Retiring SDTX Federal Judge Goes Lenient on the Austin’s for $50M Pump-and-Dump Scheme

Several sentenced in $50M pump-and-dump scheme

DEC 13, 2021 | REPUBLISHED BY LIT: DEC 13, 2021

HOUSTON – All seven defendants charged in relation to a more than $50 million securities fraud “pump-and-dump” scheme have received their final sentences, announced Acting U.S. Attorney Jennifer B. Lowery.

Carolyn Price Austin, 67, Houston, pleaded guilty as did Andrew Ian Farmer, 43, Thomas Galen Massey, 51, Eddie Douglas Austin Jr., 71, and Charles Earl Grob, 41, all also of Houston; John David Brotherton, 62, League City; and Scott Russell Sieck, 62, Winter Park, Florida.

Today, U.S. District Judge Vanessa Gilmore sentenced her to 12 months in federal prison to be immediately followed by one year of supervised release. In handing down the sentence, the court noted the large sum of money lost by the victims in the case and that there were “some people that lost all their money.”

Previously, Judge Gilmore ordered Farmer to serve a sentence of 72 months. Brotherton, Grob and Massey were ordered to serve 60 months, 12 months and three years of probation, respectively, while Eddie Austin and Sieck both were ordered to serve 36-month terms of imprisonment.

All seven must also pay restitution the victims of their scheme. Farmer and Sieck were each ordered to pay $8 million, while Eddie Austin must pay $6.6 million. The court ordered Grob and Massey to pay $4.5 and $1 million, respectively while Brotherton must pay $6.2 million. The court held open the amount of restitution Carolyn Austin will be required to pay to enable the parties to submit an agreed upon amount.

Farmer, Eddie Austin, Sieck, Brotherton and Grob were further ordered to forfeit additional funds to the United States in amounts ranging from $242,907 to $6 million.

The defendants admitted to their involvement in a conspiracy to commit fraud in microcap securities. During the course of the conspiracy, they obtained control of the stock of numerous companies, then “pumped up” the price of the stock through false and misleading press releases and fraudulent trading techniques. They then “dumped” their shares of stock onto the market for a significant profit.

Farmer and Brotherton are in custody serving their sentence at a U.S. Bureau of Prisons facility. Eddie Austin, Carolyn Austin and Sieck were permitted to remain on bond and voluntarily surrender at a later date. Grob has completed his sentence and is currently on supervised release.

The FBI conducted the investigation with the assistance of the Securities and Exchange Commission and Financial Industry Regulatory Authority. Assistant U.S. Attorneys Justin R. Martin and Michael Chu are prosecuting the case.

Seven Defendants Convicted in Securities Fraud Conspiracy

FEB 12, 2019 | REPUBLISHED BY LIT: DEC 13, 2021

HOUSTON – The last defendant charged in relation to a more than $40 million securities fraud “pump and dump” conspiracy has now been convicted, announced U.S. Attorney Ryan K. Patrick. With the guilty plea of John David Brotherton, 59, of League City, today, all seven defendants charged in the case now stand convicted.

Andrew Ian Farmer, 40, Thomas Galen Massey, 48, Eddie Douglas Austin Jr., 68, Carolyn Price Austin 64, and Charles Earl Grob, 38, all of Houston, and Scott Russell Sieck, 60, of Winter Park, Florida, all had previously entered pleas of guilty for their respective roles in the case.

Farmer, Massey, Eddie Austin, Brotherton, Sieck and Grob admitted they participated in a conspiracy to commit fraud in microcap securities. During the course of the conspiracy, these six defendants obtained control of the stock of numerous companies, then “pumped up” the price of the stock through false and misleading press releases and fraudulent trading techniques. They then “dumped” their shares of stock onto the market for a significant profit.

As part of her plea agreement, Carolyn Austin admitted she knew of the intended manipulation of the stock prices and acted to conceal this fact from law enforcement.

U.S. District Judge Vanessa D. Gilmore has set Brotherton’s sentencing for June 3, 2019, along with Sieck, Grob and Massey. Eddie and Carolyn Austin are set for June 17, while Farmer will be sentenced June 24. Farmer faces up 10 years in prison, while Carolyn Austin’s conviction carries a possible three-year-term of imprisonment. The remaining defendants face a maximum of five years.

All seven defendants could also be ordered to pay up to a $250,000 fine.

With the exception of Brotherton, who is in now in custody following violations of his conditions of release, the remaining defendants were permitted to remain on bond pending their respective sentencing hearings.

The FBI conducted the investigation with the assistance of the Securities and Exchange Commission and Financial Industry Regulatory Authority. Assistant U.S. Attorneys Justin R. Martin and Michael Chu are prosecuting the case.