Seattle lawyer faces 'pump-and-dump' fraud charges

14 July 2009

A Seattle-based securities lawyer has been charged with carrying out a fraud scheme worth $1 million.

David Otto, along with several others, has been accused of running a 'pump-and-dump' scam, whereby a promotional campaign for nutritional supplement producer MitoPharm was ran suggesting that the company produced products with anti-aging capabilities.

The Securities and Exchange Commission alleges that the share price of the company rose to above $2.30 following the promotion, despite the fact that the products were not actually available from MitoPharm.

Mr Otto was said to have sold his shares in the company for more than $1 million, while stock promoter Charles Bingham secured $300,000.

The SEC's Marc Fagel stated that Mr Otto used "phony documents to corner the market in a start-up company's stock", enabling him to profit at the expense of "unsuspecting" investors.

After the pair sold their shares, the company's stock is alleged to have fallen substantially.

The SEC has also charged six former executives of Sky Capita, accusing them of organizing a boiler room fraud worth $140 million.

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development