$17 MILLION Illegal Scheme... ONLY 18 Months in Jail?

Just a couple weeks ago, a Securities Trader Sentenced to 18 Months in Prison for Market Manipulation Scheme that Netted more than $17 Million in Illicit Profits.

Joseph Taub of Clifton, New Jersey is going to prison. A New Jersey-based securities trader was sentenced today to 18 months in prison for orchestrating a massive, long-running market manipulation scheme and tax fraud that netted more than $17 million in illegal profits between 2014 and 2016, U.S. Attorney Craig Carpenito announced.

What’s dangerous about social media and day trading gurus that have large followings is they can use this same tactic. They can buy shares in a company with low trade volume, pump up the interest in said company by sending a bogus newsletter or post to their following indicating that this company is about to explode, and after the followers buy into the company’s stock, the guru will dump their shares after earning a lot of profit. This is the classic pump-and-dump scheme. This was why Jordan Belfort got locked up.

One area of this social media guru world that I want everyone to be careful with is the gurus claiming to make millions in stock trading, day trading, or some system that they found that lets them live a lavish lifestyle from trading. Almost everyone who day trades loses money. It’s a losing game unless you have some kind of advantage that nearly no one has. Or if you have insider information, you can play that game. I’ll only expose you if you don’t share the insider information with me.

The real problem with pump and dump schemes is that they make one person a lot of money, the scammer, and they leave all of the hopeful investors holding the bag. When the scammer dumps their shares, the price plummets leaving the investors with shares in a company that are worth much less than they were five minutes ago and there’s no exit without experiencing major losses.

Taub also admitted defrauding the United States by hiding from the brokerage firms and the IRS the identities of those who actually controlled the straw accounts and who reaped the majority of the profits from the scheme. As a result, the profits from the straw accounts were taxed at the lower tax rates applicable to the straw account holders instead of the higher tax rates applicable to Taub, which allowed Taub to avoid $394,424 in taxes.

The Department of Justice has also reached a settlement of its civil forfeiture case against assets acquired by Taub and his family using proceeds of the market manipulation scheme. Under the terms of the settlement, Taub and his family members agreed to forfeit all assets subject to the pending forfeiture complaint in which they have a potential interest.

Be careful of day trading schemes my friends.

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