A corporate insider was found guilty in Central Islip federal court of conspiring with others at a Long Island boiler room to “pump and dump” stocks on elderly investors.
Michael Watts, a former registered broker, was found guilty at a trial of promoting and manipulating the prices of shares in Hydrocarb Energy Corp. and other companies.
Watts, 63, who now lives in Texas, was convicted of conspiracy to commit securities fraud, securities fraud, conspiracy to commit wire fraud, money laundering conspiracy and money laundering. The verdict followed a three-week trial before United States District Judge Joanna Seybert.
When he is sentenced, Watts faces more than 20 years in prison.
U.S. Attorney Richard Donoghue said that it was proven at trial that between 2014 and 2016, Watts and his co-conspirators at a Melville-based boiler room artificially inflated the price and trading volume of Hydrocarb stock.
They did so through an illegal cold-calling campaign that used lies and high-pressure sales tactics to lure victim investors, including many elderly victims, into purchasing stock.
Donoghue said that Watts, who was one of the largest shareholders in Hydrocarb and knew that the business was failing, also used the boiler room to dump more than $2 million worth of Hydrocarb shares that he owned or controlled on unsuspecting investors in the months leading to the company’s April 2016 bankruptcy.
It is alleged that the conspiracy’s market manipulation fraudulently inflated the stock price of Hydrocarb and four other companies by more than $147 million. Watts is the 13th co-conspirator to be convicted in the case, with others scheduled to be tried early next year.
“With today’s verdict, the jury has delivered a measure of closure to the victims, many of them elderly and vulnerable, who were preyed upon by Watts and his co-conspirators,” Donoghue said. “The defendant will face another reckoning when he is sentenced for his crimes.”
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