Two men have pleaded guilty in federal court in Atlanta to conspiring to commit securities fraud in a scheme that used hacked U.S. brokerage accounts to artificially inflate penny-stock prices before cashing out, generating more than $1 million in losses. Zoltan Nagy, 60, of Vancouver, British Columbia, and Glenn Laken, 72, of Chicago, admitted their roles while a sixth alleged co-conspirator, Rahim Mohamed, remains at large.
According to WSB-TV, Nagy and Laken were majority shareholders of publicly traded penny-stock companies tied to separate but similar manipulation schemes, according to federal prosecutors. The outlet reports that the scheme relied on hacking into U.S.-based online brokerage accounts to force unwitting purchases of penny stocks, which co-conspirators then sold off after artificially driving up the share prices. Nagy served as the sole officer and director of Lotus Bio-Technology Development Corp., which traded under the ticker LBTD, while Laken was CEO, chairman and controlling shareholder of a company holding a 61 percent stake in Good Gaming Inc., which traded under the ticker GMER, the station's report states.
How the Hacked Accounts Were Used
Per the same account, prosecutors allege that on August 16, 2017, Rahim Mohamed, or someone acting at his direction, hacked a U.S. online brokerage account, forcing it to buy 200,000 LBTD shares. Co-conspirators then sold roughly 261,000 LBTD shares that same day. A month later, on September 19, 2017, Mohamed allegedly hacked 24 customer accounts across multiple brokerage firms, forcing those accounts to buy millions of LBTD shares, which the conspirators then sold for approximately 7.75 million shares and nearly $1.1 million in proceeds, prosecutors say.
By early August 2017, Nagy and co-conspirators Richard Tang, Davies Wong and Phillip Sewell controlled the majority of publicly available LBTD shares, according to the station's report. The scheme later shifted to Good Gaming stock: between January 12 and January 18, 2018, Tang allegedly coordinated with Laken to transfer approximately 2.9 million GMER shares into co-conspirator accounts. On January 22, 2018, hacked accounts were forced to buy over one million GMER shares, and conspirators sold more than 700,000 of those shares for nearly $170,000.
Prior Guilty Pleas and a Suspect's Criminal Past
Three Canadian co-conspirators had already pleaded guilty in connection with the Lotus scheme before Nagy and Laken entered their pleas. Davies Wong, 67, of Vancouver, pleaded guilty to conspiracy to commit securities fraud on November 29, 2023. Phillip Sewell, 65, also of Vancouver, pleaded guilty to securities fraud conspiracy on September 17, 2024. Richard Tang, 49, of Vancouver, pleaded guilty to wire fraud conspiracy on October 23, 2024, and faces up to 20 years in prison, according to the same WSB-TV report.
The station's report also notes that Laken was previously convicted in 2002 of racketeering conspiracy and wire fraud tied to stock manipulation and pension fund fraud. Laken, Nagy, Sewell and Wong each face up to five years in prison for their roles in the current case.
Official Comment and the Search for a Missing Suspect
U.S. Attorney Theodore S. Hertzberg said the defendants used sophisticated stock price manipulation that harmed investors and undermined market confidence, adding that the scheme disrupted market integrity. Hertzberg said authorities will continue aggressively prosecuting securities fraud alongside law-enforcement and SEC partners, per the same report.
Rahim Mohamed, 50, a Calgary, Alberta, resident, remains at large, according to WSB-TV. Authorities have asked anyone with information about Mohamed's whereabouts to contact local law enforcement. Each defendant faces potential restitution orders and fines of up to $250,000 or twice the financial gain or loss, and all five defendants have sentencing hearings scheduled for January 2027 in Atlanta.
A Broader Pattern of Hacked-Account Stock Fraud
The case sits within a wider enforcement push against so-called pump-and-dump schemes that exploit hacked brokerage accounts. The U.S. Securities and Exchange Commission has alleged that 13 individuals, five entities and two relief defendants illegally accessed at least 31 U.S. retail brokerage accounts, according to a U.S. Securities and Exchange Commission press release, which also identifies Lotus Bio-Technology Development Corp. and Good Gaming Inc. as the two microcap securities at the center of the alleged activity. The SEC complaint further states that Davies Wong and Glenn Laken, respectively, controlled the majority of the Lotus and Good Gaming stock sold while the hacking attacks were carried out.
An analysis from the Norris McLaughlin Biz Law Blog notes that the alleged account intrusions occurred in late summer 2017 and in early 2018, leading to three major stock dumps in August 2017, September 2017 and January 2018. The blog also states that Mohamed coordinated at least some of the hacks of the retail brokerage accounts, and that the SEC's investigation drew assistance from 18 other law-enforcement and regulatory bodies.
