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Married couple charged with $1 million stock spam scam

August 21st, 2006

SophosLabs has warned users to be wary of emails offering unsolicited financial advice as a married couple are charged by federal regulators with making $1 million through a stock market pump-and-dump scam.

42-year-old Jeffrey Stone and his wife Janette Diller Stone of Greenwich, Connecticut have had civil fraud charges filed against them by the Securities and Exchange Commission (SEC). The two are accused of buying 288 million shares of WebSky Inc in September 2004, and weeks later making $1 million after artificially inflating the stock price through a fraudulent spam campaign.

According to the SEC, spam emails sent by the Stones stated that WebSky would have an annual revenue of more than $40 million because of a successful venture in Argentina. In reality WebSky was a start-up company with no revenues. The emails caused the firm´s stock price to rise more than 300%, according to the SEC, with 234 million shares being traded. WebSky had forbidden the Stones from sending the emails, and told them that the Argentinian deal was not viable.

Charges were also brought against Douglas Haffner, CEO of WebSky, for selling stock to the Stones in a subsequent deal without registering the sale or obtaining an exemption from registration, according to the SEC. Without admitting or denying the action, Haffner and WebSky settled by agreeing to surrender the $35,000 gained from the sale and to a permanent injunction against violations of the registration provisions of federal securities laws, the SEC reported.

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