Edward Constantinescu, Perry Matlock, and others involved in a meme stock uproar last year have been charged by the federal court. They were engaged in a $114 million “pump and dump” scheme.
The defendants Edward Constantinescu and Perry Matlock go by the names “@MrZackMorris” and “@PJ_Matlock” with more than 550,000 and 340,000 followers respectively on the platform. They have been charged with the accusation by the federal court in Houston. This was verified by the US Securities and Exchange Commission, which arrested the eight men yesterday.
The defendants were co-founders of the company named Atlas Trading. The company dealt with stock trading on Discord.
The others charged with Matlock and Edward were Thomas Cooperman, Gary Deel, Mitchell Hennessey, Stefan Hrvatin, Daniel Knight, and John Rybarczyk.
The defendants were charged on the ground that they falsely claimed to their followers on Twitter that they are planning to hold stocks for a long period of time so that they can aim at higher price targets.
In November 2020, Matlock allegedly said to the members of Atlas that he “NOT post plays so I can scalp 2 cents on my followers like they want you to believe.”
“I WOULDN’T BE HERE IF I DID THAT. . . . My GOAL is to help THIS group [make] money and help make THIS group successful,” he said, according to the indictment.
But in reality, he and others were trying to sell the shares at artificially increased costs.
The federal prosecutors said in a news release that the eight suspects are indicted of manipulating their online followings to circulate “false, positive information” about securities they bought, such as their “view that the security would increase in price, and the price the security could reach—to induce other investors to buy the security and artificially drive up its price.”
The men then allegedly “secretly sold their shares of the security at a higher price to secure a profit for themselves, at or around the time they posted messages to induce other investors to purchase the same security and concealed their intent to sell,” the indictment, in the Southern District of Texas, states.
“These messages were false and misleading, and omitted material information, because the defendants concealed their intent to use these messages to induce other investors to purchase the securities so that defendants could sell their shares at a higher price at and around the time of the messages,” the indictment claims.
Edward alone is suspected to use the pump-and-dump scheme that made him able to buy luxury cars and post them on his Twitter account.
He also had a channel on discord where he claimed to provide free stock tips. According to prosecutors, that chat channel was actually used to increase engagement and publicity of his scheme. One of the private messages clearly proved that all these were Asatotally a fraud.
“We’re robbing f—— idiots of their money,” Daniel Knight allegedly said in a private chat with the other suspects.
“Securities fraud victimizes innocent investors and undermines the integrity of our public markets,” Assistant Attorney General Kenneth A. Polite Jr., of the Justice Department’s criminal division, said in a statement. “As these charges demonstrate, the department will continue to prosecute those who defraud investors by spreading false and misleading information, including over social media, to line their own pockets.”