New Jersey Stock Promoter Sentenced for his Role in Pump-And-Dump Schemes

BOSTON – A New Jersey stock promoter was sentenced late yesterday afternoon in federal court in Boston for his involvement in the manipulation of the stock of two separate companies, Amogear, Inc. and Greenway Technology.    

Mitchell Brown, 51, of Long Branch, NJ, was sentenced by U.S. District Court Judge William G. Young to 42 months in prison and ordered to pay a fine of $1 million.  Brown had previously pleaded guilty to conspiracy, securities fraud and wire fraud.

In 2013 and 2014, a federal undercover operation monitored in real-time Brown’s participation in the scheme to manipulate the stock price of Amogear, Inc.  In February 2014, the Securities and Exchange Commission (SEC) suspended trading in the securities of Amogear as the attempted manipulation of its stock was underway.  Prior to the suspension, Brown and his co-conspirators, who were all stock promoters, carried out a scheme to create a false appearance of an active market in the stock, including a false media campaign designed to increase the price of the stock, knowing that Amogear was a shell company without any real operations.  Brown and his co-conspirators planned to sell the stock into the market at artificially inflated prices from which they would profit. What Brown did not know was that Amogear was controlled by federal agents.

Previously, in 2012 and 2013, Brown had conspired with a number of individuals to manipulate the stock price of Greenway Technology (Greenway).  As part of that scheme, Brown and his co-conspirators took various steps to conceal their control over the vast majority of Greenway stock, and subsequently orchestrated a promotional campaign which included blast e-mails to many potential investors, including those in Massachusetts, containing misleading information touting Greenway’s stock.  As a result of the hype created by the false and misleading promotional campaign, Brown and his co-conspirators were able to sell their Greenway stock to unwitting investors at artificially high prices.  In total, the scheme caused a loss to investors of approximately $855,586. 

This case arises from a multi-year investigation focusing on preventing fraud in the microcap stock markets.  Microcap companies are small, publicly-traded companies whose stock often trades at pennies per share.  Fraud in the microcap stock markets is of increasing concern to regulators as such markets have proven to be fertile grounds for fraud and abuse.  This is, in part, because accurate information about microcap stocks may be difficult for the average investor to find, since many microcap companies do not file financial reports with the SEC.

United States Attorney Carmen M. Ortiz and Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division, made the announcement today.  The case was prosecuted by Assistant U.S. Attorney Vassili Thomadakis of Ortiz’s Criminal Division and Eric Forni and Andrew Palid of the Securities and Exchange Commission who were appointed as Special Assistant U.S. Attorneys in this case.