Four Pump-and-Dump Scammers Plead Guilty

Four men have pleaded guilty to charges relating to a pump-and-dump market manipulation scheme that netted more than $20 million in profit. According to the U.S. Department of Justice, securities of more than 15 publicly traded companies had their prices inflated through deceptive trading practices and misinformation spread through false statements in press releases and spam e-mails sent to tens of millions of e-mail addresses.Michael Saquella (a.k.a. Michael Paloma), 47, of Mesa, Ariz., . Henry "Hank" J. Zemla, 38, of Harris Township, Mich., and Lawrence J. Kaplan, 63, of Scottsdale, Ariz. all pleaded guilty Alexandria, Va. to participating in a pump-and-dump market manipulation plot.

Justin Medlin, 26 of Paris, France, also pleaded guilty in federal court in Alexandria to charges of electronic mail fraud and conspiracy to commit securities fraud and electronic mail fraud.

This type of deceptive trading has become a problem of late, particularly among online brokerages, many of whom must swallow losses created by the schemes due to customer account security policies. Last year, discount brokerages E*Trade and TD Ameritrade saw a combined $22 million in losses as a result of such a scam.