SCOTTS VALLEY — A local stock trader pleaded guilty this week in a federal securities fraud case.
Jason Nielsen, a Scotts Valley resident, is scheduled to be sentenced Oct. 24 for one count of securities fraud in U.S. District Court in San Jose and faces a maximum penalty of five years in prison.
According to information provided by the U.S. Department of Justice, Nielsen worked to manipulate the stock price for Sunnyvale-based Arrayit in 2019 and 2020. The publically traded company produced medical devices, including fingerstick allergy testing and COVID-19 tests.
Nielsen was a large Arrayit investor who, at various times, owned as much as 10% of the company’s stock, according to the case’s court filings. He incidentally shares his name with a different Jason Nielsen, who works as a UC Santa Cruz physics professor.
Nielsen worked to defraud the company’s securities buyers using public message boards to post false and misleading information about Arrayit, the existence of genuine supply and demand for Arrayit securities and the nature of his personal financial stake in Arrayit securities, according to court documents. He used the name “PennyStockAlert.”
Nielsen’s actions were “all in order to fraudulently induce other investors to purchase Arrayit securities and thereby drive up the stock’s price, and all while Nielsen simultaneously and secretly was selling his own previously acquired shares at an artificially inflated price,” according to the prosecution’s filings.
The practice of fraudulently driving up stock prices is known as “scalping.”
The case was prosecuted out of the Department of Justice’s Northern District of California office.
Victims related to the case may access the Victim Notification System for case-related updates and information. Victims with questions may contact the Fraud Section’s Victim Assistance Unit by calling the Victim Assistance phone line at 888-549-3945 or by emailing Victimassistance.email@example.com. Additional information is available at justice.gov/criminal-vns/case/Nielsen.