Israeli media reports on Thursday revealed a Securities and Exchange Commission scandal in the United States involving several online casinos within the Affactive, Netad Management and RevenueJet groups, which have closed up shop leaving both affiliates and players unpaid.
The news doesn’t come as a surprise as the groups have a reputation for bad conduct like not paying, spamming, search engine manipulation and DDoS activity.
The SEC violations are related to fraud, money laundering and identify theft believed to be carried out in "pump-and-dump" style white collar crime in penny-stock manipulation scams. This activity has allegedly taken place over a period of years producing $2.8 million in revenue.
The news has resulted in the arrest of Gery "Gabi" Shalon and Ziv Orenstein in Israel this week as requested by the US Attorney for the Southern District of New York. They are being held without bail as they await extradition to the US.
A search of Shalon’s home revealed a stash of two million shekels (about USD $520,000) in cash.
A third individual, American citizen Joshua Samuel Aaron, is also a suspect in these crimes and is rumored to be hiding out somewhere in Russia.
The SEC described the fraudulent "pump and dump" stock market activity in a statement:
“Aaron and Shalon allegedly wrote and designed the e-mails, Shalon allegedly disseminated them, and Orenstein allegedly provided essential operational support by handling brokerage accounts using numerous aliases.”
Details regarding the allegations are available from the following resources: FBI, CNBC and US DoJ Sealed Indictment.