This week, a New Jersey-based securities trader admitted to orchestrating a massive, long-term market manipulation scheme and tax fraud that led to more than $17 million in illegal profits. The scheme took place between 2014 and 2016. 41-year-old Joseph Taub of Clinton, New Jersey pleaded guilty to counts 4 and 5 of a superseding indictment charging him with securities fraud and conspiracy to defraud the United States.
Documents filed in the case and statements made in court showed that Taub and others conspired to manipulate the securities prices of numerous public companies by coordinating trading in dozens of brokerage accounts he secretly controlled. Taub primarily used “straw accounts” held in the names of others to carry out most of his trading activities.
These straw accounts were used to conceal the scheme from regulators and law enforcement. Taub was involved in a series of contemporaneous transactions intended to artificially manipulate the market price of the securities of several publicly traded companies while also encouraging other market participants to trade in those securities based on the false impression that there was a real interest in those securities.
Taub used Run Based Manipulation and Order Based Manipulation to pull off the scam. The defendant also admitted to defrauding the United States by hiding the identifies of those who actually controlled the straw accounts from brokerage firms and the IRS. As a result of the scheme, the profits from the straw accounts were taxed at the lower tax rates instead of the higher tax rates applicable to Taub.
In total, Taub avoided more than $394,000 in taxes. On February 21, 2018, Sean Greenwald pleaded guilty to his role in the scheme and is currently awaiting sentencing. Under the terms of Taub’s plea agreement, he would receive a sentence of 18 months in prison and will be forced to forfeit $17.1 million. He’ll also be required to pay restitution in the amount of $394,424 to the IRS.
Taub is scheduled to be sentenced on December 1, 2020.