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Case 3:15-cr-05364-RBL Document 20 Filed 12/10/15 Page 1 of 15

The Honorable Ronald B. Leighton

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UNITED STATES DISTRICT COURT FOR THE


WESTERN DISTRICT OF WASHINGTON
AT TACOMA

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UNITED STATES OF AMERICA,

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Plaintiff,

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NO. CR15-5364 RBL


UNITED STATES
SENTENCING MEMORANDUM

v.
MARIUS MORARIU,
Defendant.

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In November 2014, defendant Morariu contacted his friend, Tovy Pustovit, and
asked for help in setting up and orchestrating a fraudulent pump and dump scheme. At
the time, defendant Morariu was aware that defendant Pustovit had been sued by the U.S.
Securities and Exchange Commission for engaging in illegal stock manipulation, but
overcome by greed, defendant Morariu wanted to make easy money. Between November
2014 and March 2015, defendant Morariu and Pustovit manipulated the stocks of three

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companies, Brightech, Inc. (ticker symbol BRTE), General Environmental

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Management, Inc. (ticker symbol GEVI), and Green Street Capital Corp. (ticker

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symbol JAGR). In an effort to evade detection by law enforcement, defendant Morariu

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recruited his unsuspecting friends to open nominee accounts in which defendant Morariu
and Pustovit could trade, and they transferred cash among themselves to fund the

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United States Sentencing Memorandum - 1
U.S. v. Morariu, CR15-5364RBL

UNITED STATES ATTORNEY


700 STEWART STREET, SUITE 5220
SEATTLE, WASHINGTON 98101
(206) 553-7970

Case 3:15-cr-05364-RBL Document 20 Filed 12/10/15 Page 2 of 15

1 accounts and to split their illicit profits. By manipulating these three stocks, defendant
2 Morariu and Pustovit combined to make $98,396.
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After law enforcement was tipped off that Pustovit may be engaging in further

4 market manipulation in violation of the Courts Preliminary Injunction Order, an FBI


5 Special Agent contacted the individuals Morariu recruited to open the nominee accounts.
6 Shortly thereafter, the FBI Special Agent called Morariu to discuss the investigation.
7 Within days, defendant Morariu agreed to be interviewed by the representatives of the
8 United States Attorneys Office and the FBI Special Agent. During this interview,
9 defendant Morariu, in an effort to protect Tovy Pustovit, initially told law enforcement
10 that he had learned how to conduct pump and dump schemes, but quickly admitted to
11 conspiring with Pustovit to manipulate the three stocks listed above. At the end of the
12 interview, defendant Morariu informed the FBI that he had approximately $20,000 in
13 cash that was profit from the schemes. Later in the day, the FBI retrieved the $20,000
14 with defendant Morarius consent. Based upon this cooperation, the United States
15 respectfully requests that the Court depart from the Guidelines pursuant to USSG
16 5K1.1.
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In balancing all the sentencing factors, including the seriousness of the offense, the

18 impact on the victims and the integrity of the financial markets, the need to deter others
19 from engaging in stock manipulation, and the defendants cooperation with law
20 enforcement, the United States recommends the Court impose a split sentence of 10
21 months with 5 months imprisonment and 5 months of home confinement as it is
22 sufficient, but not greater than necessary, to reflect the goals of sentencing.
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I.

PROCEDURAL HISTORY

On August 13, 2015, defendant Morariu pleaded guilty to a one-count Information

25 charging him with Securities Fraud. Presentence Investigation Report (PSR) 1.


26 Defendant Morariu is scheduled to be sentenced at 10:00 a.m. on December 18, 2015.
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United States Sentencing Memorandum - 2
U.S. v. Morariu, CR15-5364RBL

UNITED STATES ATTORNEY


700 STEWART STREET, SUITE 5220
SEATTLE, WASHINGTON 98101
(206) 553-7970

Case 3:15-cr-05364-RBL Document 20 Filed 12/10/15 Page 3 of 15

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II.
A.

FACTS

Background

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1.

Pump and Dump Schemes


A pump and dump scheme is a form of market manipulation designed to

create a false and misleading appearance of a market for and interest in the security of a
publicly traded company in order to entice unsuspecting investors to purchase the stock at
artificially high prices. There are generally three phases to a pump and dump scheme: (1)
obtaining and concealing control of a significant portion of a publicly traded company's
stock; (2) fraudulently inflating the price and trading volume of the company's stock
through a variety of means, including engaging in manipulative, coordinated trading of
the companys stock to create the false appearance of market interest, and disseminating
false and misleading promotional materials to the investing public; and (3) once the stock
price has been fraudulently inflated, selling or dumping the stock at the fraudulently
inflated price. The price of the manipulated stock collapses soon after the dump as the
perpetrators cease propping up the stocks price, and innocent investors are left with
worthless stock.
Individuals engaged in pump and dump schemes are frequently affiliated
with stock promotion websites and/or email accounts. These individuals use these
websites and email accounts to disseminate false and misleading promotional materials
concerning the stock. For example, they will blast false and misleading email
communication touting a likely sudden increase in a particular stock price or volume
without disclosing the fact that, in truth, the promoters were responsible for the recent
increase in price and volume through their manipulative, coordinated trading activities.
Manipulators frequently cause the dissemination of a barrage of misleading promotional
materials concerning a specific stock at or near the end of the manipulation. The
manipulators then sell their accumulated position at the same time the promotions are
disseminated, thus profiting from the interest generated by the promotions.
United States Sentencing Memorandum - 3
U.S. v. Morariu, CR15-5364RBL

UNITED STATES ATTORNEY


700 STEWART STREET, SUITE 5220
SEATTLE, WASHINGTON 98101
(206) 553-7970

Case 3:15-cr-05364-RBL Document 20 Filed 12/10/15 Page 4 of 15

The stocks favored in market manipulation schemes are generally those that

2 are thinly traded and quoted through an over-the-counter alternative trading service,
3 such as OTC Markets or OTCBB. These OTC trading platforms provide a marketplace
4 to quote and trade shares of companies that do not meet the listing requirements for
5 trading on a national exchange, such as the New York Stock Exchange or NASDAQ.
6 Many companies, or issuers, that offer their stock through OTC trading platforms do
7 not submit regular, independently audited financial reports or make other disclosures with
8 the SEC. The securities associated with such non-filing issuers do not have many buyers
9 and sellers; in other words, they are thinly traded. They also often trade at prices well
10 below one dollar per share, and hence are sometimes known as "penny stocks." With
11 little to no information about the issuer coupled with thin trading, such stocks are
12 susceptible to manipulation by individuals who are able to accumulate large blocks of
13 shares for the purpose of profiting from the manipulation.
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2.

Manipulative Stock Trading Practices


Manipulative trading techniques frequently involve trading activity with no

16 real economic purpose, including matched trades and a practice known as layering or
17 spoofing. A matched trade is trading that involves the prearranged purchase and sale
18 of stock between accounts controlled by different parties. Colluding parties engage in
19 matched trades in order to create the misleading impression of an increase in trading
20 volume and price. Layering or spoofing is a practice where a trader places non-bona fide
21 orders - orders that the trader does not intend to have executed - to induce others to buy
22 or sell a stock at a price not representative of actual supply and demand. More
23 specifically, when engaging in layering or spoofing, a trader repeatedly enters a buy order
24 for a stock that the trader subsequently cancels prior to trade execution. This type of
25 activity is manipulative because it is done with the intention of tricking other investors to
26 purchase the stock at an artificial price driven by the orders the trader cancels. Layering
27 and spoofing impacts the best bid price and gives the market false impression of active
28 trading and volume when, in fact, the trader had no intention of completing the purchase.
United States Sentencing Memorandum - 4
U.S. v. Morariu, CR15-5364RBL

UNITED STATES ATTORNEY


700 STEWART STREET, SUITE 5220
SEATTLE, WASHINGTON 98101
(206) 553-7970

Case 3:15-cr-05364-RBL Document 20 Filed 12/10/15 Page 5 of 15

1 B.

Defendant Morariu and Pustovits Manipulative Activity

In November 2014, defendant Morariu contacted Pustovit and asked him to help

3 conduct a fraudulent pump and dump scheme. PSR 10; Plea Agreement 9a. Pustovit
4 agreed to help by providing the cash necessary to promote the scheme and instructing
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defendant Morariu on how to operate a successful pump and dump scheme. Id. In the
following months, defendant Morariu and Pustovit would manipulate the stocks of
BRTE, GEVI, and JAGR. PSR 9.
To engage in the fraudulent schemes and avoid detection from law enforcement,

9 defendant Morariu and Pustovit agreed that: (1) defendant Morariu would recruit other
10 individuals who did not know Pustovit to open brokerage accounts; (2) Pustovit would
11 provide cash to defendant Morariu who would use the cash to fund the nominee accounts;
12 (3) the nominee accounts would be used to accumulate shares in the companies they
13 intended to manipulate; (4) stock promotion companies controlled by defendant Morariu
14 and Pustovit would promote the stocks by disseminating false and fraudulent
15 information; and (5) after the false promotion campaigns, the stocks would be sold into
16 the market at artificially inflated prices. PSR 10 and 11; Plea Agreement 9c.
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With respect to GEVI, Pustovit gave defendant Morariu $20,000 in cash to fund

18 the manipulation, they accumulated 2.7 million shares of GEVI in the nominee accounts,
19 and they sent fraudulent promotional alerts. PSR 12; Plea Agreement 9f-g.
20 Defendant Pustovit and Morariu made $83,096 in the GEVI manipulation, and $6,254
21 and $9,046 in the BRTE and JAGR manipulations, respectively. PSR 12; Plea
22 Agreement 9h-i.
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C.
Defendant Morarius Cooperation
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After receiving a tip from another individual that Pustovit was running pump and
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dump schemes after the institution of the SEC civil enforcement action, an FBI Special
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Agent contacted defendant Morarius friends in whose names Morariu opened the
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nominee accounts. Shortly thereafter, on approximately March 27, 2015, the FBI Special
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United States Sentencing Memorandum - 5
U.S. v. Morariu, CR15-5364RBL

UNITED STATES ATTORNEY


700 STEWART STREET, SUITE 5220
SEATTLE, WASHINGTON 98101
(206) 553-7970

Case 3:15-cr-05364-RBL Document 20 Filed 12/10/15 Page 6 of 15

1 Agent called Morariu on the telephone in an attempt to set up an interview. After


2 retaining an attorney, defendant Morariu agreed to be interviewed on April 3, 2015.
3 During the interview, defendant Morariu initially denied that Pustovit was involved in the
4 manipulative activity, but within a couple hours, he admitted that Pustovit and he had
5 conducted the manipulative activity together. Defendant Morariu described how he
6 looked Pustovit up online and found articles about the SECs action against Pustovit.
7 Thus, prior to engaging in any trading, defendant Morariu knew that his contemplated
8 conduct was unlawful.
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Throughout the interview, defendant Morariu provided significant details

10 surrounding how the scheme worked. Defendant Morariu also described how they set up
11 the scheme to evade detection by law enforcement by: (1) conducting their trading on
12 public wi-fi in coffee shops and other places; (2) using prepaid debit cards to pay to
13 register the domain names of the stock promotion websites; and (3) using prepaid cellular
14 phones and applications like SnapChat to communicate about the scheme.
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In addition, defendant Morariu said that shortly after the FBI Special Agent called

16 him on March 27th, he called Pustovit and the two discussed how to respond to the call,
17 including Pustovit telling defendant Morariu to get an attorney. According to defendant
18 Morariu, he met with Pustovit late in the evening of March 31, 2015, at the car shop they
19 were running together after they sent SnapChat messages to set up the meeting. During
20 the meeting, defendant Morariu told Pustovit that he was going to meet with the FBI. At
21 that time, defendant Morariu and Pustovit made a plan where Morariu would take sole
22 responsibility for the market manipulation. Pustovit told Morariu that Pustovit had an
23 agreement with the United States Attorneys Office and that Pustovit would receive a
24 higher sentence if he was incriminated in the new manipulation. Defendant Morariu also
25 described additional meetings at the car shop where Pustovit coached him on what would
26 happen at the meeting with the FBI, and that it would be a hard meeting.
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During his interview with law enforcement, defendant Morariu admitted that he

28 had deleted text messages and the prepaid cards. He also admitted to deleting
United States Sentencing Memorandum - 6
U.S. v. Morariu, CR15-5364RBL

UNITED STATES ATTORNEY


700 STEWART STREET, SUITE 5220
SEATTLE, WASHINGTON 98101
(206) 553-7970

Case 3:15-cr-05364-RBL Document 20 Filed 12/10/15 Page 7 of 15

1 information off his computer at the direction of Pustovit. Finally, defendant Morariu told
2 law enforcement that he had more than $20,000 in cash at his parents house, and he
3 agreed to allow the FBI to retrieve the cash.
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III.

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SENTENCING GUIDELINES RANGE

Pursuant to the Plea Agreement, the parties agreed that the following Sentencing
Guidelines provisions apply and recommend that the Court adopt the resulting
calculations which are consistent with the Probation Offices calculation in the PSR:

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Guideline

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Base Offense Level. USSG 2B1.1(a)

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Specific Offense Characteristic


USSG 2B1.1(b)(1)(I), based on an agreed gain of
$98,396 as a result of the defendants conduct

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Specific Offense Characteristic


USSG 2B1.1(b)(2)(A)(i), because the offense involved
ten (10) or more victims

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Adjustment
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Specific Offense Characteristic


USSG 2B1.1(b)(10)(C), because the offense involved
sophisticated means

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Acceptance of Responsibility. USSG 3E1.1(a)

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TOTAL OFFENSE LEVEL

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The Sentencing Guidelines are advisory. United States v. Booker, 543 U.S. 220,

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22 245-46 (2005). However, the district courts still must consult [the] Guidelines and take
23 them into account when sentencing[.] United States v. Cantrell, 433 F.3d 1269, 1279
24 (9th Cir. 2006) (internal citation omitted, internal quote omitted). The appropriate
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In the Plea Agreement, the parties agreed to a four-level increase since the defendants fraud involved more than
50 victims. Plea Agreement 12c. On November 1, 2015, the Sentencing Commission amended the USSG and this
enhancement was amended to provide a four-level increase when the conduct involves a substantial financial
hardship to five or more victims. Given this change, the United States has agreed that the imposition of a two-level
increase is appropriate.
UNITED STATES ATTORNEY
United States Sentencing Memorandum - 7
700 STEWART STREET, SUITE 5220
U.S. v. Morariu, CR15-5364RBL
SEATTLE, WASHINGTON 98101
(206) 553-7970

Case 3:15-cr-05364-RBL Document 20 Filed 12/10/15 Page 8 of 15

1 guidelines range, though now calculated under an advisory system, remains the critical
2 starting point for the imposition of a sentence under 3553(a). United States v. Mashek,
3 406 F.3d 1012, 1016 n.4 (8th Cir. 2005) (quoted approvingly in Cantrell, 433 F.3d at
4 1279).
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Specific Offense Characteristic 2B1.1(b)(1)(G): Use of Gain as


Alternative Measure of Loss

Application Note 3(B) to USSG 2B1.1 explains that [t]he court shall use the

8 gain that resulted from the offense as an alternative measure of loss only if there is a loss
9 but it reasonably cannot be determined. Here, the parties agreed that while defendant
10 Morariu conduct resulted in losses for many investors, the actual amount of loss cannot
11 reasonably be determined and, therefore, an agreed upon gain amount should be used as
12 an alternative measure. Given the manner in which trading records are kept and
13 produced by the various trading platforms and markets, an accounting of actual loss
14 would require the United States to individually audit thousands of separate purchase and
15 sales orders for the manipulated stocks and attempt to match those thousands of purchase
16 and sales orders to a particular investor in order to determine whether any individual
17 investor made money or lost money on those stocks. As an alternative, therefore, the
18 parties urge the Court to find that an appropriate measure of harm in this case for
19 purposes of the Sentencing Guidelines calculation would be the amount of net profit
20 attained by Morariu and Pustovit from the scheme, which totaled $98,396.
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Specific Offense Characteristic USSG 2B1.1(b)(2)(A)(i): Number of


Victims

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During the investigation leading to the instant prosecution, the United States

24 obtained and reviewed trading records for the manipulated stocks on the date of the
25 fraudulent promotions and sale of defendant Morarius and Pustovits stock. These
26 trading records reveal over scores of investors purchased those stocks on the dates of the
27 fraudulent promotions. Certain of these investors may not have actually suffered any loss
28 depending upon the timing of their purchase and sale or whether or not they had taken
United States Sentencing Memorandum - 8
U.S. v. Morariu, CR15-5364RBL

UNITED STATES ATTORNEY


700 STEWART STREET, SUITE 5220
SEATTLE, WASHINGTON 98101
(206) 553-7970

Case 3:15-cr-05364-RBL Document 20 Filed 12/10/15 Page 9 of 15

1 additional positions prior to the dates of the fraudulent promotions. Rather than
2 undertake an expensive and time consuming task of auditing all purchase and sales
3 records for each separate investor, the United States and the defendant agreed and
4 stipulated for the purpose of the Plea Agreement that victims in this case at least
5 numbered more than 50 individuals. Plea Agreement 12c.
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On November 1, 2015, the Sentencing Commission amended the USSG and this

7 enhancement was amended to provide a four-level increase when the conduct involves a
8 substantial financial hardship to five or more victims. Given this change to the USSG,
9 the United States has agreed that the imposition of a two-level increase is appropriate
10 since the offense involved 10 or more victims.
11 C.

Applicable Sentencing Guidelines Range

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Defendant Morariu had no prior criminal history, and therefore, is placed into

13 Criminal History Category I. With a Total Offense Level of 16 and Criminal History
14 Category I, defendant Morarius applicable sentencing guidelines range is 21-27 months.
15 PSR 48.
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IV.

5K1.1 MOTION

. Given the nature and substance of the defendants cooperation, the truthfulness
of the information he provided, and the timing in which he provided it, the United States
respectfully requests that the Court depart downward from the advisory Guideline range.
The United States believes that the defendant provided truthful and complete information
in his April 3rd interview. He also indicated a willingness to provide any further
assistance, and he was prepared to testify at trial if necessary. Given the intricate steps
the defendant and Pustovit took to disguise their manipulative conduct, the defendant
provided critical information linking Pustovit to the manipulation. There is little doubt
that defendant Morarius cooperation contributed significantly to Pustovits guilty plea.
The United States believes that the defendants cooperation constitutes substantial
assistance that merits a downward departure below the sentencing range that the
United States Sentencing Memorandum - 9
U.S. v. Morariu, CR15-5364RBL

UNITED STATES ATTORNEY


700 STEWART STREET, SUITE 5220
SEATTLE, WASHINGTON 98101
(206) 553-7970

Case 3:15-cr-05364-RBL Document 20 Filed 12/10/15 Page 10 of 15

1 defendant otherwise would face. See USSG 5K1.1 (allowing a court to depart
2 downward from an otherwise-applicable guidelines range based upon a defendants
3 substantial assistance in the investigation or prosecution of others). Under USSG
4 5K1.1, in evaluating the defendants cooperation, the Court should consider: (a) the
5 nature and extent of the defendants assistance; (b) the significance and usefulness of the
6 defendants assistance; (c) the truthfulness, completeness, and reliability of the
7 information the defendant provided; (d) any danger or risk of injury to the defendant or
8 his family resulting from his cooperation; and (e) the timeliness of the defendants
9 assistance.
The defendants cooperation was timely, extensive, and useful. The defendants

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11 assistance resulted in a guilty plea by Pustovit, an individual who the United States
12 believed had given up illegal stock trading. The defendant began cooperating within days
13 of being contacted by the FBI. Furthermore, the United States believes that the defendant
14 was truthful and complete, and the information he provided proved to be reliable. Based
15 upon the foregoing, it is clear that the defendant has provided substantial assistance in the
16 investigation of others and has provided useful and reliable information about their
17 activities in a timely manner. On this basis, and pursuant to Section 5K1.1 of the
18 Sentencing Guidelines, the United States respectfully moves the Court for a downward
19 departure from the guidelines sentencing range that otherwise would apply to the
20 defendant.
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V.

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THE 3553(A) FACTORS SUPPORT A SENTENCE OF SPLIT SENTENCE


OF 10 MONTHS

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In balancing all the sentencing factors, including the seriousness of the offense, the

24 impact on the victims and the integrity of the financial markets, the need to deter others
25 from engaging in stock manipulation, and the defendants cooperation with law
26 enforcement, the United States recommends the Court impose a split sentence of 10
27 months with 5 months imprisonment and 5 months of home confinement as a condition
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United States Sentencing Memorandum - 10
U.S. v. Morariu, CR15-5364RBL

UNITED STATES ATTORNEY


700 STEWART STREET, SUITE 5220
SEATTLE, WASHINGTON 98101
(206) 553-7970

Case 3:15-cr-05364-RBL Document 20 Filed 12/10/15 Page 11 of 15

1 of supervised release, as it is sufficient, but not greater than necessary, to reflect the goals
2 of sentencing.
3 A.

The Nature and Circumstances of the Offense

Any stock manipulation is a serious offense, but the seriousness of the offense is

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greatly enhanced where, as here, the conduct involves multiple stocks involving scores of
victims and was accomplished using sophisticated means. From approximately
November 2014 to March 2015, defendant Morariu participated in the manipulation of
three stocks. Defendant Morariu engaged in this illicit behavior with the knowledge that

9 his conduct was clearly illegal, as he was aware that Pustovit had been sued by the SEC.
10 During his manipulative schemes, defendant Morariu took steps to evade detection by
11 law enforcement, including disguising the manipulative trading in nominee accounts,
12 using prepaid phones, and public wifi spots. These stock manipulations earned defendant
13 Morariu and Pustovit over $95,000 in profits, with over $80,000 coming from the
14 manipulation of GEVI. Finally, the criminal activity at issue in this case had a profound
15 impact on the victims of the offense. This type of conduct causes real financial harm to a
16 number of hard working individuals, and undermines the integrity of the United States
17 financial markets.
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B.
The History and Characteristics of the Defendant
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A split sentence of 10 months is also supported by the history and characteristics
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of the defendant. 18 U.S.C. 3553(a)(1). While the defendants conduct involved a
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serious offense, he began cooperating with the investigation shortly after he was
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confronted by the FBI. His cooperation was thorough and included providing
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information concerning the destruction of evidence. Furthermore, unlike Pustovit, it
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appears that defendant Morariu immediately stopped engaging in fraud when confronted
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by law enforcement.
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United States Sentencing Memorandum - 11
U.S. v. Morariu, CR15-5364RBL

UNITED STATES ATTORNEY


700 STEWART STREET, SUITE 5220
SEATTLE, WASHINGTON 98101
(206) 553-7970

Case 3:15-cr-05364-RBL Document 20 Filed 12/10/15 Page 12 of 15

1 C.
2

To Reflect the Seriousness of the Offense, to Promote Respect for the Law
and to Provide Just Punishment

A sentence of 63 months is also needed to reflect the seriousness of the offense,

4 to promote respect for the law, and to provide just punishment for the offense. 18 U.S.C.
5 3553(a)(2)(A). Securities fraud is a serious offense that carries statutory maximum
6 terms of imprisonment of 20 years and maximum fine of up to $5 million. The
7 seriousness of this crime is greatly enhanced when, as here, the fraudulent scheme was
8 perpetrated on numerous victims and involved sophisticated means. Given the
9 seriousness of the crime and the defendants behavior during its commission, a split
10 sentence of 10 months will promote respect for the law and provide just punishment for
11 the offense.
12 D.

To Afford Deterrence

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Section 3553(a)(2)(B) requires that the sentence imposed reflect the seriousness

14 of the offense and afford adequate deterrence. The securities markets are a critical
15 aspect of our economy, and many depend upon it to generate returns on savings for future
16 use. Market manipulations, like those conducted by defendant Morariu, create doubts
17 about the integrity and fairness of such markets in general and, if undeterred, will lead to
18 withdrawals in participation to the detriment of the economy as a whole.
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The issue of deterrence becomes particularly relevant in securities fraud cases
20 such as this one because such crimes are notoriously difficult to detect and prosecute.
21 Perpetrators, like Morariu, hide behind multiple brokerage accounts that are held by or
22 opened in the names of other individuals, therefore making it difficult to connect the
23 trading activity and the promotions to the actual individuals conducting the pump and
24 dump. Given the difficulty of detection, effective deterrence requires meaningful
25 punishment in each instance where the perpetrator has been caught. As explained by
26 Judge Richard Posner in United States v. Heffernan, 43 F.3d 1144, 1149 (7th Cir. 1994),
27 [c]onsideration of (general) deterrence argue for punishing more heavily those offenses
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United States Sentencing Memorandum - 12
U.S. v. Morariu, CR15-5364RBL

UNITED STATES ATTORNEY


700 STEWART STREET, SUITE 5220
SEATTLE, WASHINGTON 98101
(206) 553-7970

Case 3:15-cr-05364-RBL Document 20 Filed 12/10/15 Page 13 of 15

1 that either are lucrative or are difficult to detect and punish, since both attributes go to
2 increase the expected benefits of a crime and hence the punishment required to deter it.
3

On the other hand, punishments that are perceived as too light compound the

4 skepticism of the public and fuel the perception that the securities markets are purposely
5 rigged against the average investor. Therefore, the United States urges the Court to
6 impose meaningful punishment in this case.
7 E.
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The Need to Avoid Unwarranted Sentencing Disparities


Section 3553(a)(5) cautions against creating unwarranted sentencing disparities

9 among similarly situated defendants. Previously, the Court sentenced Alexander


10 Hawatmeh to a sentence of 60 months, Christopher Mrowca to a term of 36 months, and
11 Mikhail Galas to a sentence of time served (after serving one day). The United States
12 believes defendant Morarius conduct and history and characteristics are most closely
13 aligned with Galas. At sentencing, the United States recommended a sentence of 24
14 months imprisonment for Galas given his involvement in numerous manipulations, his
15 cooperation, and the lower amount of his profits. The United States believes that unlike
16 Galas, who received a sentence of time served, defendant Morarius conduct warrants
17 some time in prison. While the defendant provided significant cooperation, he engaged
18 in the misconduct at issue here with the knowledge that the SEC had already sued
19 Pustovit for engaging in market manipulation. As a result, defendant Morariu engaged
20 took numerous sophisticated actions in order to evade detection from law enforcement.
21 Therefore, the United States respectfully requests that a 10 month split sentence be
22 imposed.
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VI.

RESTITUTION

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Pursuant to the Plea Agreement, the parties jointly recommend that no restitution
be ordered because the complication and prolongation of the sentencing process
resulting from the fashioning of an order of restitution under this section outweighs the
need to provide restitution to any victims. 18 U.S.C. 3663(a)(1)(B)(ii). The
United States Sentencing Memorandum - 13
U.S. v. Morariu, CR15-5364RBL

UNITED STATES ATTORNEY


700 STEWART STREET, SUITE 5220
SEATTLE, WASHINGTON 98101
(206) 553-7970

Case 3:15-cr-05364-RBL Document 20 Filed 12/10/15 Page 14 of 15

1 government does not have access to the brokerage records of each individual who may
2 have been impacted by the defendants stock manipulation. Instead, as noted above, in
3 order to calculate with any reasonable degree of certainty the amount of loss each
4 investor suffered, the government would have to individually audit separate purchase and
5 sales orders, match them up with an individual investor, and then determine whether that
6 individual made money or lost money. Such an endeavor would take significant
7 expenditure of personnel time and resources, and unduly delay sentencing. In sum, the
8 burden of calculating and verifying each investors loss outweighs the need to provide
9 restitution to the victims in this case, and the parties urge the Court to so find.
10

VII.

CONCLUSION

11

For the foregoing reasons, the United States recommends that the Court sentence
12 defendant Morariu to 5 months imprisonment followed by 5 months home confinement
13 as a condition of a three year term of supervised release.
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DATED: December 10, 2015

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Respectfully submitted,

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/s/ Justin W. Arnold
JUSTIN W. ARNOLD
Assistant United States Attorney

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/s/Katheryn Kim Frierson


KATHERYN KIM FRIERSON
Assistant United States Attorney
WSBA # 37794

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United States Attorneys Office


700 Stewart Street, Suite 5220
Seattle, Washington 98101
Telephone: (206) 553-7970
Facsimile: (206) 553-2502
E-mail: justin.arnold@usdoj.gov

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United States Sentencing Memorandum - 14
U.S. v. Morariu, CR15-5364RBL

UNITED STATES ATTORNEY


700 STEWART STREET, SUITE 5220
SEATTLE, WASHINGTON 98101
(206) 553-7970

Case 3:15-cr-05364-RBL Document 20 Filed 12/10/15 Page 15 of 15

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CERTIFICATE OF SERVICE
I hereby certify that on December 10, 2015, I electronically filed the foregoing

3 with the Clerk of Court using the CM/ECF system which will send notification of such
4 filing to the attorney(s) of record for the defendant(s).
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s/Jenny Fingles

JENNY FINGLES
United States Attorneys Office
700 Stewart, Suite 5220
Seattle, Washington 98101-1271
Phone: 206-553-7970
Fax:
206-553-0755
E-mail: jenny.fingles@usdoj.gov

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United States Sentencing Memorandum - 15
U.S. v. Morariu, CR15-5364RBL

UNITED STATES ATTORNEY


700 STEWART STREET, SUITE 5220
SEATTLE, WASHINGTON 98101
(206) 553-7970