Pump and Dump
An attorney convicted of conspiracy to commit securities fraud and manipulative training has moved for disbarment on consent in Illinois
Beginning no later than September 2014 and continuing until in or around January 2017, Movant conspired to commit the crimes of securities fraud and manipulative securities trading in connection with VMS Rehab Systems, Inc. (“VMS”), and its stock, in violation of Title 18, U.S.C. § 371. Together with his co-conspirators Michael Wexler, Ongkaruck Sripetch, and Brehnan Knight, Movant conspired to conduct an illegal pump-and-dump scheme, a fraudulent scheme that involved the artificial inflation of the stock price of VMS (the “pump”) so that individuals who controlled a substantial portion of the stock could sell shares of that stock at artificially high prices (the “dump”). Movant and his co-conspirators also conspired to conduct a manipulative trading scheme, a fraudulent scheme that involved creating the false and misleading appearance of trading activity for VMS stock and the market for such stock.
During the events described in this statement, Wexler was the chief executive officer of VMS, Sripetch ran a stock promotion website called Stockpalooza and controlled Optimus Prime Financial, Inc., Knight maintained a personal bank account, and Movant maintained a domestic brokerage account.
Movant, Wexler, Sripetch, and Knight agreed that they would carry out the scheme by Movant acquiring millions of shares of VMS stock, purportedly in exchange for providing legal services, and then making misrepresentations to his brokerage firm in order to deposit and trade the shares of VMS through his brokerage account. Sripetch and Knight would then engage in manipulative trading in VMS stock in order to create a false or misleading appearance of active trading in the stock and of the market for the stock. To generate interest in the company and its stock, and to provide material for use in third-party promotions of the stock, Wexler would issue press releases about VMS. Sripetch would promote the stock in order to artificially inflate and maintain the inflated price. Movant would sell the VMS stock from his brokerage account into the open market at the inflated price, and then transfer a portion of the proceeds to a bank account controlled by Knight, who, in turn, would transfer a portion to an account controlled by Sripetch.
Movant, Wexler, Sripetch, and Knight carried out various aspects of their agreement to perpetrate a pump-and-dump scheme between March 2016 and January 2017. Wexler and Sripetch issued promotional materials containing false, misleading, or exaggerated information regarding VMS in order to artificially inflate its share price. Knight and Sripetch engaged in manipulative trading of the stock to affect its price and generate the appearance of demand for the shares. On or about December 21, 2016, Movant sold, or caused to be sold, 5,321,434 shares of VMS stock through his brokerage account for proceeds of $183,057.33. On or about December 23, 2016, Movant transferred $56,500 from his bank account to a bank account controlled by Knight, who then transferred a portion of the proceeds to a bank account controlled by Sripetch.
(Mike Frisch)