News and Press Releases

NEW YORK BROKER INDICTED FOR ALLEGED ROLE IN INTERNATIONAL
STOCK FRAUD SCHEME
Spam E-Mails Promoting Stocks Used to Artificially Inflate Prices; Scheme Generated $30
Million for Co-Conspirators

FOR IMMEDIATE RELEASE
February 1, 2011

Berger of New York for his role in a wide-ranging fraud scheme to illegally pump-and-dump
thinly-traded Chinese and Israeli stocks, announced Assistant Attorney General Lanny A. Breuer
and U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade.

The single count superseding indictment returned in the Eastern District of Michigan
alleges that Berger, 47, conspired with Alan 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. The indictment alleges that during the course of the scheme, Berger caused the
sale of approximately 30 million shares of stock, generating approximately $30 million for his
co-conspirators and more than $600,000 in commissions for himself. Ralsky, Tribble, Hui and
Bradley have all been previously convicted and sentenced for their roles in the case.

“Pump and dump schemes undermine the integrity of our stock markets,” said Assistant
Attorney General Breuer. “When stock brokers exploit their trusted positions to enrich
themselves at the expense of innocent investors, as Mr. Berger is charged with doing here, we
will pursue them vigorously.”

“Investor fraud schemes like this one prey on small investors and are motivated by
greed,” said U.S. Attorney McQuade. “Financial fraud is an important priority so that we can
protect victims and the integrity of our financial systems.”

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, which
revealed a sophisticated and extensive “pump and dump” operation in which the defendants sent
spam e-mails to manipulate thinly-traded stocks. After the e-mail recipients bought the stock
being promoted, thereby driving up the share price, Berger and his coconspirators profited by
selling their existing shares at the newly inflated prices.

According to the indictment, Berger’s role was to act as the stock broker for the
conspiracy. Berger allegedly established brokerage accounts for trading the stocks that were
illegally promoted, arranged for shares of the stocks to be transferred into the brokerage
accounts, executed stock trades at the direction of co-conspirator Tribble rather than the direction
of the named account holders and transferred funds from the trading of the stocks to bank
accounts controlled by the conspirators. Berger also allegedly routinely provided 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,
all without authorization from the named account holders.

The stocks artificially inflated and then sold by Berger and his co-conspirators included
China World Trade Corporation, Pingchuan Pharmaceutical Inc., China Digital Media
Corporation, World Wide Biotech and Pharmaceutical Co., China Mobility Solutions and m-
Wise.

The indictment charges Berger with one count of conspiracy to commit securities fraud
and wire fraud. It also seeks forfeiture of criminal proceeds. If convicted, Berger faces a
maximum penalty of 25 years in prison, and a $250,000 fine. Berger is scheduled to be
arraigned on Feb. 8, 2011, in U.S. District Court in Detroit.
An indictment is merely an allegation, and a defendant is presumed innocent unless
proven guilty in a court of law.

In a related action, the U.S. Securities and Exchange Commission (SEC) today filed civil
fraud charges against Berger as well as seven other individuals and three companies involved in
the scheme. The SEC seeks permanent injunctions, disgorgement and civil penalties, and a
penny stock bar against Berger for violations of the antifraud and registration provisions of the
securities laws.

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 Criminal Division’s Computer
Crime and Intellectual Property Section.

11-137

DO NOT REPLY TO THIS MESSAGE. IF YOU HAVE QUESTIONS, PLEASE USE THE CONTACTS IN THE MESSAGE OR CALL THE OFFICE OF PUBLIC AFFAIRS AT 202-514-2007.

(Download 137.CRM Document )

 

 

Return to Top

What Makes Schools Safer? Using science to discover what works. Federal funding available. Visit NIJ.gov, keywords: 'comprehensive school safety intiative'
Community Enforcement

Enforcement

 

Community Prevention

Prevention

 

Community Engagement

Community Engagement

 

Local Events

Upcoming Events

 

District Report

District Report

 

U.S. Attorney's Briefing Room & DOJ Seal

U.S. Attorney's Briefing Room

The Briefing Room highlights the work of the U.S. Attorney's offices across the country.

Social Network - Twitter

Eastern District of Michigan Twitter Link - Follow us at USAO_MIE

Gavel

U.S. v Dr. Farid Fata

Justice 101

Justice 101