Man sentenced for stock market hoax
LOS ANGELES, California (CNN) -- A federal judge sentenced a Los Angeles-area man to three years and eight months in prison, saying he dropped an "atomic bomb" on the stock market when he wrote a fake press release that contained damaging claims about technology company Emulex.
Mark Symeon Jakob, 24, a former student at California State University, Long Beach, expressed regret for writing the memo, which triggered panic among investors who held the company's stock and cut more than $2.2 billion off its total market capitalization.
Jakob, wearing khakis and a polo shirt, told U.S. District Court Judge Dickran Tevrizian that he realized the significance of his action when he began receiving letters from people who had lost much of their life savings.
He said he would try to do everything "to give back to society what I took from them."
In sentencing Jakob to 44 months in federal prison, Tevrizian said the crime was like "dropping an atomic bomb on the stock market."
Jakob is to begin serving his sentence September 5. He was also ordered to serve three years on supervised release.
Jakob pleaded guilty last December to two counts of securities fraud and one count of wire fraud after admitting to writing the fraudulent news release, which was designed to lower the value of Emulex shares.
Jakob had sold "short" 3,000 shares of Emulex stock, betting that its value would fall. But when it rose instead, he risked losing $97,000.
So he wrote the bogus news release, prosecutors said, and sent it to Internet Wire, an online news service, which distributed it just before the New York stock markets opened last August 25. The release caused Emulex's stock to plunge more than 60 percent in one hour before trading was halted. Investors lost nearly $110 million.
The phony news release claimed the SEC had launched an investigation into Emulex's accounting practices, that Emulex's CEO resigned and that the company was lowering its previously reported earnings projections.
Prosecutors said Jakob made about $350,000 as a result of his plan -- money he has since agreed to surrender as part of a settlement in addition to a civil penalty of more than $100,000.
"He stole more than Jesse James," Tevrizian said. "This is a big-time heist."
|Back to the top|