Mark Simeon Jakob, the amateur stock trader accused of committing one of the most audacious Wall Street hoaxes ever, has confessed and was expected to plead guilty to fraud charges and agree to pay as much as $110 million in restitution.
Jakob, 23, also will serve as long as 46 months in prison for the scam, which he orchestrated last summer and reaped more than $241,000 in profits.
Jakob sent the stock of the Emulex Corporation plummeting 62 percent, some $2.5 billion, in less than half an hour after releasing a Internet news release on Aug. 25 that contained false information about the Costa Mesa, Calif.-based high-tech company.
The hoax was quickly discovered, and Emulex stock rebounded. But during that time, many investors bailed out, losing as much as $110 million. The hoax raised concerns worldwide about the alarming ease with which Wall Street can be manipulated in the fast-moving Internet age.
Jakob, a former El Camino College student from El Segundo, Calif., had initially pleaded innocent to 11 criminal counts of securities and wire fraud. On Dec. 22, he entered into the plea agreement with federal prosecutors.
Authorities said Thursday that Jakob confessed because the evidence against him was overwhelming, and could have resulted in a much longer prison term had he gone to trial.
Jakob's defense lawyer agreed, offering a short explanation for the plea: "He's guilty."
"In a state of panic, he committed a crime, and he's ready to 'fess up to it," said attorney Joel Levine. "He's a one-time offender. This isn't a career stock manipulator."
James V. DeSarno Jr., who heads the FBI's Southern California field office, said Jakob's punishment should serve as a reminder that "he has committed serious felonies and caused real harm to real people."
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