Joseph Taub, who was indicted by a grand jury in New Jersey based on allegations of tax fraud and operating a scheme to manipulate stock prices entered a plea deal where he admitted to orchestrating a market manipulation scheme and defrauding the government of taxes.
According to case documents and statements, between 2014 and 2016 Taub, with co-conspirators, set up dozens of brokerage accounts in order to manipulate the prices of publicly traded companies. These dozens of brokerage accounts were controlled by Taub because he funded the accounts and directed the trading in the accounts. The brokerage accounts controlled by Taub but in the name of someone other than Taub, is a type of account known as ‘straw accounts.’ Straw accounts were used to hide trading activity and market manipulation schemes since these accounts were not in Taub’s name. Taub wrongly believed that the government would not notice his nefarious actions.
According to the indictment, Taub used multiple accounts to carry out his market manipulation scheme. He would use one account to purchase a large number of shares of a particular publicly traded company whose share price he wanted to manipulate. In coordination with co-conspirators whose names were on various other ‘straw’ brokerage accounts, Taub would direct the placement of numerous smaller buy orders in those straw accounts. The multiple small buy orders caused upward pressure on the stock price. After the stock price had increased, Taub would sell the large number of shares he had purchased in his account, taking a profit. Next, Taub would direct that the shares in the straw accounts be sold, or, if an order had not been executed, to cancel the order. According to the indictment, the co-conspirators expected to lose on their trades in the expectation that the losses would be made up on the large trade made by Taub.