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The case can be viewed at the link below, I have also uploaded the documentation.
https://www.justice.gov/criminal-vns/case/Nielsen
Please find relevant news and answer the questions on reliable news sites such as the financial times, the wall street journal, the economist, BBC, ABC, ASIC, etc…
Case 5:22-cr-00161-BLF Document 1 Filed 04/18/22 Page 1 of 7
1 STEPHANIE M. HINDS (CABN 154284)
United States Attorney
2
THOMAS A. COLTHURST (CABN 99493)
3 Chief, Criminal Division
4 JUSTIN D. WEITZ (NYBN 5027966)
JACOB FOSTER (CABN 250785)
5 Assistant Chiefs, Fraud Section
LAURA CONNELLY (DCBN 241537)
6 Trial Attorney, Fraud Section
7
U.S. Department of Justice, Fraud Section
1400 New York Avenue NW
Washington, DC 20005
Telephone: 202-262-3520
Laura.Connelly@usdoj.gov
8
9
10 LLOYD FARNHAM (CABN 202231)
Assistant United States Attorney
11
450 Golden Gate Avenue, Box 36055
12
San Francisco, CA 94102-3495
Telephone: (415) 436-7200
13
lloyd.farnham@usdoj.gov
14 Attorneys for United States of America
15
UNITED STATES DISTRICT COURT
16
NORTHERN DISTRICT OF CALIFORNIA
17
SAN JOSE DIVISION
18
19 UNITED STATES OF AMERICA,
20
21
)
)
)
)
)
)
)
)
)
)
Plaintiff,
v.
22 JASON NIELSEN,
23
Defendant.
24
VIOLATIONS:
15 U.S.C. §§ 77q(a) & 77x – Securities Fraud;
18 U.S.C. §§ 981(a)(1)(C) and 28 U.S.C.
§ 2461 – Criminal Forfeiture
SAN JOSE VENUE
The United States Attorney charges that:
Introductory Allegations
27
28
CR 22-00161-BLF
INFO RMATIO N
25
26
Case No.
1.
INFORMATION
Arrayit Corp. (“Arrayit”) was a publicly-traded medical technology company
1
Case 5:22-cr-00161-BLF Document 1 Filed 04/18/22 Page 2 of 7
1 incorporated in Nevada, and based in Sunnyvale, California. Arrayit described itself as “a world leader
2 in microarray technology empowering researchers and doctors in the life sciences, wellness and
3 healthcare testing markets.”
4
2.
Shares of Arrayit stock were traded “over the counter” (“OTC”) using the ticker symbol
5 “ARYC.” The OTC market is a system of trading stocks that are not listed on centralized stock
6 exchanges, such as the New York Stock Exchange or Nasdaq. Many OTC stocks are known as “penny
7 stocks” that trade for less than one dollar per share. As a security traded OTC, individuals, entities, and
8 other investors were able to buy or sell Arrayit shares. Arrayit securities were regulated by the U.S.
9 Securities and Exchange Commission (“SEC”).
10
3.
Defendant JASON NIELSEN (“NIELSEN”) was a large investor in Arrayit who, at
11 various times, owned as much as 10% of Arrayit’s stock. NIELSEN frequently posted on public
12 message boards related to OTC securities, including Arrayit. One such public message board was
13 “Investors Hub,” or “iHub.” NIELSEN posted on public message boards using the username
14 “PennyStockAlert,” and frequently posted messages about Arrayit.
15
The Scheme to Defraud
16
4.
Beginning in or around 2019 and continuing through in or around 2020, NIELSEN
17 engaged in a scheme to defraud purchasers and sellers of Arrayit’s securities by communicating and
18 reposting materially false and misleading information about Arrayit, the existence of genuine supply and
19 demand for Arrayit securities, and the nature of his personal financial stake in Arrayit securities, all in
20 order to fraudulently induce other investors to purchase Arrayit securities and thereby drive up the
21 stock’s price, and all while NIELSEN simultaneously and secretly was selling his own previously
22 acquired shares at an artificially inflated price.
23
5.
The purpose of the scheme to defraud was for NIELSEN to enrich himself at the expense
24 of other investors by purchasing and selling Arrayit securities through fraudulent and manipulative
25 means.
26
6.
NIELSEN used a variety of manners and means in furtherance of the scheme, including,
27 among others:
28
a.
INFORMATION
“Scalping,” which is a form of market manipulation in which an individual
2
Case 5:22-cr-00161-BLF Document 1 Filed 04/18/22 Page 3 of 7
1 purchases shares of a stock, recommends that others purchase the stock without disclosing his intention
2 to sell, and subsequently sells the stock. NIELSEN engaged in scalping in furtherance of the scheme by
3 making materially false and misleading statements to the public and to Arrayit shareholders about the
4 nature and timing of NIELSEN’s own financial interest in Arrayit securities, at times representing that
5 he was purchasing or holding shares of Arrayit securities he was promoting on iHub when, in fact, he
6 was secretly selling Arrayit securities;
7
b.
“Spoofing,” which is the manipulative and deceptive practice of placing orders to
8 buy and sell securities with the intent to cancel those orders before execution. NIELSEN engaged in
9 spoofing in furtherance of the scheme by placing orders to buy large quantities of Arrayit stock that he
10 intended to cancel before execution in an effort to deceive the public and Arrayit shareholders by
11 signaling the existence of demand for Arrayit securities which did not exist, and to allow NIELSEN to
12 sell his shares at artificially inflated prices;
13
c.
Using his iHub account to disseminate false, positive news and information about
14 Arrayit and the release of Arrayit’s financial reports; and
15
d.
Concealing, through false and misleading statements, NIELSEN’s scheme to
16 defraud purchasers and sellers of Arrayit’s securities and the market at large, and to illegally profit from
17 the proceeds of the scheme.
18
7.
It was further a part of the scheme to defraud that NIELSEN took the following actions,
19 among others:
20
a.
In furtherance of his scalping scheme, NIELSEN falsely posted on iHub about his
21 trading plans and position with regard to Arrayit stock. For example, on or about February 26, 2020,
22 NIELSEN posted, among many positive posts about Arrayit, “My ARYC shares are also locked up. No
23 one can shake them from my bulletproof safe
.” On the same day, NIELSEN sold 300,000 Arrayit
24 shares.
25
b.
On or about March 27, 2020, while NIELSEN was selling shares, NIELSEN
26 placed “spoof” orders to buy 2,000,000 shares at prices away from the best bid with the intent to cancel
27 those orders before execution. NIELSEN then posted to iHub about his bids, stating “Oh Boy Lol….2
28 million share bid.” Other posters replied with comments about the 2,000,000-share bids, but NIELSEN
INFORMATION
3
Case 5:22-cr-00161-BLF Document 1 Filed 04/18/22 Page 4 of 7
1 never acknowledged that he was, in fact, the one who had submitted the bids or that he intended to
2 cancel those orders before execution. NIELSEN subsequently cancelled the bids.
3
c.
In or around March 2020 through in or around April 2020, after Arrayit
4 announced that it had created a COVID-19 test, NIELSEN repeatedly posted positive news about
5 Arrayit’s COVID-19 test and the company’s potential. On or about March 18, 2020, NIELSEN posted
6 the same link to the Arrayit website’s instructions on COVID-19 testing repeatedly on iHub throughout
7 the day. NIELSEN also repeatedly stated his view on iHub that the stock was destined for high prices in
8 light of the news about the COVID-19 test, including a post saying “Give it time. 10% gainer
9 tomorrow…easy.”
10
d.
While NIELSEN was repeatedly posting about Arrayit’s COVID-19 test and
11 suggesting that Arrayit had a high upside, he was selling his own shares. From on or about March 11,
12 2020, through on or about April 6, 2020, while NIELSEN was promoting the stock on iHub, NIELSEN
13 sold over 3,000,000 shares of Arrayit at elevated prices. As NIELSEN was selling, he posted on iHub
14 that he was buying the stock. For example, on or about March 23, 2020, NIELSEN posted “I’m a buyer
15 at this level” and on or about March 30, 2020, NIELSEN posted “I’ll be buying another 100k
16 tomorrow!” even as he was selling shares.
17 COUNT ONE: (15 U.S.C. §§ 77q(a) & 77x – Securities Fraud)
18
8.
The allegations in Paragraphs 1 through 7 are realleged and incorporated as if fully set
19 forth here.
20
9.
Beginning in or around 2019 and continuing through in or around 2020, in the Northern
21 District of California and elsewhere, the defendant,
22
JASON NIELSEN,
23 willfully and knowingly, in the offer and sale of securities, namely Arrayit stock, by the use of means
24 and instruments of transportation and communication in interstate commerce and by use of the mails,
25 directly and indirectly (a) employed a device, scheme, and artifice to defraud; (b) obtained money and
26 property by means of an untrue statement of a material fact and an omission to state a material fact
27 necessary in order to make the statements made, in light of the circumstances under which they were
28 made, not misleading; and (c) engaged in a transaction, practice, and course of business which operated
INFORMATION
4
Case 5:22-cr-00161-BLF Document 1 Filed 04/18/22 Page 5 of 7
1 or would operate as a fraud or deceit upon the purchaser, in violation of Title 15, United States Code,
2 Sections 77q(a) and 77x.
3
4
FORFEITURE ALLEGATION:
5
10.
(18 U.S.C. §§ 981(a)(1)(C) & 28 U.S.C. § 2461 – Criminal
Forfeiture)
The allegations in Paragraphs 1 through 7 and 9 are re-alleged and incorporated by
6 reference for the purpose of alleging forfeiture pursuant to Title 18, United States Code, Section
7 981(a)(1)(C) and Title 28, United States Code, Section 2461(c).
8
11.
9
Upon conviction of the offense alleged in Count One, the defendant,
JASON NIELSEN,
10 shall forfeit to the United States pursuant to Title 18, United States Code, Section 981(a)(1)(C) and Title
11 28, United States Code, Section 2461, any property, real or personal, which constitutes or is derived
12 from proceeds traceable to said violations, including but not limited to a sum of money equal to the total
13 proceeds from the commission of said offense.
14
12.
If, as a result of any act or omission of the defendant, any of said property
15
a. cannot be located upon the exercise of due diligence;
16
b. has been transferred or sold to or deposited with a third person;
17
c. has been placed beyond the jurisdiction of the Court;
18
d. has been substantially diminished in value; or
19
e. has been commingled with other property, which cannot be divided without difficulty;
20 the United States shall be entitled to forfeiture of substitute property, pursuant to Title 21, United States
21 Code, Section 853(p), as incorporated by Title 18, United States Code, Section 982(b)(1), and Title 28,
22 //
23 //
24 //
25 //
26 //
27 //
28 //
INFORMATION
5
Case 5:22-cr-00161-BLF Document 1 Filed 04/18/22 Page 6 of 7
1 United States Code, Section 2461(c).
2
All pursuant to Title 18, United States Code, Sections 981(a)(1)(C) and Title 28, United States
3 Code, Section 2461.
4
5 DATED: April 18, 2022
6
STEPHANIE HINDS
United States Attorney
7
8
LLOYD FARHAM
Assistant United States Attorney
9
10
JOSEPH S. BEEMSTERBOER
Acting Chief, Fraud Section
11
12
/s/ Laura Connelly
JACOB FOSTER
JUSTIN WEITZ
Assistant Chiefs
LAURA CONNELLY
Trial Attorney
Fraud Section, Criminal Division
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
INFORMATION
6
Case 5:22-cr-00161-BLF Document 1 Filed 04/18/22 Page 7 of 7
AO 257 (Rev. 6/78)
DEFENDANT INFORMATION RELATIVE TO A CRIMINAL ACTION – IN U.S. DISTRICT COURT
BY:
COMPLAINT
INFORMATION
INDICTMENT
Name of District Court, and/or Judge/Magistrate Location
NORTHERN DISTRICT OF CALIFORNIA
SUPERSEDING
OFFENSE CHARGED
SAN JOSE DIVISION
Petty
15 U.S.C. §§ 77q(a) & 77x – Securities Fraud
Minor
DEFENDANT – U.S
Misdemeanor
JASON NIELSEN
Felony
PENALTY:
DISTRICT COURT NUMBER
Maximum 5 years in prison; Maximum fine of $250,000 or twice the
gross gain or loss; Maximum supervised release term of 3 years;
$100 mandatory special assessment; Forfeiture
CR 22-00161-BLF
DEFENDANT
IS NOT IN CUSTODY
PROCEEDING
Name of Complaintant Agency, or Person (& Title, if any)
person is awaiting trial in another Federal or State Court,
give name of court
1)
Has not been arrested, pending outcome this proceeding.
If not detained give date any prior
summons was served on above charges
2)
Is a Fugitive
3)
Is on Bail or Release from (show District)
this person/proceeding is transferred from another district
per (circle one) FRCrp 20, 21, or 40. Show District
this is a reprosecution of
charges previously dismissed
which were dismissed on motion
of:
U.S. ATTORNEY
DEFENSE
}
this prosecution relates to a
pending case involving this same
defendant
prior proceedings or appearance(s)
before U.S. Magistrate regarding this
defendant were recorded under
Name and Office of Person
Furnishing Information on this form
}
5)
On another conviction
6)
Awaiting trial on other charges
MAGISTRATE
CASE NO.
Yes
Has detainer
been filed?
DATE OF
ARREST
Federal
State
No
}
If “Yes”
give date
filed
Month/Day/Year
Or… if Arresting Agency & Warrant were not
DATE TRANSFERRED
TO U.S. CUSTODY
Month/Day/Year
This report amends AO 257 previously submitted
ADDITIONAL INFORMATION OR COMMENTS
NO PROCESS*
WARRANT
Bail Amount:
* Where defendant previously apprehended on complaint, no new summons or
warrant needed, since Magistrate has scheduled arraignment
Date/Time:
Comments:
}
Other U.S. Agency
If Summons, complete following:
Arraignment
Initial Appearance
Defendant Address:
On this charge
AUSA Lloyd Farnham
PROCESS:
SUMMONS
4)
If answer to (6) is “Yes”, show name of institution
STEPHANIE M. HINDS
U.S. Attorney
Name of Assistant U.S.
Attorney (if assigned)
SHOW
DOCKET NO.
IS IN CUSTODY
Before Judge:
Sample Presentation
News Source = ABC News: Donald Trump insider Chris Collins invested millions into an Australian
drug company. Then it all came crashing down, By Stephanie March, Jeanavive McGregor and
Lauren Day, 10 Feb February 2020.
https://www.abc.net.au/news/2020-02-10/inside-story-behind-chris-collins-downfall/11929048
Key Issue:
1. Australian shareholders and ethics experts want Collins prosecuted in Australia and question
whether ASIC dismissed warning signs. Could he be prosecuted in Australia?
2. Will the US extradite Mr Collins to Australia?
3. There are concerns Mr Trump will pardon Collins.
