Financial Fraud: Darren Goodrich Pleads Guilty In A $20 Million Market Manipulation Scheme

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Market Manipulation Scheme

<h2 id&equals;"california-registered-broker-pleads-guilty-to-participating-in-a-20-million-market-manipulation-scheme" class&equals;"rb-heading-index-0-28518">California Registered Broker Pleads Guilty To Participating In A &dollar;20 Million Market Manipulation Scheme<&sol;h2>&NewLine;<h3 id&equals;"defendant-helped-manipulate-the-stock-price-of-a-company-that-purported-to-offer-users-access-to-a-cloudbased-mobile-platform" class&equals;"rb-heading-index-1-28518">Defendant Helped Manipulate the Stock Price of a Company That Purported to Offer Users Access to a Cloud-Based Mobile Platform<&sol;h3>&NewLine;<p>Earlier today&comma; Darren Goodrich&comma; a registered broker at a brokerage firm in El Segundo&comma; California&comma; pleaded guilty to conspiracy to commit <strong>securities fraud for manipulating the stock<&sol;strong> of Cubed&comma; Inc&period; &lpar;Cubed&rpar;&comma; which traded under the ticker symbol CRPT&period;  The guilty plea was entered before United States Magistrate Judge Vera M&period; Scanlon at the federal courthouse in Brooklyn&comma; New York&period;  When sentenced&comma; Goodrich faces up to five years in prison&comma; as well as restitution&comma;<em> criminal forfeiture<&sol;em>&comma; and a fine&period;<&sol;p>&NewLine;<p>The guilty plea was announced by Robert L&period; Capers&comma; United States Attorney for the Eastern District of New York&comma; and Diego Rodriguez&comma; Assistant Director-in-Charge&comma; Federal Bureau of Investigation&comma; New York Field Office&period;<&sol;p>&NewLine;<p>According to court filings and facts presented at the plea hearing&comma; between March 2014 and July 2014&comma; Goodrich and his co-conspirators engaged in a <strong>scheme to defraud investors<&sol;strong> and potential investors in Cubed by artificially controlling the price and volume of traded shares in the company through fraudulent concealment of the defendants’ and their co-conspirators’ ownership interests and engineering price movements and trading volume in the stock&period;  In March 2014&comma; Goodrich’s co-conspirators took Cubed public through an asset purchase agreement&period;  On April 22&comma; 2014&comma; Cubed’s stock began trading in earnest&period;  Between April 22&comma; 2014 and April 30&comma; 2014&comma; Goodrich and his co-conspirators concocted trading volume in this stock by purchasing more than 50&percnt; of the total number of Cubed shares purchased during this period&period;<&sol;p>&NewLine;<p>Between May 2&comma; 2014 and June 29&comma; 2014&comma; law enforcement authorities conducted a judicially-authorized wiretap of one of Goodrich’s co-conspirator’s cellular telephone&period;  The wiretap revealed that Goodrich and his co-conspirators fraudulently manipulated Cubed’s stock by artificially controlling the price and volume of that stock through orchestrated trading&period;  Rather than generating significant market interest and causing a quick pump and dump that would elicit regulators’ scrutiny&comma; the conspirators gradually increased the price of Cubed’s stock to give it the appearance of a legitimate company with genuine and steady market demand for the security&period;  For example&comma; on May 5&comma; 2014&comma; while Cubed was in a period of gradual increase from &dollar;5&period;20 on April 22&comma; 2014 to &dollar;5&period;42 on May 22&comma; 2014&comma; a co-conspirator called Goodrich&comma; and stated&comma; &OpenCurlyDoubleQuote;Can you buy a 100 and see if &lbrack;the other market maker&rsqb; moves&quest;”  Goodrich complied and then responded&comma; &OpenCurlyDoubleQuote;Yeah&comma; they’re going&period;”<&sol;p>&NewLine;<p>Goodrich and his co-conspirators used an attorney escrow account to successfully control the price and volume of Cubed’s stock&period;  On June 23&comma; 2014&comma; Cubed reached its highest closing price of &dollar;6&period;75 per share&comma; resulting in a market capitalization of approximately &dollar;200 million&period;  Previously&comma; Cubed filed with the SEC a Form 10-Q and reported less than &dollar;1&comma;500 in cash&comma; zero revenue&comma; negative stockholders’ equity&comma; a net loss of &dollar;15&comma;000&comma; and accrued professional fees of &dollar;131&comma;824&period;<&sol;p>&NewLine;<p>&lbrack;separator type&equals;&&num;8221&semi;thin&&num;8221&semi;&rsqb;<&sol;p>&NewLine;<p>The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section&period;  Assistant United States Attorneys Shannon C&period; Jones&comma; Christopher L&period; Nasson&comma; and Patrick Hein are in charge of the prosecution&comma; with assistance provided by Assistant United States Attorney Claire S&period; Kedeshian of the Office’s Civil Division&comma; which is responsible for the forfeiture of assets&period;<&sol;p>&NewLine;<p>The charges were brought in connection with the President’s <a class&equals;"wpil&lowbar;keyword&lowbar;link" href&equals;"https&colon;&sol;&sol;www&period;fraudswatch&period;com&sol;tag&sol;financial-fraud&sol;" title&equals;"Financial" data-wpil-keyword-link&equals;"linked" data-wpil-monitor-id&equals;"563">Financial<&sol;a> Fraud Enforcement Task Force&period;  The task force was established to wage an aggressive&comma; coordinated&comma; and proactive effort to investigate and prosecute financial crimes&period;  With more than 20 federal agencies&comma; 94 U&period;S&period; Attorneys’ offices&comma; and state and local partners&comma; it is the broadest coalition of law enforcement&comma; investigatory&comma; and regulatory agencies ever assembled to combat fraud&period;  Since its formation&comma; the task force has made great strides in facilitating increased investigation and prosecution of financial crimes&semi; enhancing coordination and cooperation among federal&comma; state&comma; and local authorities&semi; addressing discrimination in the lending and financial markets&semi; and conducting outreach to the public&comma; victims&comma; financial institutions&comma; and other organizations&period;  Since fiscal year 2009&comma; the Justice Department has filed over 18&comma;000 financial fraud cases against more than 25&comma;000 defendants&period;  For more information on the task force&comma; please visit <a href&equals;"https&colon;&sol;&sol;www&period;stopfraud&period;gov&sol;iso&sol;opa&sol;topic&sol;california-registered-broker-pleads-guilty-participating-20-million-market-manipulation&period;html">ww&period;StopFraud&period;gov<&sol;a>&period;<&sol;p>&NewLine;<p><strong><u>The Defendant<&sol;u><&sol;strong><strong>&colon;<&sol;strong><&sol;p>&NewLine;<p>DARREN GOODRICH<br &sol;>&NewLine;Age&colon;  37<br &sol;>&NewLine;Residence&colon; Manhattan Beach&comma; California<&sol;p>&NewLine;<p>E&period;D&period;N&period;Y&period; Docket No&period; 14-CR-399 &lpar;S-1&rpar; &lpar;ENV&rpar;<&sol;p>&NewLine;<p><a href&equals;"https&colon;&sol;&sol;www&period;justice&period;gov&sol;usao-edny&sol;pr&sol;california-registered-broker-pleads-guilty-participating-20-million-market-manipulation">Original Press Releases &&num;8230&semi;<&sol;a><&sol;p>&NewLine;

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