The Manhattan U.S. Attorney announced on Tuesday that three men in Florida and Israel had been charged in a penny stock scam with international reach. Three Israeli residents, one an American citizen who remains at large, allegedly ran a “pump-and-dump” stock scheme that laundered proceeds through a shell company in Cyprus. The crimes could go as far back as 2011.
The Securities and Exchange Commission has filed a civil lawsuit against Gery Shalon, Ziv Orenstein, and Joshua Samuel Aaron (aka Mike Shields) as well.
A major attack last summer on JPMorgan Chase computers may also be tied to the men. It is believed that contact information for about 80 million of the bank’s customers was compromised in the attack. No charges have yet been filed in the breach of the nation’s largest bank, but reports indicate the men are suspects.
If true, the reason for the hack may have been to steal email addresses and other information to spam unwitting investors. Emails would solicit interest in worthless stocks held by the perpetrators, which would drive prices up before the stocks were unloaded for profit. Eleven charges were filed for, “orchestrating a scheme to manipulate the price and volume of traded shares in numerous publicly traded stocks by means of deceptive and misleading e-mail campaigns, and manipulative, prearranged stock trading.”
At least two of the men, Shalon and Orenstein, have been informally linked in business forums to the ownership of 13 online casinos including Slots Jungle and WinPalace. The marketing arms of those businesses are known as Affactive and Revenue Jet. The marketing websites as well as casino websites are now off line.
A court in Jerusalem ordered that the two be held in custody without bail until they can be extradited to the U.S. to face charges. When arrested at his home, Shalon had 2 million shekels ($520,000) in his possession.
Anthony Murgio and Yuri Lebedev of Florida were also arrested and their cases may be related according to several reports. The two were charged in Manhattan with operating a Federal Credit Union as a captive bank for their unlawful business. The pair allegedly used a collectibles website, and then a credit union they took over as fronts for an unlicensed bitcoin business. Charges include conspiracy, operating an unlicensed money transmitting business. and money laundering.