Two Florida Men Among Five Indicted In ‘Pump And Dump’ Securities Fraud Scheme

On February 17th, 2022, the United States Department of Justice (DOJ) announced that five men, including two from Florida, have been indicted on federal securities fraud charges for their role in an ‘pump and dump’ investment fraud scheme. The DOJ contends that they unlawfully manipulated the price of a health care industry stock. In this blog post, our experienced Miami penny stock fraud lawyers provide an overview of the alleged ‘pump and dump’ securities fraud scheme. 

Penny Stock Fraud: Global WholeHealth Partners Corporation 

Global WholeHealth Partners Corporation (ticker symbol: GWHP) is a health care services company with a main headquarters in Southern California. Among other things, Global WholeHealth Partners Corporation is involved in the marketing and sale of COVID-19 diagnostic tests. According to a complaint filed in a federal court by the U.S. Attorney’s Office Southern District of California, the following five men unlawfully attempted to manipulate the stock price:

• Joshua Yafa of Florida;
• Jamie Jafa of Florida:
• Brain Volmer of Nevada;
• Charles Strongo of California; and
• Carl Marcinia of California.

Federal investigators allege that the five men operated a classic pump and dump-style penny stock fraud scheme. To start, they obtained a controlling majority of the shares of the Global WholeHealth Partners Corporation. From there, they opened and operated secret trading accounts designed to enhance trading volume and artificially inflate the price of GWHP. Finally, they operated a classroom and engaged in a newsletter writing campaign focused on employing high pressure sales tactics to sell the penny stock to members of the general public.

Penny Stock Manipulation (Fraud) Remains a Serious Problem for Investors 

A penny stock is a low priced security, generally trading at less than $1.00 per share. Penny stocks are listed on a number of different public exchanges, including the New York Stock Exchange (NYSE). Due to the relatively low price and light volume of these types of stocks, they are at a higher risk for manipulation—especially through pump and dump schemes.

As defined by the Securities and Exchange Commission (SEC), a pump and dump stock fraud scheme occurs when shares for a company are artificially inflated in price and then marketed to the general public. Once the price is high enough (pumped), the parties engaged in the penny stock fraud scheme then sell (dump) all of their shares. The net effect is that funds are transferred from unsuspecting investors to fraudsters.

Set Up a Fully Confidential Consultation With a Florida Securities Fraud Attorney

At ​Carlson & Associates, P.A., our South Florida securities fraud lawyers have the professional skills and legal knowledge that you can rely for guidance through a complex investment fraud claim. If you suffered financial damage in a pump and dump penny stock fraud scheme, we can help. Give our Miami office a call now to arrange your fully private, no strings attached initial consultation. Our penny stock fraud lawyers represent investors in South Florida and beyond.

Resource:

justice.gov/usao-sdca/pr/five-defendants-indicted-pump-and-dump-stock-fraud-scheme