Raleigh Man Arrested for Internet Stock Manipulation
Posted April 15, 1999
RALEIGH — An Internet hoax last week sent a technology stock soaring and resulted in the arrest of a Raleigh man.
Gary Hoke, a graduate ofN.C. State, worked forPairGain Technologiesin Raleigh; now suspended, he has been charged in the first case of stock manipulation on the Internet.
The hoax was discovered shortly after it happened, a week ago.
The posting about PairGain said the company was being sold to an Israeli company. It showed up first on aYahoo finance page. That message linked to a fake copy of a Bloomberg News Web page design carrying the false news story.
With the false report, PairGain's stock went way up. After the hoax was discovered, PairGain's stock price dropped. It is not known how many people may have lost money, including Hoke, who had stock options.
TheFBIhas charged Gary Hoke with securities fraud. They found him by following a trail of Internet addresses to Hoke's computer.
"One of the things about Internet crime and people conducting business over the Internet, they leave electronic footprints," says Rick Wade of the FBI. "We are able to go back and identify people through those electronic footprints."
Hoke is free on bond awaiting a court date in Los Angeles. No hearing date has been set. The maximum penalty for securities fraud is ten years in federal prison and up to a million dollars in fines.
The hoax should be a lesson to all who put complete trust in the Internet: don't! Double check things before you accept them as fact.
It is easy for most anyone to make a Web site and for someone as well trained as Hoke, faking a real Web site is also easy. That is why it pays to verify information you find on the Web.