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Case 3:14-cr-05348-RBL Document 119 Filed 06/22/15 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. CR14-5348 RBL


UNITED STATES
SENTENCING MEMORANDUM

v.
MIKHAIL GALAS,
Defendant.

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Defendant Mikhail Galas participated in at least five separate pump and dump
trading schemes involving thinly traded stocks, including the stock of ISM International,
Inc. (ISML). The ISML manipulation allowed Galas and his co-schemers to earn over
$244,000 in illicit profits. While defendant Galass personal profit was relatively small
in the ISML manipulation, his conduct assisted in the facilitation of the fraud which
harmed scores of investors. Furthermore, the defendants participation in the ISML
manipulation was not an isolated incident. He participated in at least four other stock
manipulation schemes prior to his arrest.
Given the impact the defendants fraudulent conduct had on the victims and the
integrity of the financial markets, the number of manipulations defendant Galas
participated in, and the need to deter others from engaging in stock manipulation, a 24

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United States Sentencing Memorandum/ - 1
U.S. v. Mikhail Galas, CR14-5348 RBL

UNITED STATES ATTORNEY


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

Case 3:14-cr-05348-RBL Document 119 Filed 06/22/15 Page 2 of 15

1 month term of imprisonment is sufficient, but not greater than necessary, to reflect the
2 goals of sentencing.
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I.

PROCEDURAL HISTORY

On August 5, 2014, the defendant was arrested pursuant to a federal Complaint


and arrest warrant. Presentence Investigation Report (PSR) 4. Defendant Galas
was released on pretrial supervision on August 14, 2014. Id. On February 4, 2015, the
defendants bond conditions were modified to include a prohibition on accessing a
computer after the defendant attempted to access his frozen E*Trade account, and to

9 address the defendants improper contact with Tovy Pustovit, then a possible witness in
10 this prosecution. Id. On February 23, 2015, defendant Galas pleaded guilty to
11 Conspiracy to Commit Securities Fraud. PSR 5. Defendant Galas is scheduled to be
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sentenced at 2:00 p.m. on June 26, 2015.
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II.
FACTS
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A.
Background
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1.
Pump and Dump Schemes
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A pump and dump scheme is a form of market manipulation designed to

18 create a false and misleading appearance of a market for and interest in the security of a
19 publicly traded company in order to entice unsuspecting investors to purchase the stock at
20 artificially high prices. There are generally three phases to a pump and dump scheme: (1)
21 obtaining and concealing control of a significant portion of a publicly traded company's
22 stock; (2) fraudulently inflating the price and trading volume of the company's stock
23 through a variety of means, including engaging in manipulative, coordinated trading of
24 the companys stock to create the false appearance of market interest, and disseminating
25 false and misleading promotional materials to the investing public; and (3) once the stock
26 price has been fraudulently inflated, selling or dumping the stock at the fraudulently
27 inflated price. The price of the manipulated stock collapses soon after the dump as the
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United States Sentencing Memorandum/ - 2
U.S. v. Mikhail Galas, CR14-5348 RBL

UNITED STATES ATTORNEY


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

Case 3:14-cr-05348-RBL Document 119 Filed 06/22/15 Page 3 of 15

1 perpetrators cease propping up the stocks price, and innocent investors are left with
2 worthless stock.
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Individuals engaged in pump and dump schemes are frequently affiliated

4 with stock promotion websites and/or email accounts. These individuals use these
5 websites and email accounts to disseminate false and misleading promotional materials
6 concerning the stock. For example, they will blast false and misleading email
7 communication touting a likely sudden increase in a particular stock price or volume
8 without disclosing the fact that, in truth, the promoters were responsible for the recent
9 increase in price and volume through their manipulative, coordinated trading activities.
10 Manipulators frequently cause the dissemination of a barrage of misleading promotional
11 materials concerning a specific stock at or near the end of the manipulation. The
12 manipulators then sell their accumulated position at the same time the promotions are
13 disseminated, thus profiting from the interest generated by the promotions.
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The stocks favored in market manipulation schemes are generally those that

15 are thinly traded and quoted through an "over-the-counter" alternative trading service,
16 such as OTC Markets or OTCBB. These OTC trading platforms provide a marketplace
17 to quote and trade shares of companies that do not meet the listing requirements for
18 trading on a national exchange, such as the New York Stock Exchange or NASDAQ.
19 Many companies, or "issuers," that offer their stock through OTC trading platforms do
20 not submit regular, independently audited financial reports or make other disclosures with
21 the SEC. The securities associated with such non-filing issuers do not have many buyers
22 and sellers; in other words, they are thinly traded. They also often trade at prices well
23 below one dollar per share, and hence are sometimes known as "penny stocks." With
24 little to no information about the issuer coupled with thin trading, such stocks are
25 susceptible to manipulation by individuals who are able to accumulate large blocks of
26 shares for the purpose of profiting from the manipulation.
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United States Sentencing Memorandum/ - 3
U.S. v. Mikhail Galas, CR14-5348 RBL

UNITED STATES ATTORNEY


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

Case 3:14-cr-05348-RBL Document 119 Filed 06/22/15 Page 4 of 15

2.

Manipulative Stock Trading Practices


Manipulative trading techniques frequently involve trading activity with no

3 real economic purpose, including matched trades and a practice known as layering or
4 spoofing. A matched trade is trading that involves the prearranged purchase and sale
5 of stock between accounts controlled by different parties. Colluding parties engage in
6 matched trades in order to create the misleading impression of an increase in trading
7 volume and price. Layering or spoofing is a practice where a trader places non-bona fide
8 orders - orders that the trader does not intend to have executed - to induce others to buy
9 or sell a stock at a price not representative of actual supply and demand. More
10 specifically, when engaging in layering or spoofing, a trader repeatedly enters a buy order
11 for a stock that the trader subsequently cancels prior to trade execution. This type of
12 activity is manipulative because it is done with the intention of tricking other investors to
13 purchase the stock at an artificial price driven by the orders the trader cancels. Layering
14 and spoofing impacts the best bid price and gives the market false impression of active
15 trading and volume when, in fact, the trader had no intention of completing the purchase.
16 B.

Defendant Galass Participation in Stock Manipulations

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In December 2011, co-defendants Alexander Hawatmeh and Christopher Mrowca

18 agreed to conduct a pump and dump scheme involving ISML stock. PSR 8; Plea
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Agreement 7b. At the time, ISML stock was trading over-the-counter, had very little
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trading volume, and was trading for less than one cent per share. PSR 8; Plea
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Agreement; 7b. In furtherance of their scheme, co-defendants Hawatmeh and Mrowca
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agreed: (1) Hawatmeh would accumulate ISML stock in accounts he controlled; (2)
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Hawatmeh, Mrowca, and others would engage in manipulative trading in ISML stock to
24 give the market the fraudulent appearance that there was legitimate interest in ISML
25 stock and to manipulate the price of ISML upwards; (3) Mrowca would promote the
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stock using the Money Runners Group, a stock promotion he controlled; (4) Hawatmeh
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would sell the ISML stock he accumulated in the market as the price rose in response to
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United States Sentencing Memorandum/ - 4
U.S. v. Mikhail Galas, CR14-5348 RBL

UNITED STATES ATTORNEY


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

Case 3:14-cr-05348-RBL Document 119 Filed 06/22/15 Page 5 of 15

1 the promotion; and (5) Hawatmeh and Mrowca would split the after-tax profits from the
2 scheme. PSR 9; Plea Agreement 7b.
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Shortly after Hawatmeh and Mrowca hatched the scheme, they invited defendant

4 Galas to participate in the ISML manipulation. PSR 10; Plea Agreement 7c. On
5 January 18, 2012, Galas began buying and selling ISML stock at the direction of the
6 other co-defendants in order to give the market the false appearance of an active market
7 for the stock and to fraudulently inflate the price of ISML stock. Id.
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In order to execute the scheme, from December 15, 2011 through April 10, 2012,

9 Hawatmeh accumulated approximately 2.6 million shares of ISML at prices between


10 $.009 and $.09 per share. Plea Agreement 7d; Complaint 16. During this period,
11 Hawatmehs trading accounted for approximately 85% of the total trading volume in
12 ISML stock. Complaint 16. In addition to accumulating shares for the inevitable
13 dump, Hawatmeh, Mrowca, and Galas engaged in coordinated, manipulative trading in
14 ISML to raise the trading volume and influence the bid price and closing price in order to
15 give the market the false appearance of an active market in ISML. PSR 10; Plea
16 Agreement 7c; Complaint 17-22. When taken together, the trading by all the co17 schemers in ISML in the spring of 2012 represented about 90% of the total trading
18 volume in ISML, indicating that they essentially controlled all the buying and selling of
19 ISML. Complaint 23. Based on this manipulative trading, the price of ISML rose to
20 $.096 per share by April 19, 2012. Id.
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In the week leading up to the planned dump of shares on April 20, 2012, Mrowca

22 began issuing false and misleading promotional messages through the Money Runners
23 Group which were designed to induce unsuspecting investors to purchase ISML stock.
24 Complaint 26. For example, on April 13, 2012, the Money Runners Group issued a
25 fraudulent promotional message indicating that the Money Runners Group intended to
26 alert a new stock play on April 20, 2012. Id. The message, which did not mention
27 ISML by name, indicated that the company is about to make some BIG moves and with
28 a VERY small float and with what the company has to offer we can see the largest stock
United States Sentencing Memorandum/ - 5
U.S. v. Mikhail Galas, CR14-5348 RBL

UNITED STATES ATTORNEY


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

Case 3:14-cr-05348-RBL Document 119 Filed 06/22/15 Page 6 of 15

1 gainer Money Runners has ever seen and that the Money Runners team will be
2 personally Buying [sic] loads of shares when we alert on 4/20! Id. These claims were
3 false and designed to raise interest in the upcoming fraudulent promotion on April 20,
4 2012, as the message did not disclose approximately 90% of the trading volume was
5 controlled by Hawatmeh, Mrowca, Galas and others. Complaint 27. Furthermore, the
6 message falsely represented that Hawatmeh, Mrowca, Galas and others would be buying
7 ISML shares when they knew that they intended to dump their accumulated shares into
8 the market for profit. Id.
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On April 20, 2012, Hawatmeh, Mrowca, and Galas executed their agreement to

10 fraudulently promote the stock and dump the accumulated shares. PSR 11; Plea
11 Agreement 7e; Complaint 30-31. Shortly before the market opened, the Money
12 Runners Group alerted its subscribers that ISML was the play, and in response, the price
13 of ISML rose sharply. Id. At that time, Hawatmeh, Galas and others sold their shares
14 reaping large collective profits of approximately $244,972. PSR 11; Plea Agreement
15 7e; Complaint 32-33. Defendant Galass profit was $15,130. In the days following
16 the dump, the shares of ISML collapsed. PSR 11.
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After the manipulation of ISML, defendant Galas engaged in similar conduct in

18 additional stocks, PSR 12; Plea Agreement 7f. Specifically, Galas participated in the
19 manipulation of at least four additional stocks: First Columbia Gold Corp. (FCGD),
20 Fastfunds Financial Corporation (FFFC), Madison Systems, Inc. (MADI), and IBSG
21 International, Inc. (IBIN). Id.
22 C.
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Defendant Galass Cooperation with Law Enforcement


After the search of his residence and his arrest, defendant Galas agreed to be

24 interviewed by the United States. During two proffer sessions, defendant Galas admitted
25 to the facts underlying the manipulations of ISML, FCGD, FFFC, MADI, and IBIN. In
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addition, defendant Galas informed the United States about additional individuals
involved in the manipulation of penny stocks. Most importantly, defendant Galas

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United States Sentencing Memorandum/ - 6
U.S. v. Mikhail Galas, CR14-5348 RBL

UNITED STATES ATTORNEY


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

Case 3:14-cr-05348-RBL Document 119 Filed 06/22/15 Page 7 of 15

1 informed the United States that Tovy Pustovit engaged in obstruction of justice. On
2 August 5, 2014, Galas was arrested as he exited a plane he had flown to Los Angeles
3 with his wife and Tovy Pustovit. According to Galas, after he was released on bail he
4 met with Tovy Pustovit in a hotel room. At that time, Pustovit told Galas that Pustovit
5 had arranged for another individual to wipe a computer. The United States conducted
6 additional investigation of this allegation and determined that Pustovit had engaged in
7 obstructive behavior.
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As a result, when Pustovit pleaded guilty on May 19, 2015, Pustovit admitted that

9 he placed a telephone call to an individual in the Vancouver, Washington area and


10 directed that individual to erase data from a computer located in Pustovits apartment.
11 See Plea Agreement in United States v. Tovy Pustovit, CR15-5251 RBL, Dkt. 9 at 9e.
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III.

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SENTENCING GUIDELINES RANGE

The Sentencing Guidelines are advisory. United States v. Booker, 543 U.S. 220,
245-46 (2005). However, the district courts still must consult [the] Guidelines and take
them into account when sentencing[.] United States v. Cantrell, 433 F.3d 1269, 1279
(9th Cir. 2006) (internal citation omitted, internal quote omitted). The appropriate

17 guidelines range, though now calculated under an advisory system, remains the critical
18 starting point for the imposition of a sentence under 3553(a). United States v. Mashek,
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406 F.3d 1012, 1016 n.4 (8th Cir. 2005) (quoted approvingly in Cantrell, 433 F.3d at
1279).
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

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United States Sentencing Memorandum/ - 7


U.S. v. Mikhail Galas, CR14-5348 RBL

Adjustment
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+12
UNITED STATES ATTORNEY
700 STEWART STREET, SUITE 5220
SEATTLE, WASHINGTON 98101
(206) 553-7970

Case 3:14-cr-05348-RBL Document 119 Filed 06/22/15 Page 8 of 15

$244,719 as a result of the defendants conduct

Specific Offense Characteristic


USSG 2B1.1(b)(2)(A)(ii), because the offense involved
fifty (50) or more victims

+4

-2

A two level downward adjustment pursuant to USSG


3B1.2(b) for Galass minor role in the offense
Acceptance of Responsibility. USSG 3E1.1(a)

TOTAL OFFENSE LEVEL

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-3
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9 A.
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Specific Offense Characteristic 2B1.1(b)(1)(G): Use of Gain as


Alternative Measure of Loss

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

12 gain that resulted from the offense as an alternative measure of loss only if there is a loss
13 but it reasonably cannot be determined. Here, the parties agreed that while defendant
14 Hawatmehs conduct resulted in losses for many investors, the actual amount of loss
15 cannot reasonably be determined and, therefore, an agreed upon gain amount should be
16 used as an alternative measure. Given the manner in which trading records are kept and
17 produced by the various trading platforms and markets, an accounting of actual loss
18 would require the United States to individually audit thousands of separate purchase and
19 sales orders for ISML and attempt to match those thousands of purchase and sales orders
20 to a particular investor in order to determine whether any individual investor made
21 money or lost money on ISML. As an alternative, therefore, the parties urge the Court to
22 find that an appropriate measure of harm in this case for purposes of the Sentencing
23 Guidelines calculation would be the amount of net profit attained by Galas and his co24 conspirators from the scheme, which totaled $244,719.
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United States Sentencing Memorandum/ - 8
U.S. v. Mikhail Galas, CR14-5348 RBL

UNITED STATES ATTORNEY


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

Case 3:14-cr-05348-RBL Document 119 Filed 06/22/15 Page 9 of 15

1 B.
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Specific Offense Characteristic USSG 2B1.1(b)(2)(A)(ii): Number of


Victims

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

4 obtained and reviewed trading records for ISML on the date of the fraudulent promotions
5 and sale of Galas, Hawatmeh and the other co-conspirators stock. These trading records
6 reveal over three hundred fifty investors purchased those stocks on the dates of the
7 fraudulent promotions. For example, for ISML on April 20, 2012 -- the day Mrowca
8 alerted his subscribers to purchase ISML while his Hawatmeh, Galas, and others
9 simultaneously dumped their accumulated shares approximately 380 separate investors
10 purchased ISML stock. Certain of these investors may not have actually suffered any
11 loss depending upon the timing of their purchase and sale or whether or not they had
12 taken additional positions prior to the dates of the fraudulent promotions. Rather than
13 undertake an expensive and time consuming task of auditing all purchase and sales
14 records for each separate investor, the United States and the defendant agreed and
15 stipulated for the purpose of the Plea Agreement that victims in this case at least
16 numbered more than 50 individuals.
17 C.

Specific Offense Characteristic USSG 2B1.1(b)(10)(C): Sophisticated Means

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Application Note 9(B) to 2B1.1 defines sophisticated means to include

19 especially complex or especially intricate offense conduct pertaining to the execution or


20 concealment of an offense. In this case, both the execution and concealment of the
21 offense involved sophisticated means. In executing the scheme, Hawatmeh coordinated
22 with a number of individuals, including Mrowca and Galas, to engage in securities
23 trading techniques that required advanced knowledge of markets and, in particular, how
24 trading information is conveyed so as to successfully create the false illusion that a once
25 barely traded penny stock was suddenly gaining interest and momentum from investors.
26 Hawatmeh and Mrowcas agreement to use teaser messages to Money Runners Groups
27 subscribers leading up to the day Hawatmeh and Mrowca planned to dump the stock also
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United States Sentencing Memorandum/ - 9
U.S. v. Mikhail Galas, CR14-5348 RBL

UNITED STATES ATTORNEY


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

Case 3:14-cr-05348-RBL Document 119 Filed 06/22/15 Page 10 of 15

1 reveals a sophisticated understanding of investor psychology and how to manipulate that


2 psychology.
3 D.

Applicable Sentencing Guidelines Range

Defendant Galas has no criminal convictions and is a Criminal History Category I.

5 With a Total Offense Level of 18 and Criminal History Category I, defendant Galass
6 applicable sentencing guidelines range is 27 to 33 months. PSR 46.
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IV.

THE 3553(A) FACTORS SUPPORT A SENTENCE OF 24 MONTHS

Taking into account the sentencing guideline range and all of the sentencing

9 factors under Title 18, United States Code, Section 3553(a), including the nature and
10 circumstances of the offense, the history and characteristics of the defendant, and the
11 need for the sentence to reflect the seriousness of the offense, to promote respect for the
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law, to provide just punishment, and to afford adequate deterrence, the United States
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respectfully requests that the Court sentence defendant Galas to 24 months imprisonment
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as it is sufficient, but not greater than necessary, to meet the goals of sentencing.
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A.
The Serious Nature and Circumstances of the Offense
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A sentence of 24 months incarceration reflects the serious nature and
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circumstances of the defendants fraudulent conduct. During the manipulative ISML
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pump and dump scheme, the co-schemers fraudulently obtained over $244,000. Based in
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large part on false statements concerning the true worth of the underlying securities he
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was manipulating, well over three hundred individuals purchased stock at fraudulently
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inflated prices. While defendant Galass only profits totaled $15,000, his manipulative
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trading allowed Hawatmeh and Mrowca to obtain significant profits to the detriment of
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retail investors. Furthermore, Galass criminal activity was not an isolated incident
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resulting from one poor decision to participate in the ISML manipulation. After that
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manipulation, the defendant participated in the manipulation of at least four other stocks.
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United States Sentencing Memorandum/ - 10
U.S. v. Mikhail Galas, CR14-5348 RBL

UNITED STATES ATTORNEY


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

Case 3:14-cr-05348-RBL Document 119 Filed 06/22/15 Page 11 of 15

The criminal activity at issue in this case had a profound impact on the victims of

2 the offense. This type of conduct causes real financial harm to a number of hard working
3 individuals, and undermines the integrity of the United States financial markets.
4 B.
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The History and Characteristics of the Defendant


A sentence of 24 months is also supported by the history and characteristics of the

defendant. 18 U.S.C. 3553(a)(1). The United States has considered both the
aggravating and mitigating factors in the defendants history and characteristics and the
mitigating factors in recommending a sentence of 24 months which is below the low-end

9 of the advisory guidelines range. As noted above, the defendant participated in a


10 manipulative scheme in ISML stock for which the co-schemers profited handsomely.
11 After the ISML manipulation, the defendant participated in four additional stock
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manipulations and profited from those manipulations. Furthermore, the defendants
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fraudulent conduct impacted numerous investors.
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While the defendant has no prior convictions, he has had two encounters with law
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enforcement, a January 2010 arrest for reckless driving and a recent arrest for public
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intoxication. Furthermore, the defendants bond was modified in the instant case after he
17 attempted to access his frozen E*Trade account.
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In making its recommendation of 24 months, the United States considered certain


mitigating factors in defendant Galass history and characteristics, including defendant
Galass timely admission of his guilt and his cooperation which led to the application of a
guideline enhancement for Tovy Pustovit.
C.

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

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A sentence of 24 months is also needed to reflect the seriousness of the offense,

25 to promote respect for the law, and to provide just punishment for the offense. 18 U.S.C.
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3553(a)(2)(A). Securities fraud is a serious offense that carries statutory maximum
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terms of imprisonment of 20 years and maximum fine of up to $5 million. The
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United States Sentencing Memorandum/ - 11
U.S. v. Mikhail Galas, CR14-5348 RBL

UNITED STATES ATTORNEY


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

Case 3:14-cr-05348-RBL Document 119 Filed 06/22/15 Page 12 of 15

1 seriousness of this crime is greatly enhanced when, as here, the fraudulent scheme
2 stretches over multiple years, is perpetrated on numerous victims, and involves
3 sophisticated means.

Given the seriousness of the crime and the defendants behavior

4 during its commission, a term of 24 months imprisonment will promote respect for the
5 law and provide just punishment for the offense.
6 D.
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To Afford Deterrence
Section 3553(a)(2)(B) requires that the sentence imposed reflect the seriousness

of the offense and afford adequate deterrence. The securities markets are a critical

9 aspect of our economy, and many depend upon it to generate returns on savings for future
10 use. Market manipulations, like those conducted by defendant Hawatmeh, create doubts
11 about the integrity and fairness of such markets in general and, if undeterred, will lead to
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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
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such as this one because such crimes are notoriously difficult to detect and prosecute.
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Perpetrators, like Hawatmeh, hide behind multiple brokerage accounts that are held by or
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opened in the names of other individuals, therefore making it difficult to connect the
17 trading activity and the promotions to the actual individuals conducting the pump and
18 dump. Given the difficulty of detection, effective deterrence requires meaningful
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punishment in each instance where the perpetrator has been caught. As explained by
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Judge Richard Posner in United States v. Heffernan, 43 F.3d 1144, 1149 (7th Cir. 1994),
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[c]onsideration of (general) deterrence argue for punishing more heavily those offenses
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that either are lucrative or are difficult to detect and punish, since both attributes go to
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increase the expected benefits of a crime and hence the punishment required to deter it.
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On the other hand, punishments that are perceived as too light compound the
25 skepticism of the public and fuel the perception that the securities markets are purposely
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rigged against the average investor. Therefore, the United States urges the Court to
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impose meaningful punishment in this case.
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United States Sentencing Memorandum/ - 12
U.S. v. Mikhail Galas, CR14-5348 RBL

UNITED STATES ATTORNEY


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

Case 3:14-cr-05348-RBL Document 119 Filed 06/22/15 Page 13 of 15

1 E.

The Need to Avoid Unwarranted Sentencing Disparities

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

3 among similarly situated defendants. On June 5, 2015, the Court sentenced co4 defendants Hawatmeh and Mrowca to terms of imprisonment of 60 months and 36
5 months, respectively. In addition, the United States intends to seek a sentence of 63
6 months for Tovy Pustovit. Given defendant Galass minor role in the ISML offense, the
7 United States respectfully requests that he be given the lowest sentence of all the
8 defendants. A sentence of 24 months, however, is still warranted given the defendants
9 conduct in the ISML manipulation and his repeated participation in other stock
10 manipulations.
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V.

RESTITUTION

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
government does not have access to the brokerage records of each individual who may

17 have been impacted by ISML. Instead, as noted above, in order to calculate with any
18 reasonable degree of certainty the amount of loss each investor suffered, the government
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would have to individually audit separate purchase and sales orders, match them up with
an individual investor, and then determine whether that individual made money or lost
money. Such an endeavor would take significant expenditure of personnel time and
resources, and unduly delay sentencing. In sum, the burden of calculating and verifying
each investors loss outweighs the need to provide restitution to the victims in this case,

24 and the parties urge the Court to so find.


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United States Sentencing Memorandum/ - 13
U.S. v. Mikhail Galas, CR14-5348 RBL

UNITED STATES ATTORNEY


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

Case 3:14-cr-05348-RBL Document 119 Filed 06/22/15 Page 14 of 15

1
2

VI.

CONCLUSION

For the foregoing reasons, the United States recommends that the Court sentence

3 defendant Galas to 24 months imprisonment followed by a term of three years of


4 supervised release.
5

DATED: June 22, 2015.

Respectfully submitted,

7
ANNETTE L. HAYES
United States Attorney

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/s/ Justin W. Arnold


JUSTIN W. ARNOLD
Assistant United States Attorney
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. Mikhail Galas, CR14-5348 RBL

UNITED STATES ATTORNEY


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

Case 3:14-cr-05348-RBL Document 119 Filed 06/22/15 Page 15 of 15

CERTIFICATE OF SERVICE

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I hereby certify that on June 22, 2015, I electronically filed the foregoing with the

4 Clerk of Court using the CM/ECF system which will send notification of such filing to
5 the attorney(s) of record for the defendant(s). I hereby certify that I have served the
6 attorney(s) of record for the defendant(s) that are non CM/ECF participants via e-mail
7 and/or telefax.
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s/ Lissette Duran-Leutz
Lissette Duran-Leutz
Paralegal Specialist
United States Attorney=s Office
Western District of Washington
700 Stewart Street, Suite 5220
Seattle, Washington 98101-1271
Telephone: (206) 553-7234
Fax:
(206) 553-2502
E-mail: Lissette.I.Duran-Leutz@usdoj.gov

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United States Sentencing Memorandum/ - 15
U.S. v. Mikhail Galas, CR14-5348 RBL

UNITED STATES ATTORNEY


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