This past Tuesday, federal officials announced that four men had been arrested based on an investigation in to a pump and dump penny stock scheme as well as Bitcoin operation. After the announcement of the arrests, with the individuals being from Florida and Israel, the iGambling community has been able to connect two of the arrested men as the owners of as many as 13 online casinos. Included in the long list of casinos are Casino Titan and Loco Panda.
The New York Times described the fake investment scheme as one that spanned across three continents and included operations in Florida and New York, along with Russia, Cyprus and Israel. Israeli authorities arrested Ziv Orenstein and Gerry Shalon, the two men connected to the online gaming websites. The FBI would like to extradite the two men to face charges in the US despite the fact the two are citizens of Israel. A fifth man is still wanted by police, Joshu S. Muel Aaron, as he is believed to be involved in the scheme as well.
The individuals arrested now face charges that include:
- Securities Fraud
- Wire Fraud
- Aggravated Identity Theft
- Conspiracy to Commit Securities Fraud
- Conspiracy to Commit Wire Fraud
- Conspiracy to Commit Identification Document Fraud
- Conspiracy to Commit Money Laundering
Two additional arrests that are in relation to the case include Yuri Lebedev and Anthony Murgio. These men were arrested in Florida and seem to be involved in a case that began last summer. JPMorgan Chase was victim of a cyber-attack when their central database was hacked and private information of 76 million people was accessed. It was believed in the beginning that the Russian Government was the sponsor behind the hack due to the Ukrainian crisis and sanctions put in place against Russia at the time.
Now, officials believe the attack was a move to continue the penny stocks scheme. The information released by the FBI does not include information about the JPMorgan attack but does state that the charges against the two Florida men were used as leverage to gain information on that particular case.
According to the press release by the FBI, Shalon, Aaron and Orenstein, along with others, have worked together since 2011. The group created a stock manipulation scheme, otherwise known as a pump-and-dump, to manipulate the amount and trading volume of publicly traded microcap stocks. This was done to be able to sell holdings in the stocks while the prices were artificially inflated. The group was able to earn millions of dollars in the process.
Due to the arrests in the case, affiliates associated with The Revenue Jet Group and The Affactive Group have become concerned. Within a two day time frame, it has been reported that the affiliate representatives for the thirteen online casinos connected to the two men have been advised to freeze accounts and payments. Much money will most likely be lost by the affiliate groups with the shutdown of the online casinos involved in the investigation.