Securities Attorney Convicted of Two Market Manipulation Schemes
BOSTON – A California-licensed securities attorney was convicted yesterday by a federal jury in Boston in connection with his role in schemes to manipulate the stock of two publicly traded microcap companies, Greenway Technology and Crown Marketing.
Jehu Hand, 61, was convicted following a 13-day trial of conspiracy, securities fraud and wire fraud. Following the verdict, Hand was remanded to the custody of the U.S. Marshals. U.S. District Court Judge William G. Young has not yet scheduled the sentencing hearing.
In the scheme involving the stock of Greenway Technology, Hand and his co-conspirators used front companies to conceal their control over the vast majority of Greenway’s stock, which then became available for sale to the public after Hand authored and sent several false opinion letters to the transfer agent and brokerage firms. With millions of shares at their disposal, the conspirators proceeded to hire stock promoters to send blast e-mails to potential investors touting Greenway as a company on the verge of acquiring hotels which would cater to gay and lesbian travelers, when in fact the company lacked the requisite funds to acquire any such properties. As a result of the hype created by the false and misleading promotional campaign, Hand and his co-conspirators were able to sell millions of shares of Greenway stock to ordinary investors at artificially high prices.
The scheme involving Crown Marketing stock followed a similar pattern. Hand and his co-conspirators once again used front companies to hide their control over most of Crown’s stock, which could be sold to the public as a result of a false filing that Hand had made with the U.S. Securities and Exchange Commission. The conspirators then put out misleading press releases about the company and hired stock promoters to send blast e-mails touting Crown’s stock. In this case, Crown was billed as having revolutionary drug-delivery technology, when in actuality there was no real commercial interest in Crown’s product. As with Greenway, once Crown’s stock price and trading volume spiked, Hand and his co-conspirators dumped their stock in the market at inflated prices.
In total, between the Greenway and Crown schemes, Hand and his co-conspirators caused losses of more than $1.5 million.
The charge of conspiracy provides a sentence of no greater than five years in prison, three years of supervised release, and a fine of $250,000, or twice the gross loss to the victim. The charges of securities fraud and wire fraud provide for a sentence of no greater than 20 years in prison, three years of supervised release, and a fine of $250,000, or twice the gross gain or loss. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
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 James Herbert and SEC Attorney Andrew Palid, who was appointed as a Special Assistant U.S. Attorney, are prosecuting the case.