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It’s an old lesson in government investigations, but one worth repeating. Conduct during an investigation can matter as much as the conduct under investigation – sometimes even more.
High-profile prosecutions of the past have shown the severe consequences of mistakes in responding to government investigations. Martha Stewart went to prison not for insider trading but for how she responded to an insider trading investigation. Barry Bonds was convicted not for steroid use, but for how he responded to a steroids investigation.
Just as flawed responses can increase risk in government investigations, so too can legally sound responses reduce risk, as a recent securities and tax fraud case showed. Thanks to a prudent response to a government investigation, an accountant avoided prison altogether for his role in an illegal $17 million stock manipulation scheme that allegedly pocketed him hundreds of thousands of dollars.
Litigation Release No. 24999 / December 30, 2020
, curities and Exchange Commission v. Joseph Taub, et al., 16 Civ. 09130 (D.N.J.) (filed December 12, 2016)
On December 28, 2020, the United States District Court for the District of New Jersey entered a final consent judgment against Joseph Taub, whom the SEC charged with orchestrating a market manipulation scheme.
The SEC s complaint, filed on December 12, 2016 and amended on April 26, 2018, alleged that Taub engaged in a fraudulent market manipulation scheme, utilizing dozens of securities accounts at several brokerage firms to create the false appearance of trading interest and activity in particular exchange-traded securities, thereby enabling him to purchase stocks at artificially low prices and then quickly sell them at artificially high prices for substantial profits. The complaint further alleged that Taub took steps to conceal the trading scheme and supervised the manipulative trading of a co-defendant. In a parallel cri
Newark, NJ - A New Jersey-based securities trader was sentenced today to 18 months in prison for orchestrating a massive, long-running market manipulation scheme and tax fraud that netted more than $17 million in illegal profits between 2014 and 2016.
Joseph Taub, of Clifton, New Jersey, previously pleaded guilty before U.S. District Judge John Michael Vazquez in Newark federal court to counts four and five of a superseding indictment charging him with securities fraud and conspiracy to defraud the United States. Judge Vazquez imposed the sentence by videoconference today.
According to documents filed in this case and statements made in court:
From 2014 to 2016, Taub and others conspired to manipulate the securities prices of numerous public companies by coordinating trading in dozens of brokerage accounts he secretly controlled. Taub used straw accounts that were held in the names of others to conduct much of his trading. Taub funded many of these straw accounts and used the st
Taub dodged nearly $400,000 in taxes and falsely influenced the market through trading dozens of straw accounts he secretly owned to manipulate the securities prices of multiple public companies. The scheme was in operation from 2014 to 2016.
Despite being held under different names, Taub funded these accounts himself in an effort to keep his scheme a secret from law enforcement and regulators.
By trading with these accounts, Taub artificially influenced the market price of affected securities, causing others to trade them, thinking they had actual value, using Run Based Manipulation and Order Based Manipulation.
In this scheme, the manipulator profits directly from the manipulated market because of the exploited investor s false signal about the security s demand or supply.
NJ Man Gets 18 Months in Prison for $17 Million Stock Scheme The scheme worked by using multiple trades to artificially depress then inflate the stock prices of smaller companies whose stocks were thinly traded and could easily be manipulated, then selling the stocks for a profit at the higher price
Published December 22, 2020 •
Updated on December 23, 2020 at 6:16 am
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A New Jersey-based securities trader who admitted to orchestrating a stock market manipulation scheme and tax fraud that netted more than $17 million in illegal profits was sentenced to 18 months in prison Tuesday.
Joseph Taub had pleaded guilty in July to securities fraud and conspiracy to defraud the United States. The 41-year-old Clifton resident had faced up to 25 years in prison on the two counts.