WASHINGTON - A New York stock broker has pleaded guilty in federal court in Detroit to conspiracy to commit securities fraud and wire fraud in connection with the Alan Ralsky spamming organization’s stock pump-and-dump scheme, announced Assistant Attorney General of the Criminal Division Lanny A. Breuer and U.S. Attorney Barbara McQuade for the Eastern District of Michigan.
Gregg M. S. Berger, 47, of New York City, pleaded guilty yesterday before U.S. District Judge Marianne O. Battani. A federal grand jury in the Eastern District of Michigan indicted Berger in December 2010, charging him in a wide-ranging fraud scheme to illegally pump-and-dump thinly traded Chinese and Israeli stocks.
“Like so many other financial fraudsters we have prosecuted, Gregg Berger knew better,” said Assistant Attorney General Breuer. “He traded on his position as a stockbroker to defraud hundreds of investors out of their hard-earned savings. Now that he has pleaded guilty for his crimes, he faces serious and deserved punishment.”
Under the terms of the plea agreement, Berger faces up to 51 months in prison, a possible fine of up to $75,000, as well as restitution and a five-year term of supervised release. Sentencing is scheduled for Aug. 23, 2011.
According to the indictment, Berger conspired with Ralsky, Francis Tribble, How Wai John Hui, Scott Bradley and others to carry out a sophisticated stock fraud scheme from January 2005 through December 2007. Ralsky, Tribble, Hui and Bradley have all been convicted and sentenced for their roles in the case.
The charges arose after a multi-year investigation, led by agents from the FBI, with assistance from the U.S. Postal Inspection Service and the Internal Revenue Service, revealed a sophisticated and extensive operation that largely focused on running a pump-and-dump scheme, whereby the defendants sent spam touting thinly traded Chinese penny stocks, drove up their stock price, and reaped profits by selling the stock at artificially inflated prices.
In pleading guilty, Berger acknowledged that he established brokerage accounts at the direction of Hui and Tribble, and communicated with Ralsky and Bradley during the conspiracy. Berger’s roles in the scheme included trading the stocks that were illegally promoted by spam email campaigns; arranging for shares of the stocks to be transferred into the brokerage accounts he established; executing stock trades at the direction of Tribble rather than the direction of the named account holders; causing funds that resulted from the stock trades to be transferred to bank accounts beneficially controlled by Hui and other co-conspirators; and providing confidential account information, including trade amounts, prices, cash balances and wire transfer details to Tribble, Bradley and others involved in the scheme who were not entitled to such information, without authorization from the actual named account holders.
The stocks pumped-and-dumped by conspirators included China World Trade Corporation (CWTD), Pingchuan Pharmaceutical Inc. (PGCN), China Digital Media Corporation (CDGT), World Wide Biotech and Pharmaceutical Co. (WWBP), China Mobility Solutions (CHMS) and m-Wise (MWIS).
The indictment alleged that during the course of the scheme Berger caused the sale of approximately 30 million shares of stock, generating approximately $30 million for the co-conspirators and more than $600,000 in commissions for himself. The plea agreement stipulates that Berger may litigate at sentencing the amount he actually earned as a result of his participation in the conspiracy.
The case is being prosecuted by Assistant U.S. Attorney Terrence Berg for the Eastern District of Michigan and Senior Counsel Thomas Dukes of the Computer Crime and Intellectual Property Section in the Justice Department’s Criminal Division.