Man pleads guilty to using hack, pump-and-dump botnet

James Bragg of Chandler, Arizona, faces five years in prison and a US$250,000 fine

A Chandler, Arizona, man has pleaded guilty to charges related to his role in a pump-and-dump scam that inflated penny stock prices via spam and hacked computers.

James Bragg, 41, faces five years in prison and a US$250,000 fine for orchestrating the hacking and spamming portions of the scheme, which ran between November 2007 and February 2009, according to prosecutors. He pleaded guilty Wednesday in U.S. District Court for the District of New Jersey.

Bragg used a Russian botnet operator, named only as B.T. in court documents, to send the spam and to access hacked brokerage accounts and buy the penny stocks without the victim's knowledge.

The case sheds some light into the murky world of penny stock manipulation, where companies hire shady promoters to boost their stock prices. The promoters appear to be legitimate marketing and public relations firms, but some of them use illegal practices such as spamming to achieve results.

Bragg, for example, was hired by a Texas-based middleman, identified only as C.R., who "acted as a middleman between stock promoters seeking to pump shares of stock, and e-mail spammers," according to court filings.

Prosecutors say that Bragg promoted penny stocks such as RSUV (Remote Surveillance Technologies) and VSHE ( VShield Software). Both companies are now apparently defunct.

It's not clear how much spam was sent or how much was made from the scam, but in a Dec. 20, 2007, Skype instant message exchange with C.R., Bragg described the mail as "runnin [sic] hard hitting inbox on gmail, hot[mail], yahoo, fusemail."

In one case, profits from a month-long pump-and-dump were more than $150,000, but losses to victims of the scam -- who were left holding worthless stock that they'd purchased at inflated prices -- were almost certainly much higher.

This isn't the first time Bragg has faced spam-related charges. He was sentenced to 12 months in prison several months ago in a separate case, filed in U.S. District Court for the Eastern District of Michigan.

Pump-and-dump spam has been around for years, but this is the second time this year that someone has pleaded guilty charges relating to hacked brokerage accounts. In April Jaisankar Marimuthu, of Chennai, India, was sentenced to more than six years in prison by a U.S. judge for his role in a similar hack, pump-and-dump scheme.

Robert McMillan covers computer security and general technology breaking news for The IDG News Service. Follow Robert on Twitter at @bobmcmillan. Robert's e-mail address is robert_mcmillan@idg.com

Join the newsletter!

Or
Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags securitycybercrimelegalfinancescamsindustry verticalsU.S. Department of JusticeJames Bragg

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Robert McMillan

IDG News Service
Show Comments

Essentials

Mobile

Victorinox Werks Professional Executive 17 Laptop Case

Learn more >

Exec

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?