Description: Newark, NJ - New York Accountant Pleads Guilty In Stock Manipulation Scheme That Netted Millions In Illicit Profits
A Cedarhurst, New York, man on February 20, 2018 admitted his role in a long-running market manipulation scheme that netted millions in illegal profits between 2014 and 2016.
Shaun Greenwald, 40, pleaded guilty before U.S. District Judge John Michael Vazquez to an information charging him with one count of securities fraud conspiracy and one count of tax fraud conspiracy.
According to documents filed in this case and statements made in court:
From 2014 to 2016, Greenwald, Joseph Taub, 38, of Clifton, New Jersey, and others conspired to manipulate securities prices of numerous public companies by coordinating trading in dozens of brokerage accounts that they secretly controlled.
These “straw accounts” were held in the conspirators’ own names, the names of their family members, and the names of entities they controlled. Many of the accounts were opened in the names of individuals who neither controlled the accounts nor traded the securities held in the accounts. Taub funded many of these accounts and used the account holders to conceal the scheme from regulators and law enforcement.
The fraudulent trades typically involved two types of straw accounts. First, a “Winner Account” purchased a large block of shares in a particular security. Next, a “Loser Account” placed multiple small orders in the same security to create upward pressure on the stock price. Once the price of the security moved higher due to the Loser Account’s manipulative orders, the conspirators sold their large position in the Winner Account and the shares from any executed trades in the Loser Account. While the Loser Accounts would generally lose money, the conspirators expected the gains from the Winner Accounts to more than make up for them.
Taub was one of Greenwald’s clients. As part of the scheme, Greenwald opened brokerage accounts in his name or entities that he controlled. However, the vast majority of the funding for these accounts was provided by Taub, which Greenwald concealed on the account opening forms. Greenwald then provided the log-in and password information to Taub so that he and others could use the accounts for trades. In return, Greenwald was paid a portion of the profits made from his accounts.
Greenwald also admitted that he performed accounting services for the conspiracy, including calculated the taxes on profits made from the straw accounts. Taxes were paid at the straw account holders’ tax rates, which were typically lower than Taub’s rates, even though the account holders – per their agreements with Taub – were only getting a fraction of the profits. While Taub did provide the account holders funds for the taxes on his portion of the straw account profits, he failed to declare any of this income on his tax returns.
Each count to which Greenwald pleaded guilty is punishable by a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. Sentencing is scheduled for June 5, 2018.
Taub was charged by complaint on Dec. 12, 2016. The charges and allegations against Taub are merely accusations, and he is presumed innocent unless and until proven guilty.
U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark, special agents of IRS – Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen in Newark, and special agents of the U.S. Attorney’s Office, District of New Jersey, with the investigation. He also thanked the SEC’s New York Regional Office for its assistance.
The government is represented by Assistant U.S. Attorneys Daniel Shapiro and Zach Intrater of the U.S. Attorney’s Office Economic Crimes Unit in Newark; and Assistant U.S. Attorneys Sarah Devlin and Barbara Ward, Acting Chief of the office’s Asset Forfeiture and Money Laundering Unit.
Defense counsel: Marc Agnifilo Esq. and Joshua Kirshner Esq., New York