WASHINGTON – A stock trader from Jupiter, Fla., pleaded guilty today to engaging in a market manipulation scheme involving several publicly traded companies, Acting Assistant Attorney General Rita M. Glavin of the Criminal Division announced.
Earlier today, Paul M. Gozzo, 33, pleaded guilty before U.S. District Judge Donald L. Graham in Miami to one count of conspiracy to commit securities fraud and one count of securities fraud. In his plea, Gozzo admitted to engaging in a market manipulation scheme with two co-conspirators for the purpose of artificially inflating the prices of several publicly traded stocks. Gozzo also admitted that he and his co-conspirators manipulated the stock price of several stocks by, among other things, creating the false appearance that there was a greater investor interest in the stocks than actually existed and by creating the false appearance that there was greater liquidity in the stocks than actually existed. In return for his assistance in manipulating the stock prices of these companies, Gozzo admitted that he received approximately $540,000.
According to the information contained in plea documents, Gozzo conspired with a purported investment banker, who owned large amounts of stock in several public companies, and the investment banker’s son to artificially increase the stock price of those companies. They did so, according to court documents, by creating the false appearance that there was a greater investor interest in the stock prices they were manipulating by providing support bids for shares of those companies and by engaging in coordinated trades with each other and others for the purpose of keeping the stock price artificially inflated and further inflating the stock price. This created the impression that there was a greater investor interest in the stock than truly existed, which allowed Gozzo and his co-conspirators to sell that stock at an artificially high price. Gozzo admitted that he and his co-coconspirators also bought and sold stock through numerous broker-dealers to make it appear that there were several investors trading in the stocks they were manipulating, when in fact there were not additional investors. In return for Gozzo’s assistance in manipulating the stock prices of these companies, the investment banker compensated Gozzo in the form of cash retainer payments and both free-trading and restricted stock.
Gozzo faces a maximum sentence of five years in prison on the conspiracy charge and five years in prison on the securities fraud charge. Sentencing is scheduled for June 5, 2009.
The case is being prosecuted by Assistant Chief Hank Bond Walther of the Criminal Division’s Fraud Section and is being investigated by the FBI’s Washington Field Office. Significant assistance was provided by the U.S. Securities and Exchange Commission.