U.S. Promoter of Foreign Cryptocurrency Companies Sentenced to 60 Months in Prison for His Role in Multi-Million Dollar Securities Fraud Scheme
Earlier today, in federal court in Brooklyn, Joseph P. Willner, a self-described day trader, pleaded guilty to conspiring to commit securities fraud and illegally profiting from a series of coordinated trades involving more than 50 hacked online brokerage accounts. The plea took place before United States District Judge Margo K. Brodie. When sentenced, Willner faces up to five years in prison, as well as forfeiture and a fine of up to twice the gross loss caused by the conspiracy.
Richard P. Donoghue, United States Attorney for the Eastern District of New York, Brian A. Benczkowski, Assistant Attorney General for the Justice Department’s Criminal Division, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office, announced the guilty plea. Mr. Donoghue expressed his grateful appreciation to the United States Securities and Exchange Commission and the United States Commodity Futures Trading Commission for their significant assistance in the investigation.
“Willner and his co-conspirators used computer hacking to take the pump out of pump and dump, eliminating the need to trick investors into buying artificially inflated stock by simply hacking into brokerage firm accounts and having them buy the stock unbeknownst to the brokerage firms,” stated United States Attorney Donoghue. “While the approach was novel, the end result was all the same, with the defendant being held accountable for his criminal acts. No matter what cyber techniques fraudsters use, this Office and our law enforcement partners will bring them to justice.”
As alleged in the indictment and other court filings, between September 2014 and May 2017, Willner used his brokerage accounts to place “short sale” offers for publicly traded companies’ stock at artificially high market prices. Simultaneously, Willner’s co-conspirators hacked into victims’ online brokerage accounts and placed buy orders for the stock at the artificially high prices, matching Willner’s short sale offers. Willner and his co-conspirators then re-purchased the stock from the victims’ accounts at market or below-market prices. This sequence of fraudulent trades usually took place within minutes, and Willner immediately profited based on the difference between his artificially high short sale price and the lower price at which he re-purchased the stock.
As a result of Willner’s and his co-conspirators’ actions, the affected brokerage firms lost more than $2 million.
The government’s case is being prosecuted by the U.S. Attorney’s Office Business and Securities Fraud and National Security and Cybercrime Sections, and the Securities and Financial Fraud Unit of the Department of Justice Fraud Section. Assistant United States Attorneys Mark E. Bini and Craig R. Heeren and Department of Justice Trial Attorney Cory E. Jacobs are in charge of the prosecution.
JOSEPH P. WILLNER
E.D.N.Y. Docket No. 17-CR-620 (MKB)
United States Attorney’s Office