December 23, 2020
A New Jersey-based securities trader was sentenced to 18 months in prison for allegedly orchestrating a substantial, long-term market manipulation and tax fraud scheme that earned him $17 million in illegal profits.
Clifton resident Joseph Taub pleaded guilty in Newark federal court to charges of securities fraud and conspiracy to defraud the United States, the U.S. District Attorney's office in New Jersey said.
Taub dodged nearly $400,000 in taxes and falsely influenced the market through trading dozens of "straw accounts" he secretly owned to manipulate the securities prices of multiple public companies. The scheme was in operation from 2014 to 2016.
Despite being held under different names, Taub funded these accounts himself in an effort to keep his scheme a secret from law enforcement and regulators.
By trading with these accounts, Taub artificially influenced the market price of affected securities, causing others to trade them, thinking they had actual value, using Run Based Manipulation and Order Based Manipulation.
In this scheme, the manipulator profits directly from the manipulated market because of the exploited investor's false signal about the security's demand or supply.
Taub admitted he hid the identities of those who actually controlled the straw accounts from brokerage firms and the IRS, the District Attorney said. This meant these accounts were taxed at lower rates — allowing Taub to dodge $394,424.
Judge Vazquez sentenced Taub to one year of supervised release and ordered him to forfeit the $17.1 million and pay restitution of $394,424 to the IRS.
The Department of Justice reached a settlement with Taub in which he and his family members agreed to forfeit all assets they have a potential interest in. Taub must work with the Justice Department to transfer and manage these assets.