Federal authorities brought securities fraud charges against a man they allege made more than $82,000 in a six-week scheme that used compromised trading accounts to drive up the price of thinly-traded stocks.
Aleksey Kamardin, a 21-year-old with an address in Tampa, Fla., bought the shares using an E*Trade account and then caused hi-jacked client accounts with online brokerages to buy large blocks of the same stock, according to a complaint filed by the Securities and Exchange Commission. With the share price inflated as a result of the activity, Kamardin then sold the holdings in his E*Trade account, enabling him to realizes a handsome profit.
Such pump and dump schemes have been proliferating in recent years, usually through the use of viruses targeting the computers of online stock traders. Once a trader's machine has been owned, the criminal uses the account to manipulate the price of penny stocks.
Kamardin's spree ran from July 13 to Aug. 25 and affected 17 different stocks, including those of Gales Industries (ticker: GLDS), Fuego Entertainment (FUGO), and Butler National (BUKS). In the case of Gales, Kamardin purchased 55,000 shares on the morning of Aug. 25 for 50 cents to 55 cents, caused a compromised account maintained by TD Ameritrade to buy 245,000 shares, and then dumped his initial investment at 66 cents a share, yielding more than $7,000 in profit.
Not bad work if you can get it, we'd be tempted to say, except that this type of scheme is preposterously easy for the Feds to track. Gales's trading volume on the day in question was 533,400, compared with a 15-day average of 20,756. Kamardin's trades, which accounted for some 20 per cent of that activity, must have stuck out like a sore toe.
Which is perhaps why the boy genius, over two days in late August, had to wire his ill-gotten gains to a domestic bank account, transfer them into a second account maintained by a Russian-born roommate, relay them into an account located in Latvia and escape to Russia.
Still, when you live in a country where the per capita gross domestic product is one-fourth of that in the US, $82,000 will buy you plenty of Piroshkis - even if you have to look over your shoulder while chewing. ®