A Vancouver man pleaded guilty Tuesday in U.S. District Court to running a stock fraud scheme after previously participating in another scheme, according to a news release from U.S. Attorney Annette L. Hayes.
Tovy Pustovit, 20, faces up to 20 years in prison. He is scheduled to be sentenced Sept. 14 by U.S. District Judge Ronald B. Leighton. In exchange for Pustovit’s guilty plea, prosecutors have agreed to recommend a sentence no greater than 63 months in prison.
In addition to his guilty plea, Pustovit agreed to turn over $266,373 in criminal proceeds from the schemes.
According to the facts outlined in the plea agreement, in 2012, Pustovit, along with Alexander Hawatmeh, Mikhail Galas and Christopher Mrowca, manipulated the stock of ISM International. Pustovit was not initially charged for that stock manipulation. However, after the other defendants were arrested, investigators learned additional information about his participation and how he continued to manipulate penny stocks, the news release said.
Leighton entered a preliminary injunction in August 2014, barring Pustovit and his co-defendants from engaging in stock fraud in a civil enforcement action brought by the U.S. Securities and Exchange Commission, according to the news release.
Two co-defendants, Hawatmeh and Mrowca, are scheduled to be sentenced June 5.
Pustovit and another co-defendant, who is not named in the news release, cooked up another scheme in November 2014 involving three companies in the over-the-counter market. The duo attempted to manipulate the value of Brightech, General Environment Management and Green Street Capital Corp. The co-defendant reportedly lined up and funded various unrelated accounts to purchase the penny stocks. Once substantial amounts had been purchased, the men sent out email blasts from stock promotion websites they controlled urging people to buy the stocks. They then dumped their shares when the price rose, making significant profit.
According to the news release, Pustovit and his accomplice again manipulated the stock value of General Environment Management earlier this year, accumulating some 2.7 million shares. In February, they sent out email blasts from different companies saying the stock was “ready to soar” in value. The stock price rose and the men sold their stock netting $83,096. Shortly after, the price of the shares collapsed, harming numerous investors.
The case is still under investigation by the FBI. The Securities and Exchange Commission also is conducting a civil investigation.
