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Medical marijuana stock manipulation scheme settled with SEC

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The Securities and Exchange Commission has settled a case with two defendants in a medical marijuana stock manipulation scheme.

Both Alexander Hawatmeh and Christopher Mrowca were accused of running a pump-and-dump scheme where they would artificially inflate the prices of medical marijuana penny stocks, and then sell off the shares at an artificially high price.

Those stocks later crashed.

According to the proposed judgments filed in the US District Court for the Western District of Washington, the two agreed to a permanent bar from participating in penny stock offerings after they made $2.5 million in profit.

The National Law Review wrote that the SEC brought criminal and civil charges against Hawatmeh, Mrowca, and two other stock promoters in August 2014, alleging that they engaged in a pump-and-dump scheme and used manipulative trading tactics, such as wash trading, and matched orders to artificially inflate the stock prices of certain thinly traded microcap companies. The SEC alleged that the scheme created the illusion of an active market in the stocks, which the defendants used to aggressively promote the stocks through social media and websites under their control.

Earlier this year, Hawatmeh and Mrowca were sentenced to five and three years in prison, respectively, for their participation in the scheme. Under the proposed judgments, Mr. Hawatmeh and Mr. Mrowca are liable for disgorgement of approximately $2.1 million and $306,000 in illicit profits, respectively.

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Stephen Carter

Stephen Carter is a 30 year old journalist and information technology specialist living in Waco, Texas. He has been working with the cannabis movement since 2009. He founded Texas Cannabis Report in 2013 to bring Texans accurate cannabis related news.

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1 Comment

  1. rickyb
    July 25, 2015 at 9:17 am

    It’s just a matter of time before these leeches come out of the woodwork. Anyone who remembers all the pump & dump schemes that erupted during the dot.com bubble should have known that these newly formed cannabis companies might be ripe for stock manipulation tactics.
    I’m glad the SEC stepped in to expose these shysters. I’m also glad that the wonderful individuals who partake in bringing medicinal and recreational and LEGAL cannabis to the public won’t be distracted by the frivolous efforts of corrupt cheats and out-of-date politicians.