Man from Forsyth County sentenced to prison and fined for involvement in market manipulation scheme.
A recent case in Forsyth County involves a man from Cumming who has been given an 18-month prison sentence due to his involvement in a market manipulation scheme. The culprit, 49-year-old Milan Patel, along with four other co-conspirators from Florida, Atlanta, and New Jersey, have all faced legal consequences overseen by the Acting US Attorney for the Northern District of Georgia, Richard Moultrie, Jr.
The group of fraudsters managed to conduct over 500 trades with profits exceeding $2.6 million in total. This elaborate scheme was carried out over several years, during which Patel and his associates spread false rumors about publicly traded companies. They would then capitalize on these rumors by engaging in the buying and selling of short-term call options.
Moultrie commented on the case, highlighting how the defendants exploited their financial knowledge to manipulate the securities markets through the dissemination of fake information about companies. He emphasized his office’s dedication to collaborating with law enforcement agencies in the pursuit of prosecuting all forms of securities fraud.
Call options are essentially contracts that grant the holder the authority to purchase shares of a particular stock at a predetermined price per share on or before a specific future date. Interestingly, three of the conspirators were previously licensed brokers with FINRA, who were responsible for fabricating the fraudulent rumors.
Moreover, one co-conspirator functioned as a day trader, offering insights into the potential success of the false rumors. Meanwhile, Patel played a crucial role in spreading the misinformation using Trillian, an instant messaging app. Subsequently, these rumors were disseminated to market subscription services and Twitter accounts.
Before spreading the rumors, the group would strategically acquire positions in the companies that were the subjects of their fabrications. They would then purchase short-term call options moments before Patel disseminated the fake news, allowing them to exploit the financial markets for personal gain.
After pleading guilty, Patel was convicted last August and was ordered to pay a hefty fine of $10,000. The Federal Bureau of Investigation (FBI) and the Securities and Exchange Commission (SEC) spearheaded the investigation into this case. Furthermore, the SEC is currently exploring potential civil violations related to this fraudulent activity.
