The Securities and Exchange Commission has charged a man from Hawaii for allegedly running a scheme to inflate the price of unsecured corporate loans by spreading false press releases promising high returns for early repayments. He also falsely claimed the loans would be converted to a cryptocurrency, according to the agency.
On a particular day, the SEC’s New York office filed charges against Jeremy Koski. He is accused of publishing fabricated press releases and redemption notices regarding shares he owned in a JCPenney trust fund. The SEC alleges Koski deliberately deceived investors to pump up the share prices so he could dump them in a pump-and-dump scam.
The shares were part of the J.C. Penney Debentures Corporate-Backed Trust Securities Certificates issued by Structured Products Corp. (COTRP).
Per the SEC statement, Koski admitted to inventing the bogus notices and releases, knowing their content was false, in an attempt to generate artificial interest and increase the prices of COTRP shares.
The SEC states that Koski started his pump-and-dump plan to avoid huge losses on his investment. In September 2020, the agency says Koski bought over 287,000 corporate debentures, a debt security with yields based on the issuer’s earnings, for about $302,000 at around $1.05 per share.
Leading up to his fraud, JCPenney was emerging from Chapter 11 bankruptcy, which made the share price drop to just $0.07, representing a potential loss of over $281,000 for Koski’s position.
One month later, Koski began his plan by posting fabricated redemption notices on message boards using different aliases, increasing share prices. He then sold some of his own shares.
In summary, the SEC claims Koski orchestrated a pump-and-dump scam to try to recover losses after JCPenney’s bankruptcy severely dropped the debenture shares he had bought for over $300k.
According to the SEC, the shares traded between roughly $0.01-$0.27 with around 3,200 shares changing hands daily in the month before Koski published the fake notices. On the first day after posting them, the price jumped 600% to $1.11 and the daily trading volume increased to 270,000 shares. During this pump, Koski made $815 by selling 800 of his shares.
Starting in September 2021, Koski circulated the first bogus press release claiming the trust shares were being converted into a cryptocurrency, falsely stating this was being done in collaboration with Jim Simons of the legitimate hedge fund Renaissance Technologies.
In reality, neither Simons nor Renaissance were involved at all, but Koski paid Newswire service Issuewire to distribute his fake statement.
The SEC filed charges against Koski for harming investors who bought shares at inflated prices due to his scam. Koski now faces a preliminary court hearing in Hawaii on November 6th, per the U.S. District Court in Hawaii’s website.
#PumpandDumpScheme #JCPenney #Cryptocurrency
