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US Authorities Charge 7 in Multi-Million-Dollar Stock Market Fraud Scheme

© Flickr / Scott BealeTrading Floor at the New York Stock Exchange.
Trading Floor at the New York Stock Exchange. - Sputnik International
US Attorney Preet Bharara said that seven individuals were charged with orchestrating multiple schemes to defraud investors of tens of millions of dollars.

NEW YORK (Sputnik) — A father and his three sons are among seven individuals charged with orchestrating multiple schemes to defraud investors of tens of millions of dollars, US Attorney Preet Bharara said in a statement on Thursday.

"As alleged, Jason Galanis and his co-conspirators used their Wall Street credentials and the veneer of a legitimate-sounding financial firm to manipulate the market and fleece investors," Bharara stated. "Their alleged market manipulation brought them nearly $20 million in profits, but now also a federal indictment."

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Prosecutors allege that from 2009 to 2011, Jason Galanis, his brothers Derek and Jared, their father John and four co-conspirators defrauded shareholders of the publicly traded Gerova Financial Group, Ltd.

The seven obtained secret control over millions of shares, prosecutors explained, and manipulated the market before secretly selling their shares. As part of the scheme, the defendants fraudulently generated demand for Gerova stock by bringing investment advisors to purchase stock for client accounts that was sold by the defendants.

"Galanis and his co-conspirators exemplified arrogance and contempt for financial regulations when they allegedly devised a scheme to defraud investors to fund a lavish lifestyle," US Postal Inspection Service Inspector-in-Charge Phil Bartlett said in a statement.

On Thursday, Jason and Jared Galanis were arrested and are expected to appear before a US judge the same day. The remaining co-conspirators remain at large, but are expected to surrender, prosecutors said.

The fraud charges against the seven co-conspirators carry a maximum sentence of 20 years in prison.

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