Illegal Stock Promotion and Manipulation Scheme Cost Victims
Million of Dollars
A federal jury in Central Islip returned a guilty verdict on
all counts this afternoon against Michael Watts, a former registered broker,
for his role in a conspiracy to promote and manipulate the price of shares in
Hydrocarb Energy Corp. (Hydrocarb) and other companies. Specifically, Watts was
convicted of conspiracy to commit securities fraud, securities fraud,
conspiracy to commit wire fraud, money laundering conspiracy and money
laundering. The verdict followed a
three-week trial before United States District Judge Joanna Seybert. When sentenced, Watts faces a maximum
sentence of more than 20 years’ imprisonment.
Richard P. Donoghue, United States Attorney for the Eastern
District of New York, announced the verdict.
“With today’s verdict, the jury has delivered a measure of
closure to the victims, many of them elderly and vulnerable, who were preyed
upon by Watts and his co-conspirators,” stated United States Attorney
Donoghue. “The defendant will face
another reckoning when he is sentenced for his crimes.”
As proven at trial, from 2014 to 2016, Watts and his
co-conspirators at a Melville-based boiler room artificially inflated the price
and trading volume of Hydrocarb stock.
They did so through an illegal cold-calling campaign that used lies and
high-pressure sales tactics to lure victim investors, including many elderly
victims, into purchasing stock. Watts,
who was one of the largest shareholders in Hydrocarb and knew that the business
was failing, also used the boiler room to dump more than $2 million worth of
Hydrocarb shares that he owned or controlled on unsuspecting investors in the
months leading to the company’s April 2016 bankruptcy. The government has alleged that the
conspiracy’s market manipulation fraudulently inflated the stock price of
Hydrocarb and four other companies by more than $147 million.
Watts is the 13th defendant convicted in this case. Three others are scheduled for trial in
January 2020. Four defendants have been
sentenced for their roles in the scheme:
Ronald Hardy was sentenced to 10 years’ imprisonment; Dennis Verderosa
was sentenced to six years’ imprisonment; McArthur Jean was sentenced to four
years’ imprisonment; and Emin Cohen was sentenced to two years’ imprisonment.
United States Attorney Donoghue thanked the Federal Bureau
of Investigation, New York Field Office, for its hard work and dedication in
leading the investigation, and expressed his appreciation to the Securities and
Exchange Commission and the Financial Industry Regulatory Authority, Inc., Criminal
Prosecution Assistance Group for their cooperation and assistance.
The government’s case is being handled by the Office’s
Business and Securities Fraud Section.
Assistant United States Attorneys Whitman G.S. Knapp and Kaitlin T.
Farrell are in charge of the prosecution.
The Defendant:
MICHAEL WATTS
Age: 63
Sugarland, Texas
E.D.N.Y. Docket No. 17-CR-372 (JS)
Posts
No comments:
Post a Comment