LOS ANGELES – Two Beverly Hills men are among eight defendants charged with conspiracy to commit securities fraud for their alleged roles in a long-running, social media-based “pump and dump” scheme, according to court papers obtained Thursday.
Gary Deel, 28, and Tom Cooperman, 34, were charged in an indictment returned Wednesday in the Southern District of Texas.
According to federal prosecutors, the defendants allegedly used their extensive social media presence on Twitter and Discord to hype interest in particular securities by posting false and misleading information in order to “pump” the prices of those securities, while concealing their intent to later “dump” their shares by selling them at the artificially inflated prices.
From January 2020 to April 2022, the defendants allegedly made at least $114 million from the scheme, federal prosecutors said.
“Securities fraud victimizes innocent investors and undermines the integrity of our public markets,” Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division said in a statement. “As these charges demonstrate, the department will continue to prosecute those who defraud investors by spreading false and misleading information, including over social media, to line their own pockets.”
Prosecutors allege the defendants collectively had over 1.5 million followers on Twitter to whom they allegedly disseminated false and misleading information about the securities that they pumped and dumped as part of the scheme.
In addition to their Twitter presence, the defendants also allegedly ran an online community for individual stock traders called Atlas Trading, which they promoted as one of the largest, free online communities in the world for individual stock traders and which had a chat room called Atlas Trading Discord.
The defendants used the chat room to disseminate false and misleading information about securities, federal prosecutors contend.
The indictment also alleges that the defendants used their social media credibility to maximize their own profits at the expense of their followers, holding themselves out as skilled stock traders by posting pictures showcasing their profits and extravagant lifestyles and encouraging people to follow them on social media in order to share in their financial gains.
Each defendant is charged with one count of conspiracy to commit securities fraud. Additionally, Deel is charged with five counts of securities fraud, and Cooperman is charged with two counts of securities fraud, prosecutors noted.
The eight defendants — six of whom are not from California — made their initial court appearances Tuesday in federal court in Texas. If convicted, they face up to 25 years in prison, prosecutors noted.
