Video Tech Co. Founder Charged In Pump-And-Dump Scheme
Reenat Sinay, 15 January 2021
The founder of a Silicon Valley video streaming service and an investment manager have been indicted for allegedly orchestrating a pump-and-dump stock fraud scheme, Illinois federal prosecutors announced Friday.
David Foley and investment manager Bennie Blankenship allegedly conspired to manipulate the share prices of NanoTech Gaming Inc., a former unit of Nanotech Entertainment Inc., according to the 10-count Jan. 11 indictment.
Between 2013 and 2016, Foley acquired shares in NanoTech Gaming and issued them to a South Dakota corporation called Galaxy Entertainment Group Inc., purportedly run by a close relative of Foley’s, prosecutors said.
The shares were improperly issued to Galaxy without a restrictive legend, allowing them to be traded freely on the market in violation of U.S. Securities and Exchange Commission rules, according to the indictment. SEC rules mandate that unregistered shares must be held by the buyer for at least a year before being resold, prosecutors said.
Foley, who previously pled guilty to unrelated fraud offenses and served prison time, issued millions of Gaming shares to Galaxy using falsified opinion letters and negotiated purchase agreements with an unnamed company to offload some of the stock, prosecutors said. Blankenship fraudulently touted the profitability of these restricted shares, artificially inflating their value as they were bought and sold on, according to the indictment.
