WASHINGTON, 9 SEPTEMBER 2008 - An Indian national and legal resident of Malaysia was sentenced Tuesday to two years in prison on a conspiracy charge related to an international fraud scheme that hacked into online brokerage accounts in the U.S. in an attempt to manipulate stock prices, the U.S. Department of Justice said.
Judge Laurie Smith Camp of the U.S. District Court of the District of Nebraska also sentenced Thirugnanam Ramanathan, age 35, to a fine of US$362,247 on a charge of conspiracy to commit wire fraud, securities fraud, computer fraud and aggravated identity theft. Ramanathan, a native of Chennai, India, and a legal resident of Malaysia, pled guilty to the charge on June 2.
Ramanathan was arrested in Hong Kong and extradited to the U.S. in May 2007.
Jaisankar Marimuthu, age 33, and Chockalingham Ramanathan, 34, also residents of Chennai, were indicted with Thirugnanam Ramanathan in January 2007 by a grand jury in Omaha, Nebraska, the DOJ said in a news release.
Marimuthu and Chockalingham Ramanathan are also charged with one count of conspiracy, eight counts of computer fraud, six counts of wire fraud, two counts of securities fraud and six counts of aggravated identity theft. Marimuthu is being held in a Hong Kong prison awaiting extradition to the U.S. following his conviction there on similar offenses related to the Hong Kong stock market.
Chockalingham Ramanathan remains at large.
Thirugnanam Ramanathan said in his guilty plea that he was part of a stock conspiracy operating out of Thailand and India from February to December 2006. The members of the conspiracy hacked into the accounts of customers at brokerage firms and fraudulently inflated the prices of some stocks by making unauthorized purchases, the DOJ said.
After the price of the stocks had been artificially increased or "pumped up" through the bogus trading, the conspirators dumped their stocks for a profit, the DOJ said.
At least 60 customers and nine brokerage first in the U.S. have been identified as victims, the DOJ said. U.S. brokerage firms lost more than $300,000 during Thirugnanam Ramanathan's participation in the scheme, according to information presented at the sentencing hearing.
This case is one of the first federal prosecutions in the U.S. of an online "hack, pump and dump" scheme, the DOJ said.
Sign up for MIS Asia eNewsletters.