Suspended Attorney Christopher Davies Busted In $3 Billion Pump-And-Dump Scam
The indictments allege securities fraud and conspiracy to commit securities fraud. The government also indicted Davies for wire fraud and aggravated identity theft in connection with the scheme.
A federal grand jury in Brooklyn returned the indictment on August 30, 2018.
The disgraced lawyer pleaded “not guilty” Friday to the indictment.
United States Attorney Donoghue stated in a press release:
Davies used both sophisticated means and some of the oldest tricks in the book, including backdating documents and forging signatures, to deceive the investing public and manipulate the price and ownership of a public company’s stock.
The Pump-And-Dump Scam
In 2012, Davies took secret control over ATHI and its predecessor companies. As a result, Davies accumulated a large number of shares in the company. The government alleges he did this by fraudulently converting corporate debt into stock at no cost.
Davies forged the signatures of board members and backdated documents to obtain large amounts of ATHI stock. Davies artificially increased the price of ATHI’s stock through false and misleading press releases. He also claimed that ATHI had developed proprietary gaming and live-streaming app technology.
As a result, this caused ATHI’s stock that had historically traded for pennies to rise to $12 per share. This resulted in a market capitalization of over $3 billion. Davies’ coconspirators then dumped ATHI stock at a profit.
Davies faces a maximum sentence of 20 years’ imprisonment if convicted.
Is The Pump-And-Dump Operator A Drug Addict?
Davies was suspended infinitely by the courts in Illinois in 2015.
He was arrested in Florida for felony possession of a controlled substance.
Police recovered approximately 12.8 grams of Methylone from Mr. Davies’ vehicle. He later admitted purchasing $800 of what he believed to be ecstasy.
The Florida judge dismissed the case. The court ruled police lacked probable cause to search the vehicle. As a result, Davies was off the hook. However, he failed to cooperate with the ARDC investigation. He also failed to appear at his own disciplinary hearing.