Lawyer pleads guilty to aiding pump-and-dump scheme with IOLTA funds, opinion letters
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A Colorado lawyer has pleaded guilty to conspiracy for aiding a pump-and-dump scheme that netted her about $30,000.
Diane Dalmy, 63, pleaded guilty Tuesday in federal court in New Haven, Connecticut, according to the Hartford Courant and a Department of Justice press release. Dalmy is the seventh lawyer or broker arrested in the scheme affecting an estimated 12,000 or more victims, according to the newspaper.
In a pump-and-dump scheme, stock promoters buy stock in worthless shell companies and promote them to investors through calls, emails and press releases. After the stock price is inflated, the conspirators sell their shares for a profit.
Dalmy was accused of writing and ghostwriting fraudulent opinion letters about the companies issuing the stock. The letters were used to remove restrictions on free trading by the stock, and they could have been used by investors in making decisions.
Dalmy was also accused of providing capital from her lawyer trust account for the scheme, and of using the account to launder proceeds.
Sentencing is scheduled for May 2. She faces a possible sentence of up to five years in prison.
The Securities and Exchange Commission permanently barred Dalmy from securities work because of her opinion letters for another shell company.
Dalmy had claimed she investigated the company, but the documentation was destroyed in a flood of her home and in a computer crash. An administrative law judge said her conduct was “egregious” and her limited due-diligence word was “absurd” in a July 2016 opinion covered by the Corporate Transactions Blog.
