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by Mike Caswell

Delaware prosecutors say that Matthew Brown, operator of the Investors Hub website, should be held liable for the entire $4.78-million in profits from an illegal pump-and-dump scheme he aided, even though he personally received just a fraction of the money. (All figures are in U.S. dollars.) A substantial penalty is necessary, given the gravity of the overall offence, the government contends.

The penalty stems from a scheme in which Mr. Brown, 28, and others manipulated stocks with prearranged trades and posts on Investors Hub. The companies included in the investigation were Ontario-based pink sheets listing Playstar Corp. Mr. Brown pleaded guilty to the charges and, on May 18, 2011, received a sentence of four years in jail. The judge, in handing down the sentence, also entered a $4.78-million asset forfeiture order against Mr. Brown, which he has since argued was unfair.

In a motion filed on May 27, Mr. Brown said the forfeiture order amounted to a "financial death sentence." His understanding of his guilty plea was that he would only forfeit his personal gains from the scheme, which were $117,000. He did not know that he would be subject to a "monumental financial burden," he argued. Mr. Brown further contended that the government held him liable for profits made by those who were not even charged with anything. Those individuals netted $3-million from the scheme, he said.

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