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Kazakhstani National Sentenced to 27 Months in Prison for Money Laundering

WASHINGTON – Daniyar Zhaxalyk, 26, a citizen of Kazakhstan who entered the United States on a student visa, was sentenced today to 27 months in prison for his role in a sophisticated stock fraud scheme that caused more than $400,000 in losses, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney for the Southern District of Texas Kenneth Magidson.

Zhaxalyk was sentenced by U.S. District Judge Ewing Werlein Jr. in the Southern District of Texas.  In addition to his prison term, Zhaxalyk was ordered to pay $221,925 in restitution.  Zhaxalyk will be deported from the United States upon the completion of his sentence.

According to court documents, Zhaxalyk agreed to launder funds generated in a sophisticated “hack and dump” stock scheme that caused more than $400,000 in losses.  The indictment charges that Zhaxalyk’s co-conspirators illegally accessed brokerage accounts to engage in a stock fraud scheme in which the compromised accounts were used to purchase borrowed shares of stock at above-market prices from the defendants’ personal brokerage accounts.  Zhaxalyk’s co-conspirators then repurchased the borrowed shares at the considerably lower market price, returned the borrowed shares to the stock lender, and claimed as profit the difference between the market price and the inflated price paid by the compromised victim accounts.

A co-defendant, Alexey Li, also a citizen of Kazakhstan who entered the United States on a student visa, previously pleaded guilty in Houston on March 2, 2012, and was sentenced to three months in prison and ordered to pay $40,000 in restitution.  Two other defendants remain at large.

This case was investigated by the St. Louis, San Francisco and Houston offices of the FBI.  The case is being prosecuted by Trial Attorney Ethan Arenson of the Computer Crime and Intellectual Property Section in the Justice Department’s Criminal Division and Assistant U.S. Attorney Mark McIntyre of the Southern District of Texas.

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