And money laundering too. From the O.C. Register:
Matthew Brown, founder of Orange County stock board InvestorsHub.com, pleaded guilty today to four counts of stock fraud and money laundering. He faces up to 20 years in prison and a $500,000 fine. Brown entered his plea in U.S. District Court in Delaware.
Federal prosecutors charged Brown and six others with a pump-and-dump scheme to hype five lightly traded stocks on InvestorsHub, drive up the price and then sell. In his plea agreement, Brown admitted that investors lost at least $1 million because of his scheme.
Prosecutors said Brown and the others arranged with help from insiders to gain control of millions of shares in the target companies. Then they spread glowing rumors on InvestorsHub and other stock boards, prompting unwitting buyers to rush in. Then they sold.
I mentioned this in a post on the old blog last summer, but Matt Brown banned me from one of the iHub message boards for pointing out that a particular company’s Altman Z”-score predicted bankruptcy. That banning is why I added a message board system to Short Screen, so there would be at least one message board system where no one would get banned for posting bearish or skeptical comments about a stock.
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