Two Penny-Stock Insiders Plead Guilty in Pump-and-Dump Schemes That Used Hacked Brokerage Accounts

Published Oct. 27, 2026. Case statuses are current as of that date.

Most investors worry about being talked into a bad stock. In this case, according to federal prosecutors, some people never got a choice. Their online brokerage accounts were allegedly hacked and used to buy millions of shares of obscure penny stocks at inflated prices, while insiders sold into the demand.

Zoltan Nagy, 60, of Vancouver, British Columbia, and Glenn Laken, 72, of Chicago, have pleaded guilty to conspiracy to commit securities fraud in two pump-and-dump schemes that caused more than $1 million in losses, the U.S. Attorney's Office for the Northern District of Georgia announced on Oct. 26, 2026 [1]. Three Canadian co-conspirators had already pleaded guilty.

Important: Charges are allegations. Five defendants named below have pleaded guilty; Rahim Mohamed has not been convicted and is presumed innocent unless and until proven guilty in court.

How the schemes worked

According to U.S. Attorney Theodore S. Hertzberg, the indictment and other information presented in court [1], Nagy and Laken were majority shareholders of two penny stock companies at the center of separate but similar schemes. Both involved hacking U.S.-based online consumer brokerage accounts and forcing them to buy worthless penny stocks controlled by co-conspirators.

The Lotus scheme. Nagy was the sole officer and director of Lotus Bio-Technology Development Corp., which traded under the ticker LBTD. By early August 2017, Nagy and co-conspirators Richard Tang, Davies Wong and Phillip Sewell controlled most of the LBTD shares available for public trading.

• On Aug. 16, 2017, co-conspirator Rahim Mohamed, or someone acting at his direction, allegedly hacked a U.S. brokerage account and forced it to buy 200,000 LBTD shares. At almost the same time, Wong and others sold about 261,000 shares, most of which the hacked account bought at inflated prices.
• On Sept. 19, 2017, on a much larger scale, Mohamed or others acting at his direction allegedly hacked 24 customer accounts at multiple U.S. online brokerages and forced them to buy millions of LBTD shares. Meanwhile Wong and others sold about 7.75 million shares for nearly $1.1 million.
• In the following weeks, the proceeds were divided among Nagy, Wong, Tang, Mohamed, Sewell and others.

The Good Gaming scheme. Laken was CEO, chairman and controlling shareholder of a public company that by late 2017 owned 61% of Good Gaming, Inc., ticker GMER. Between Jan. 12 and 18, 2018, Tang coordinated with Laken to move about 2.9 million GMER shares to co-conspirators' accounts. On Jan. 22, 2018, Mohamed or others acting at his direction allegedly hacked several brokerage accounts and forced them to buy more than 1 million GMER shares, while co-conspirators sold more than 700,000 of the shares obtained from Laken for nearly $170,000. The proceeds were divided among Laken, Tang, Mohamed and others [1].

According to the release, Laken was convicted in 2002 of racketeering conspiracy, wire fraud and other federal charges related to a pension fund fraud and a stock manipulation scheme [1].

The people charged and their status

• Zoltan Nagy, 60, of Vancouver, British Columbia. Pleaded guilty Oct. 20, 2026, to conspiracy to commit securities fraud. Sentencing is set for Jan. 20, 2027, before U.S. District Judge Victoria M. Calvert. Maximum five years.
• Glenn Laken, 72, of Chicago. Pleaded guilty Sept. 25, 2026, to conspiracy to commit securities fraud. Sentencing Jan. 13, 2027. Maximum five years.
• Phillip Sewell, 65, of Vancouver. Pleaded guilty Sept. 17, 2024, to conspiracy to commit securities fraud. Sentencing Jan. 22, 2027.
• Richard Tang, 49, of Vancouver. Pleaded guilty Oct. 23, 2024, to conspiracy to commit wire fraud. Sentencing Jan. 21, 2027. Maximum 20 years.
• Davies Wong, 67, of Vancouver. Pleaded guilty Nov. 29, 2023, to conspiracy to commit securities fraud. Sentencing Jan. 21, 2027.
• Rahim Mohamed, 50, of Calgary, Alberta. Remains at large, prosecutors said; the release does not detail the charges against him (status pending). The hacking allegations have not been proven, and he is presumed innocent.

All sentencing details are from the U.S. Attorney's Office [1]. Each defendant may also be ordered to pay restitution and a fine. The FBI investigated with substantial help from the SEC. Assistant U.S. Attorneys Benjamin Wylly, Adam Sunstrom and Samir Kaushal are prosecuting.

Why this matters to everyday investors

The losses in this case landed on brokerage customers whose accounts, prosecutors say, were taken over. A hacked account can be used not only to steal cash but to make trades that benefit someone else, buying worthless stock from the people dumping it. The release does not name the brokerage firms or the account holders, and we do not identify any victims.

Red flags of account takeover

• Trades you didn't place, especially in thinly traded penny stocks.
• Unexpected password-reset emails, login alerts or two-factor codes.
• Changes to your linked bank account, email address or phone number on file.
• Sudden activity in a stock you've never heard of, paired with heavy promotion online.

What to do to protect your brokerage account

1. Turn on multi-factor authentication, ideally using an authenticator app or security key rather than text messages.
2. Use a unique, strong password for your brokerage account and your email.
3. Set up trade and login alerts, and check statements and trade confirmations promptly.
4. If you see unauthorized trades, call your brokerage's fraud line immediately using the number on its official website, change your passwords and ask that the account be locked.
5. Report it to the SEC at sec.gov/tcr, to FINRA, and to the FBI at IC3.gov.

Case status (as of Oct. 27, 2026)

Defendant	Court	Status	Source
Zoltan Nagy, 60, of Vancouver, B.C.	U.S. District Court, N.D. Ga. (Judge Victoria M. Calvert)	Pleaded guilty Oct. 20, 2026, to conspiracy to commit securities fraud; sentencing Jan. 20, 2027	[1]
Glenn Laken, 72, of Chicago	N.D. Ga.	Pleaded guilty Sept. 25, 2026, to conspiracy to commit securities fraud; sentencing Jan. 13, 2027	[1]
Phillip Sewell, 65, of Vancouver, B.C.	N.D. Ga.	Pleaded guilty Sept. 17, 2024; sentencing Jan. 22, 2027	[1]
Richard Tang, 49, of Vancouver, B.C.	N.D. Ga.	Pleaded guilty Oct. 23, 2024, to conspiracy to commit wire fraud; sentencing Jan. 21, 2027	[1]
Davies Wong, 67, of Vancouver, B.C.	N.D. Ga.	Pleaded guilty Nov. 29, 2023; sentencing Jan. 21, 2027	[1]
Rahim Mohamed, 50, of Calgary, Alberta	N.D. Ga.	Accused by prosecutors; at large (charges not detailed in release, status pending)	[1]

Those not convicted are presumed innocent. Statuses can change.

Sources

1. U.S. Attorney's Office, Northern District of Georgia, "Public Company Officers Plead Guilty to International Securities Fraud Conspiracies," Oct. 26, 2026. https://www.justice.gov/usao-ndga/pr/public-company-officers-plead-guilty-international-securities-fraud-conspiracies

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