CEO of “Penny Stock” Company Sentenced for Stock Manipulation Scheme
BOSTON – The CEO of a microcap company that claimed to own valuable patented drug delivery technology was sentenced today in federal court in Boston in connection with a scheme to manipulate the market for his company’s publicly traded stock.
Learned Jeremiah Hand, 59, of Durham, N.C., was sentenced by U.S. District Court Chief Judge Patti B. Saris to nine months in prison and one year of supervised release, with restitution to be determined at a later date. In August 2016, Hand pleaded guilty to conspiracy to commit securities fraud. In May 2018, his brother, Jehu Hand, 61, was convicted by a federal jury of conspiracy, securities fraud and wire fraud, and he is scheduled to be sentenced on Oct. 25, 2018. Their other brother, Adam Hand, 53, of Newport Beach, Calif., was sentenced to 30 months in prison and three years of supervised release after pleading guilty to one count of conspiracy to commit securities fraud.
The Hand brothers conspired in a pump-and-dump scheme to manipulate the market for the stock of Crown Marketing, a microcap or “penny stock” company that claimed to own valuable patented drug delivery technology. Specifically, Learned Hand and his brothers engaged in a scheme to conceal their control over the majority of Crown’s free-trading stock so that they could “pump” up the company’s share price and then secretly “dump” their shares into the market. Jehu Hand filed false registration statements with the Securities and Exchange Commission (SEC) so that the stock that the co-conspirators controlled could be sold to the public. Meanwhile, Learned Hand, who had been named Crown’s CEO, orchestrated a press campaign, including the distribution of press releases containing false and misleading statements regarding the drug delivery technology purportedly owned by Crown. Crown’s share price and trading volume shot up as a result of the hype created by the false press, and the co-conspirators, including Adam Hand, then proceeded to sell millions of shares of Crown stock to unwitting investors at inflated prices.
United States Attorney Andrew E. Lelling and Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today. The United States Attorney’s Office received valuable assistance from the Securities & Exchange Commission and Financial Industry Regulatory Authority during the investigation of this matter. Assistant U.S. Attorney Jamie Herbert of Lelling’s Criminal Division and SEC Attorney Andrew Palid, who was appointed as a Special Assistant U.S. Attorney, prosecuted case.