Article

Man sentenced in pump and dump stock scam

SearchFinancialSecurity.com Staff

A man who hacked into online brokerage accounts in the U.S. and operated an international pump and dump stock scheme was sentenced to 81 months in prison on Monday.

Jaisankar Marimuthu,

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36, of India, was also ordered to pay $2.4 million in restitution in the case, which prosecutors said victimized more than 90 customers and seven brokerage firms in the U.S and caused nearly $2.5 million in losses. He pleaded guilty in February to conspiracy and aggravated identity theft charges after being arrested in Hong Kong and extradited to the U.S.

According to prosecutors, Marimuthu and two others fraudulently inflated the prices of thinly traded securities in the scam, which they operated out of Thailand and India from February through December 2006. The trio broke into online brokerage accounts in the U.S. using stolen names and passwords and then used the accounts to buy thinly traded securities, typically at prices well above their market price, according to a complaint filed by the Securities and Exchange Commission.

After the price of the securities was inflated through the fraudulent trading, the men then sold their own holdings at a profit, authorities said. In one case, Marimuthu realized a 92% return on his investment in less than an hour, according to the SEC.

A co-defendant, Thirugnanam Ramanathan, 37, was extradited in May 2007 to the U.S. and pleaded guilty last June to conspiracy and aggravated theft charges. He was sentenced to two years in prison and was returned to India after completing his sentence, prosecutors said. A third suspect, Chockalingham Ramanathan, 36, remains at large.


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