back to article Man cops to botnet-fueled pump-and-dump scheme

An Arizona computer specialist has admitted taking part in a conspiracy that used large networks of compromised computers to inflate the value of stocks so they could later be sold at a profit. James Bragg, 41, of Chandler, Arizona, pleaded guilty on Wednesday to conspiracy to commit securities fraud and fraud, prosecutors said …

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WTF?

And it works?

I mean, the efficacy of spam is usually counted in 0.01%, is that enough to have an influence on the market??

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You only need a few morons

These scams work because they only need to con a few people. The scammer spams false information about a company (e.g. by saying they've just been awarded a major government contract), waits for rubes to buy up stock and then sells off their own stock (which they bought before the bubble) and pockets the difference. The marks are now left with the relatively worthless stock because the price collapses back to its original level.

It's really the next iteration of so-called "boiler room" scams but instead of hiring a bunch of traders to cold call people, you just spam, spam and let the marks connect the dots.

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Re: is that enough to have an influence

You bet your ass it is. You might only get 1 'bite' in 10,000, but if you send 5 million emails, that's 500 suckers who hand over money.

With very small companies, that's a huge number of investors, so these pump-n-dumps quickly become a self-supporting feedback loop - you send a spam saying "this stock is going TO THE MOON !!!!! Get it while it's only 1p !"; a few gullible people buy it, within 2 days it's gone up to 3p; then others who weren't gullible enough to buy on day one, but were interested enough to watch it, check back and think "Damn - if I'd bought when it was 1p, I'd have made 200% profit already ! - I'll invest £1000 right now !"

Before you know it, the stock is maybe 10p a share, which is when the crooks (who know that the 'company' actually exists of 1 man and a shovel, rather than a huge mining operation in Saskatchewan that just hit a massive lode of gold) take the money and run.

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Heh.

"In December 2007, Bragg sent a Skype message to a Texas man identified only as C.R. who acted as a middleman between stock promotors and the email spammers. It reported that the spam campaign for one of the companies was “runnin hard hitting inbox on gmail, hot, yahoo, fusemail”

{...}

At the time of reporting, it was unclear whether he had added "YEE-HAW! Hot diggedy dawg!" and danced on his comically oversized hat."

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WTF?

Off topic...no, not really

i can't help noticing:

This arse---- defrauds an untold number of victims, callously robbing them of sums which might, in some cases, be ruinous by their loss, carefully constructing his scam to do the most good for himself and commensurate harm to others, and the maximum monetary penalty allowed by law is $250,000.

A grad student in Boston shares 30 music singles by P2P and is hit with a $675,000 fine.

I am agog to see a legal system that considers a quarter million to the the most that a heartless victimizer of possibly many thousands should have to face, but a guy who made a handful of songs available to others (and there's no way of knowing how many actually benefited from it) without paying can legally be hit with over twice that.

True, another court cut that down to 10% of the original amount, but even that's over 25% of the legal maximum penalty the fraudster faces.

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