Jeremy Koski, a resident of Hawaii, has been charged by the Securities and Exchange Commission (SEC) for his alleged involvement in a pump-and-dump scheme that targeted unsecured loans. According to the SEC’s New York office, Koski distributed fake press releases and redemption notices to artificially inflate the price of shares in a trust fund operated by the retailer JCPenney.
The SEC accuses Koski of knowingly deceiving investors by spreading false information to manipulate the price of shares in the J.C. Penney Debentures Corporate-Backed Trust Securities Certificates of Structured Products Corp. (COTRP). In a statement, the SEC noted that “[Koski] conceded that he fabricated the fake redemption notices and fake press releases, that he knew their contents were false, and that he published them to try to create artificial interest in and raise the price of COTRP shares.”
Koski initiated his fraudulent scheme in an attempt to mitigate substantial losses on his investment. In September 2020, he purchased over 287,000 debentures at approximately $1.05 per share, amounting to a total investment of about $302,000. However, JCPenney’s financial struggles during that time caused the shares’ price to plummet to around $0.07, which posed a potential loss of over $281,000 for Koski.
A month later, Koski executed his plan by disseminating counterfeit redemption notices under various aliases on messaging boards. These actions led to a significant increase in share prices, allowing him to sell a portion of his holdings at a profit. Prior to the scheme, shares traded between approximately $0.01 and $0.27 per share, with around 3,200 traded daily. Following the publication of the fake notices, the price skyrocketed by 600% to $1.11, and daily trades surged to 270,000. During this period, Koski managed to pocket $815 after selling 800 shares he owned.
In September 2021, Koski introduced another deceptive element by sharing a fabricated press release that claimed the trust shares were being converted into a cryptocurrency, supposedly in collaboration with Jim Simons, the founder of the legitimate hedge fund Renaissance Technologies. However, it’s crucial to note that neither Simons nor Renaissance were involved in these activities. Koski used a distribution service called Issuewire to disseminate this fraudulent statement.
The SEC’s charges against Jeremy Koski underscore the importance of regulatory vigilance in protecting investors and maintaining the integrity of financial markets. The agency is committed to prosecuting individuals who engage in fraudulent schemes that harm innocent investors and undermine market confidence.