Aug 5 U.S. authorities on Tuesday charged four
stock promoters with civil fraud for manipulating the securities
of marijuana-related and other microcap companies, and three
were hit with criminal charges over their trades in a penny
The U.S. Securities and Exchange Commission said Mikhail
Galas, Alexander Hawatmeh, Christopher Mrowca and Tovy Pustovit
made more than $2.5 million by buying six thinly traded stocks
and then artificially driving up their prices through a
so-called "pump-and-dump" scheme.
It said the defendants, all in their early- to mid-20s,
conducted "matched" offsetting trades to create an appearance of
growing demand and promoted the stocks with "blast" emails
through websites such as Explosive Alerts and
The SEC said two of the stocks were GrowLife Inc,
which has said it provides soil, nutrients and other products to
help cultivate plant-based medicines, and Hemp Inc,
which has said it focuses on the industrial hemp industry but
does not cultivate or market medical cannabis.
Galas, Hawatmeh and Mrowca were also charged criminally by
the U.S. Department of Justice with conspiracy to commit
securities fraud and conspiracy to launder monetary instruments
in connection with one of the non-marijuana-related stocks, ISM
Lawyers for the defendants could not immediately be located.
GrowLife and Hemp are not defendants in either case.
Galas, of Vancouver, Washington; Hawatmeh, of Salem, Oregon;
and Mrowca, of Bradenton, Florida, have been arrested and are in
federal custody, according to a spokeswoman for U.S. Attorney
Jenny Durkan in Seattle, who announced the criminal charges.
Pustovit also lives in Vancouver, the SEC said.
In May, the SEC warned investors about possible scams
involving marijuana-related investments, saying fraudsters often
try to exploit new growth industries by manipulating stocks.
The cases are U.S. v. Mrowca et al, U.S. District Court,
Western District of Washington, No. 14-mj-05172; and SEC v.
Galas et al in the same court, No. 14-05621.
(Reporting by Jonathan Stempel in New York; Editing by Dan