On Wednesday, it was announced that the former CEO of CodeSmart Holdings, Ira Shapiro, and a Manhattan attorney, Darren Ofsink, had pleaded guilty to a single count of conspiracy to commit securities fraud. The men were accused of participating in an $86 million market manipulating scheme involving CodeSmart, which was traded under the ITEN ticket.

Court filings show that in May of 2013 the defendants and their co-conspirators engineered a reverse merger of CodeSmart and a public shell company. The defendants were accused of gaining control of the company’s three million unrestricted shares and fraudulently inflating the share price and trading volume, before selling their shares at a profit. The scheme is often referred to as a “pump and dump”.

Documents show that the first pump and dump took place between May 13 and August 21, 2013. During that period, the stock’s price climbed from $1.77 to $6.94. Then, it dropped to $2.19. A second pump and dump took place between August 21 and September 20, 2013. This time, the defendants caused the price to rise from $2.19 to $4.60. Then, the price fell back to $2.13.

By the end of December 2013, CodeSmart’s stock was trading in the range of $.60 per share. On July 9, 2014, the stock closed at $0.01 per share. At the time of the sentencing, Ofsink and Shapiro will face a maximum of five years in prison.

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