Former Vancouver, Washington Men Sentenced for ‘Pump and Dump’ Stock Fraud Scheme
One Defendant was Implicated in Earlier Case – Committed Fraud After Judicial Order
A former Vancouver, Washington resident was sentenced today in U.S. District Court in Tacoma to 51 months in prison for a ‘pump and dump’ stock scheme he undertook even after narrowly avoiding prosecution in an earlier scheme, announced U.S. Attorney Annette L. Hayes. TOVY PUSTOVIT, 21, of Gladstone, Oregon is the fifth and final defendant to be sentenced in the stock fraud schemes. At sentencing U.S. District Judge Ronald B. Leighton said “this is a serious offense that corrodes confidence in our markets.”
“The people damaged by these “pump and dump” schemes not only lose money, they lose trust in our financial markets,” said U.S. Attorney Annette L. Hayes. “This defendant was warned that what he was doing was wrong and yet he kept right on cheating and defrauding investors. He will now pay the price for that decision.”
According to the facts set out in the plea agreement, PUSTOVIT participated in a 2012 scheme with Alexander Hawatmeh, Mikhail Galas and Christopher Mrowca to manipulate the stock of ISM International, Inc. PUSTOVIT was not originally charged criminally in that stock manipulation scheme, but following the arrest of the other defendants, investigators uncovered additional information about PUSTOVIT’s participation and about his continuing to scheme to manipulate penny stocks.
In August 2014, Judge Leighton entered a preliminary injunction barring PUSTOVIT and the other defendants from engaging in stock fraud in a civil enforcement action brought by the U.S. Securities and Exchange Commission. Despite that warning, in November 2014 PUSTOVIT conspired with another individual, MARIUS MORARIU, 21, of Beaverton, Oregon in a ‘pump and dump’ scheme involving three companies in the over-the-counter market. PUSTOVIT and MORARIU sought to manipulate the value of Brightech, Inc. (ticker symbol BRTE), General Environmental Management, Inc. (ticker symbol GEVI), and Green Street Capital Corp. (ticker symbol JAGR). MORARIU lined up various apparently unrelated accounts and took cash from PUSTOVIT to purchase the penny stocks. After substantial amounts of stock had been purchased, the two sent out email blasts from various stock promotion websites they controlled: Infinity Stock Picks, Zeus Alerts and Hulk Alerts urging others to buy the stocks. When the price rose further, the two dumped their shares making a significant profit.
Specifically, they manipulated GEVI in early 2015, accumulating some 2.7 million shares. On February 5, 2015 they sent out email blasts from the three different companies touting the stock as being “ready to soar” in value. The stock price rose sharply on the promotion, and the men sold their stock reaping $83,096 in net profits. In the days that followed the price of the shares collapsed harming numerous investors who had been defrauded.
PUSTOVIT has agreed to forfeit to the U.S. $266,373 as criminal proceeds from the overall scheme.
MARIUS MORARIU was sentenced today to three years of probation with ten months of house arrest.
The original coconspirators in the trading of ISM International, Inc., have all been sentenced. Alexander Hawatmeh was sentenced to five years in prison, and Christopher Mrowca was sentenced to three years in prison and Mikhail Galas was sentenced to time served.
The case was investigated by the FBI. The Securities and Exchange Commission (SEC) is conducting a parallel civil investigation. The case is being prosecuted by Assistant United States Attorneys Justin Arnold and Katheryn Kim Frierson.