“$114M Discord Stock Case Tossed Ahead Of Jury Trial”
A Texas federal judge has dismissed a 21-count indictment against seven men accused of running a multimillion-dollar "pump-and-dump" stock scheme on Discord, just two weeks before their jury trial. U.S. District Judge Andrew S. Hanen ruled that the government's case could not withstand recent appellate court decisions, particularly the 2023 U.S. Supreme Court case Ciminelli v. United States, which limited fraud cases to those depriving victims of traditional property rights like money or property. Judge Hanen noted that the alleged scheme did not deprive investors of their money or property through misrepresentation but only deprived them of accurate information necessary for economic decisions.
The defendants, including John Rybarczyk, Perry "PJ" Matlock, Edward Constantinescu, Gary Deel, Stefan Hrvatin, Tom Cooperman, and Mitchell Hennessey, were accused of manipulating stock prices through coordinated social media postings. The alleged scheme, running from January 2020 to April 2022, was valued at around $114 million. However, Judge Hanen found that the financial losses were incidental and not the object of the defendants' actions, with some investors possibly even making money.
The dismissal was influenced by the 2023 Fifth Circuit case USA v. Greenlaw, which required proving both an intent to deceive and an intent to cause harm through deceit. Judge Hanen concluded that the government's indictment lacked factual allegations connecting the scheme to investors' traditional property interests.
Defense attorneys, including leading attorney Eric Rosen, praised the decision, emphasizing that the judge correctly applied the law and recognized that the defendants' actions did not constitute a crime. The U.S. Department of Justice and the Office of the U.S. Attorney for the Southern District of Texas did not immediately comment on the ruling. The case is USA v. Constantinescu et al., in the U.S. District Court for the Southern District of Texas.
