NEW YORK (AP) — Four of eight people charged in a penny stock "pump and dump" scheme that defrauded $290 million from thousands of investors were arraigned on Thursday following a two-year investigation.
Anthony Thompson, 38, of Bethesda, Maryland, Jay Fung, 40, of Delray Beach, Florida, Hanna Schmieder, 39, of Los Angeles and Kenneth Oxsalida, 59, of Sebring, Florida, all pleaded not guilty before Judge Roger Hayes in in state Supreme Court in Manhattan.
Thompson, Fung and another stock promoter sent out email blasts from websites they controlled promoting stocks to potential investors while working with others in the scheme as they allegedly took control of public shell companies, merged private companies into them, then transferred millions of shares to themselves and drove up the price of the stocks, prosecutors said.
Once they controlled the shares, prosecutors said the defendants then sent out press releases promoting companies such as Xynergy Holdings Inc. and Mass Hysteria Entertainment Co. but cashed their shares before the stocks plummeted.
But Thompson made clear he was a paid advertiser of the stock, not a boiler room broker, who had lawyers review disclaimers in the emails that clearly stated he had been compensated to promote the stocks, said his attorney, Maranda Fritz.
Thompson, who was released on $1 million bond, settled related charges stemming from a Securities Exchange Commission case in Florida in 2012.
One his co-defendants in that case, described by Fritz as the ringleader of the operation, is now working with New York prosecutors.
"We've done nothing wrong," she said.