SEC target Matthew Brown must pay "financial death_sentence"

2011-07-27 14:47 ET - Street Wire


Matthew Brown, jailed operator of the Investors Hub website, has lost his bid to overturn a $4.78-million criminal penalty for a market manipulation scheme he aided. (All figures are in U.S. dollars.) Delaware Judge Sue Robinson, in an order handed down on Thursday, July 21, dismissed a motion by Mr. Brown to reduce his fine to the amount he actually made, which he calculated at $117,000.

The decision comes as Mr. Brown, 29, is serving a four-year jail sentence for the scheme. Prosecutors claimed that he and others manipulated stocks with prearranged trades and posts on Investors Hub. One of the companies included in the investigation was an Ontario-based pink sheets listing, Playstar Corp. Mr. Brown pleaded guilty to the charges in February, 2010, and the judge sentenced him to four years in jail and entered a $4.78-million forfeiture order.

Before he went to jail, Mr. Brown filed a motion in which he complained that the amount of his fine was excessive. As he understood it, by entering a guilty plea he was only agreeing to forfeit his personal gains from the scheme. He did not know that he would receive a "financial death sentence," he claimed.

He also argued that the government held him liable for profits made by people who were not even charged with anything. "Instead of pursuing these individuals, [prosecutors] have sought to make Brown pay for everybody's gains, despite him having gained among the least amount of money," the motion read.

The government, for its part, argued that the fine accurately represented Mr. Brown's plea agreement. In a response to Mr. Brown's motion filed on June 8, 2011, prosecutors said that Mr. Brown agreed to forfeit all proceeds from the scheme, not just the portion that he received. Moreover, he received notice of the forfeiture six days before his sentencing. The time to raise the dispute was then, and not days later.

In addition, prosecutors cited the substantial harm that Mr. Brown and others inflicted on investors. In one instance, they caused a stock to rise by more than 150 per cent in hours, and sold shares worth $747,609. The government also pointed out that the judge could have ordered Mr. Brown to forfeit as much as $9.4-million, or twice the total proceeds of the scheme.

Judge Robinson, in deciding for the prosecution, simply said that she did not have jurisdiction to alter her earlier forfeiture order. Presumably, this means that Mr. Brown's only option is to appeal the order to a higher court.

Brown's indictment

Federal prosecutors indicted Mr. Brown on May 21, 2009, in the District of Delaware. They claimed that he and others dumped hundreds of millions of shares in manipulated pink sheets companies in 2006 and 2007. While the overall investigation included four stocks, the specific charges against Mr. Brown were limited to two companies.

The first was an anti-aging promotion called GH3 International Inc. In 2006, he and others received millions of GH3 shares through improper Rule 504 offerings, prosecutors claimed. In December of that year, they carried out a series of prearranged trades that coincided with misleading news. Among other things, the company claimed that its revenue would exceed $6-million in 2007.

The stock, which was a thin trader to that point, went from 0.06 cent to 1.8 cents, before quickly falling to 0.01 cent. Its daily volume spiked to nearly 300 million shares. (The U.S. Securities and Exchange Commission eventually halted the company on Dec. 24, 2009, saying its publicly available information was questionable.)

The other manipulation that Mr. Brown pleaded guilty to was that of Asia Global Holdings Inc., a company that purportedly had the rights to the show "Who Wants to be a Millionaire" in China. As with the GH3 manipulation, Mr. Brown and the others improperly issued millions of shares and co-ordinated manipulative trades to coincide with misleading news. The stock had a 41-cent high in 2006 (and was last at 0.38 cent).

According to the indictment, Mr. Brown and the others planned the promotions using the America Online messaging service. Their communications, which prosecutors quoted in the indictment, included information on the timing of the news releases and on how the men were touting the companies on-line. One message, dated Nov. 1, 2006, stated, "u have all the prs [press releases] right, except the first one, which im going to work on tomorrow for sure, we need a plan on line up of events and i need to see the *** prs to see which rumor to spread and how to start the *** thing ... ."

The indictment also described an unusual interstate money transfer, in which Mr. Brown paid a driver $10,000 to take $146,000 in cash from California to Delaware. (Documents in a related asset forfeiture case stated that the driver, who knew Mr. Brown from high school, was to deliver the cash to a Polish citizen named Pawel Dynkowski. The delivery went awry when a Texas police officer stopped the car and discovered the cash. Police had the driver deliver the money to Mr. Dynkowski's home in Delaware. They then searched the home and discovered evidence of the market manipulations.)

Prosecutors separately indicted Mr. Dynkowski for the manipulations on April 30, 2009. Authorities have yet to arrest him and he is listed as a fugitive. Another man charged in the case was Florida resident Gerard D'Amaro, who received three years in jail and was ordered to forfeit $1.49-million. Two others, Marc Riviello and Jacob Canceli, both from California, have also pleaded guilty but have not yet been sentenced.

SEC case

In addition to the criminal charges, Mr. Brown and the others are facing a parallel civil suit from the SEC. The regulator claims that they made $6.2-million manipulating Playstar, GH3 International, Asia Global and Xtreme Motorsports of California Inc. That case is on hold pending completion of the criminal cases.

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Ludington, Michigan, United States #1202475

Why is Investorhub still running?

Kanata, Ontario, Canada #1183774

Have a friend who's 'connected' to someone investigating them folks - don't worry their problems are just beginning.There are some powerful forces about to come at those on that board gaming the board and trading off it.

100% guaranteed - clearly I can't share the info/source but its a fact, there will be some people working their likely going to prison (assuming of course they are doing what we believe they are doing - but even a donkey can see what their game is over at ihub).

Short penny stock, spread misinfo, bash, ban those providing factual information that refutes their positions. What they don't realize is yes freedom of speech exists but you cannot spread misinformation about publicly listed companies in order to profit from it.

I think they assume since the stocks they play with are penny plays the SEC won't care, kind of a adolescent hubris (ie 'what are they going to do to me') - you can see this in their admin attitudes.

I have confirmation that the SEC is moving forward.


I was just banned from IHUB for calling out the moderators via PM for their gaming and quoting this case

The SEC is aware of what is going on. A specific company and investors have brought this issue to their attention.

I look forward to seeing some of those monkeys go to prison, it will be fun to watch!




Matt Brown should have gotten MORE time in prison - like 10 more years. He owes $4.8 million but that is a tiny fraction of the billions that are lost because iHub is a scandal sheet promoting scams and aiding and abetting penny stock promoters and compensated scammers. The iHub staff actively works with pennystock pump-and-dumpers and you bet they get paid under the table for those services.

to Pennyscammer #1171341

He took alot of pumping in the behind from bubba in prison I am told...

He's now swinging the other way lol...rape has to be tacked on, that is some sort of benefit to those he scammed

Aparrently, his old company is at it again, I wonder if Dave/Shelly/Dan like it up the *** chute, I am sure they're going to find out within a year or so!

Quantico Station, Virginia, United States #592433

MoMoRapter,$$MAKING$IT$$ , and PETELONG are a few of the other Crooks that use Ihub to conduct their crimes daily.

Santa Maria, California, United States #591664

they should investigate hdogtx on ihub,he pumps/lures investors and dumps on them and on his website he points out he was compensated by that company for doing the promo AFTER he sells out,needs to be investigated asap...even was pumping a huge merger long after one fell apart...that ceo even had to give a press release to tell there was no merger


I got banned for posting this url on a post for MSLP.They are trying to kill this stock.

Buy and you will be rewarded....this is a NEAR future big board stock being help by MM manipulation, Ihub, and short.

This is going to explode...do some DD and you can all get back what you lost!!

Good Luck to ALL.MSLP


I'm amused by all the angry comments here.I bet you anything at least half of you were ihubbers that got screwed because you traded on info you got from a MESSAGE BOARD SITE!

LOL I "love" this country. People get swindled, and then want to blame the person that duped them... when you should just blame your own stupidity! If those ihub rats should be jailed, then you should too, for being dumb enough to get screwed by them!

No one told you to go to some half-baked pump&bash forum and lend credence to what you read!Stop trying to make others the scapegoats for your own shortcomings, assume culpability for your own free will and move on with your damaged life.

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