A Texas securities lawyer and former employee of the U.S. Securities and Exchange Commission has been indicted on charges related to a stock pump-and-dump scheme that used spam e-mail to pump up the stock prices of several companies.

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Phillip Windom Offill Jr., of Dallas, was indicted Thursday in U.S. District Court in the Eastern District of Virginia and charged with one count of conspiracy to commit registration violations, securities fraud and nine counts of wire fraud, the U.S. Department of Justice said.

If convicted of all charges, Offill could face a maximum of 185 years in prison. Law enforcement officials are also asking the court to order Offill to forfeit about US$15 million.

The SEC, where Offill worked as a fraud prosecutor for about 15 years, also has enforcement actions against him pending in Michigan and Texas.

Offill was hired by David Stocker, a Phoenix attorney who pleaded guilty earlier this week to conspiracy to commit securities fraud in the Eastern District of Virginia, the DOJ said. The indictment charges that Offill and Stocker evaded federal securities registration requirements in order to provide co-conspirators with millions of unregistered and “free-trading” shares of nine companies’ common stock that the co-conspirators could not have otherwise legally obtained.

The indictment alleges many of the shares were subsequently sold by co-conspirators to the general investing public. By evading the registration requirements, the co-conspirators were able to hide from the investing public the actual financial condition and business operations of the companies, the DOJ said.

The indictment also alleges that, in connection with three companies, Offill participated in a pump-and-dump scheme, in which investors artificially manipulated the companies' stock prices through misleading press releases and spam e-mail messages. The e-mail messages were sent to tens of millions of addresses, the DOJ said.

After fraudulently “pumping” the market price and demand for the companies’ stock, the co-conspirators allegedly “dumped” shares by selling them for large profits to the general investing public in the over-the-counter stock market. The stock prices then fell and the shares were virtually worthless, the DOJ said.

The IDG News Service is a Network World affiliate.