Man pleads guilty to using hack, pump-and-dump botnet

James Bragg of Chandler, Arizona, faces five years in prison and a US$250,000 fine

A Chandler, Arizona, man has pleaded guilty to charges related to his role in a pump-and-dump scam that inflated penny stock prices via spam and hacked computers.

James Bragg, 41, faces five years in prison and a US$250,000 fine for orchestrating the hacking and spamming portions of the scheme, which ran between November 2007 and February 2009, according to prosecutors. He pleaded guilty Wednesday in U.S. District Court for the District of New Jersey.

Bragg used a Russian botnet operator, named only as B.T. in court documents, to send the spam and to access hacked brokerage accounts and buy the penny stocks without the victim's knowledge.

The case sheds some light into the murky world of penny stock manipulation, where companies hire shady promoters to boost their stock prices. The promoters appear to be legitimate marketing and public relations firms, but some of them use illegal practices such as spamming to achieve results.

Bragg, for example, was hired by a Texas-based middleman, identified only as C.R., who "acted as a middleman between stock promoters seeking to pump shares of stock, and e-mail spammers," according to court filings.

Prosecutors say that Bragg promoted penny stocks such as RSUV (Remote Surveillance Technologies) and VSHE ( VShield Software). Both companies are now apparently defunct.

It's not clear how much spam was sent or how much was made from the scam, but in a Dec. 20, 2007, Skype instant message exchange with C.R., Bragg described the mail as "runnin [sic] hard hitting inbox on gmail, hot[mail], yahoo, fusemail."

In one case, profits from a month-long pump-and-dump were more than $150,000, but losses to victims of the scam -- who were left holding worthless stock that they'd purchased at inflated prices -- were almost certainly much higher.

This isn't the first time Bragg has faced spam-related charges. He was sentenced to 12 months in prison several months ago in a separate case, filed in U.S. District Court for the Eastern District of Michigan.

Pump-and-dump spam has been around for years, but this is the second time this year that someone has pleaded guilty charges relating to hacked brokerage accounts. In April Jaisankar Marimuthu, of Chennai, India, was sentenced to more than six years in prison by a U.S. judge for his role in a similar hack, pump-and-dump scheme.

Robert McMillan covers computer security and general technology breaking news for The IDG News Service. Follow Robert on Twitter at @bobmcmillan. Robert's e-mail address is robert_mcmillan@idg.com

Join the PC World newsletter!

Error: Please check your email address.

Tags James BraggU.S. Department of Justicesecuritylegalscamsfinanceindustry verticalscybercrime

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Robert McMillan

IDG News Service
Show Comments

Essentials

Lexar® JumpDrive® S57 USB 3.0 flash drive

Learn more >

Microsoft L5V-00027 Sculpt Ergonomic Keyboard Desktop

Learn more >

Mobile

Lexar® JumpDrive® S45 USB 3.0 flash drive 

Learn more >

Exec

HD Pan/Tilt Wi-Fi Camera with Night Vision NC450

Learn more >

Audio-Technica ATH-ANC70 Noise Cancelling Headphones

Learn more >

Lexar® Professional 1800x microSDHC™/microSDXC™ UHS-II cards 

Learn more >

Lexar® JumpDrive® C20c USB Type-C flash drive 

Learn more >

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?