A New York man has been sentenced in federal court in Minnesota to 1½ years in prison for conspiring with two others in a "pump-and-dump" stock manipulation scheme that forced a City Council member in central Minnesota to resign.
Christopher J. Rajkaran, 36, of Queens in New York City was sentenced Thursday in U.S. District Court in Minneapolis after he pleaded guilty in October to securities fraud charges, as did Mark A. Miller, 44, who served on the Breezy Point, Minn., City Council until he resigned in June after being indicted. Miller awaits sentencing.
A third defendant, Saeid Jaberian, 60, of Hopkins, has pleaded not guilty to securities and wire fraud.
Ahead of sentencing, Rajkaran's defense argued in a court filing that he should avoid any further prison time and be sentenced to probation instead because he "takes responsibility for his conduct and knows his actions were wrong. ... Mr. Rajkaran has remained in custody since his arrest while his co-defendants have remained free."
The filing also pointed out that Rajkaran contracted COVID-19 while incarcerated and has been on lockdown status for all but one hour a day.
Proecutors alleged that Rajkaran and the other defendants engaged in a "pump-and-dump" scheme with penny stocks, acquiring large amounts of shares in inoperative shell companies. The shares traded in over-the-counter markets at a fraction of a cent.
The defendants would take control of the shell companies by filing fake documents with the SEC, announcing that they were replacing existing management teams who had purportedly resigned, prosecutors claimed in their court filings.
The defendants would then allegedly issue false news releases and business filings designed to pump up the hijacked companies' stocks — and then sell their own holdings at fraudulently inflated prices. In Rajkaran's case, he made more than $50,000 from the scheme, according to prosecutors.
"Empty shell companies are to stock manipulators and pump-and-dump schemers what guns are to bank robbers — the tools by which they ply their illegal trade," a prosecution presentence filing quoted Robert Khuzami, director of the Securities and Exchange Commission's Division of Enforcement, as saying in 2012 during the agency's "Operation Shell-Expel" initiative.
Miller, a general contractor by trade, resigned from the City Council two days after the U.S. Attorney's Office announced that the indictment against him and the others had been unsealed.
In his resignation letter, Miller said he was quitting immediately and gave no reason. Miller was elected to a four-year term in November 2020 on the council in the town of about 2,300 in the Brainerd Lakes area.
The indictment listed four stocks that were allegedly manipulated between 2017 and 2019, including Digitiliti Inc., a dormant Minnesota company that purported to provide online data protection.