Earlier today, in federal court in Brooklyn, Joseph P. Willner, a self-described day trader, pleaded guilty to conspiring to commit securities fraud and illegally profiting from a series of coordinated trades involving more than 50 hacked online brokerage accounts. The plea took place before United States District Judge Margo K. Brodie. When sentenced, Willner faces up to five years in prison, as well as forfeiture and a fine of up to twice the gross loss caused by the conspiracy.
Richard P. Donoghue, United States Attorney for the Eastern District of New York, Brian A. Benczkowski, Assistant Attorney General for the Justice Department’s Criminal Division, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office, announced the guilty plea. Mr. Donoghue expressed his grateful appreciation to the United States Securities and Exchange Commission and the United States Commodity Futures Trading Commission for their significant assistance in the investigation.
“Willner and his co-conspirators used computer hacking to take the pump out of pump and dump, eliminating the need to trick investors into buying artificially inflated stock by simply hacking into brokerage firm accounts and having them buy the stock unbeknownst to the brokerage firms,” stated United States Attorney Donoghue. “While the approach was novel, the end result was all the same, with the defendant being held accountable for his criminal acts. No matter what cyber techniques fraudsters use, this Office and our law enforcement partners will bring them to justice.”
As alleged in the indictment and other court filings, between September 2014 and May 2017, Willner used his brokerage accounts to place “short sale” offers for publicly traded companies’ stock at artificially high market prices. Simultaneously, Willner’s co-conspirators hacked into victims’ online brokerage accounts and placed buy orders for the stock at the artificially high prices, matching Willner’s short sale offers. Willner and his co-conspirators then re-purchased the stock from the victims’ accounts at market or below-market prices. This sequence of fraudulent trades usually took place within minutes, and Willner immediately profited based on the difference between his artificially high short sale price and the lower price at which he re-purchased the stock.
As a result of Willner’s and his co-conspirators’ actions, the affected brokerage firms lost more than $2 million.
The government’s case is being prosecuted by the U.S. Attorney’s Office Business and Securities Fraud and National Security and Cybercrime Sections, and the Securities and Financial Fraud Unit of the Department of Justice Fraud Section. Assistant United States Attorneys Mark E. Bini and Craig R. Heeren and Department of Justice Trial Attorney Cory E. Jacobs are in charge of the prosecution.
This was a report from the united states of attorney office.
What Does "Criminal Forfeiture" Mean?
Criminal forfeiture refers to the taking of a person’s property by the state, usually in connection with criminal activity. For example, if a person’s home was being used for drug production, the home may be seized as part of the criminal trial and investigation. This is known as criminal forfeiture, where the person “forfeits” their property.
What is the Difference Between Criminal Forfeiture and Civil Forfeiture?
Criminal forfeiture is also common for property that was obtained through criminal means. The laws governing criminal forfeiture can vary by state, and may also be different according to the nature of the crime involved.
Civil forfeiture is very similar to criminal forfeiture, except that the forfeiture occurs without any criminal charges being filed against the defendant. In a civil forfeiture, the charges are actually brought against the property itself. For example, if you’re driving with a large amount of money and the police are unable to bring charges against you, then they can “bring charges” against the money and take the money from you.
SEC Sanctions and Penalties
The U.S. Securities and Exchange Commission (SEC) obtains billions of dollars each year in monetary sanctions from wrongdoers who violated the federal securities laws. As a part of the SEC’s enforcement responsibilities, it issues orders and administers judgements ordering securities violators to, among other things:
The calculation of monetary sanctions is critically important to SEC whistleblowers. Under the Dodd-Frank Act’s SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original information that leads to successful SEC enforcement actions with total monetary sanctions exceeding $1 million. A whistleblower may receive an award of between 10% and 30% of the total monetary sanctions collected, which can lead to substantial awards. The largest SEC whistleblower awards to date are $50 million, $39 million, and $37 million.
Between September 2014 and May 2017, day trader Joseph Willner of Pennsylvania is alleged to have...