men also allegedly send fraudulent and misleading promotional emails that enticed people to buy the stock, at which point the accused would sell their shares and make a profit. Mrowca and Hawatmeh allegedly laundered those proceeds by passing the money through third-party accounts and then purchasing gold and silver bars.
“Manipulative trading in penny stocks can lead to big profits for swindlers at the expense of small investors who buy the hype,” Durkan said.
Conspiracy to commit securities fraud is punishable by up to five years in prison and a $250,000 fine. Conspiracy to launder monetary instruments is punishable by up to 20 years in prison.
The Securities and Exchange Commission also filed a civil case against the men.