Informant tired of cooperating in securities fraud investigations

Earlier this year, the Department of Justice announced the federal grand jury indictment of a broker-dealer allegedly involved in a “pump and dump” scheme that included Kentucky USA Energy Inc.

The New York broker is accused of securities fraud and conspiracy to commit securities fraud.

The scheme involved two companies, Kentucky USA Energy and Raven Gold Corporation. The defendant and others reportedly obtained large blocks of shares in the two companies, then spread misleading information about the stocks and engaged in manipulative purchases of the stock to drive prices higher.

After the stocks were pumped, the broker-dealer and others then dumped them to investors. When the stock prices subsequently plummeted, investors lost their money.

The stock scheme generated about $17 million in “gross trading proceeds,” the Department of Justice said in a statement.

The defendant has now put out his own statement on the indictment. In a lengthy newspaper article, he alleges that he was used by the FBI in investigations and prosecutions of others engaged in securities fraud.

He claims he was “forced” to participate in sting operations, and that he was so good at helping investigators that the FBI has been reluctant to release him from the agreement he had to get charges dropped. He says he has more than fulfilled his obligations. He adds that because he refuses participate in more stings, charges against him were reinstated.

We do not know the details of his claims against the FBI, but in similar situations the informants can always refuse to cooperate in undercover operations and take their chances with prosecution.

In all situations, they have the choice as to whether or not they will break the law and defraud investors in the first place.

Those who have suffered securities fraud losses can speak with experienced attorneys about their legal options, including recovery of their investments.

On behalf of MihalekLaw posted in Securities Law on Friday, July 29, 2016.

If you believe you may have a claim against your stockbroker or financial adviser, contact us online or call us at 859-233-1805 to speak with a Securities Attorney. MihalekLaw provides representation throughout the country.