Fraudster Avoids More Time For Dark Web Insider Trading
Law360, April 14, 2022
NEW YORK, NY— A New York federal judge on Thursday spared an admitted securities fraudster further prison time for running an online racket on the dark web that trafficked in confidential information about public companies.
Apostolos Trovias, of Athens, Greece, was first accused last year of buying and selling confidential information about publicly traded companies via dark web sites and encrypted messaging services.
That information included misappropriated stock tips based on confidential customer trading information, pre-release earnings reports and deal information from publicly traded companies, according to the government.
During a hearing Thursday morning before U.S. District Judge Loretta Preska in Manhattan, Trovias pled guilty to one count of securities fraud and was sentenced to time served.
He faced a stipulated sentencing guidelines range of 10 to 16 months in prison, though his attorney and prosecutors both cited the nearly 11 months he spent in prison in Peru, following his May arrest there in connection with the U.S. case, as a reason why further incarceration is unnecessary.
Judge Preska noted that while Trovias’ offense is “an insidious crime” that has the effect of undermining the integrity of the financial markets, he has otherwise led a law-abiding life.
An attorney for Trovias, Thomas Calcagni of Calcagni & Kanefsky LLP, told Judge Preska that Trovias had been held in “deplorable conditions” while imprisoned in Peru. Calcagni further said his client has demonstrated remorse, voluntarily submitted to the jurisdiction of the U.S. and intends to return to Greece following his release in order to care for his sick father.
Assistant U.S. Attorney Andrew Thomas said Trovias engaged in a multiyear scheme that involved evolving fraudulent conduct throughout its duration.
Thomas said in many ways, “Mr. Trovias is on the cutting edge of modern criminal activity.” However, he added that Trovias quickly acknowledged his wrongful conduct and agreed to come to the U.S. to face the case.
In a statement to the court, Trovias spoke about his personal growth during his time in prison in Peru, saying, “I’m a little wiser now.”
“I’m here in front of you today because I failed,” he told Judge Preska. “I was looking for shortcuts. I wanted to run without first knowing how to walk.”
Trovias — known online by the monikers “The Bull,” “dabull” and “geobull” — sold illicit stock tips through AlphaBay Market, one of the largest dark web markets until it was shuttered by law enforcement in July 2017, and Dream Market, another dark web bazaar that shut down in 2019, prosecutors say. Trovias offered the tips for sale individually and through weekly and monthly subscriptions.
“The Bull” also sold his confidential wares directly to purchasers via encrypted messaging and email services, prosecutors say. In communications with two undercover law enforcement agents, Trovias sought payment for his tips in bitcoin in order to conceal his identity, according to the criminal complaint.
Trovias also faces a parallel civil suit by the U.S. Securities and Exchange Commission.
According to the SEC, Trovias claimed to have sourced his tips from order-book data provided by an employee of a securities trading company. The SEC posits that either this claim was true or may have been part of a scheme to deceive his customers, or Trovias may have misappropriated the order-book data himself.
Prosecutors say that between May 2018 and February 2020, an undercover agent sent bitcoin to Trovias’ blockchain addresses on 17 occasions in deals for inside information. Trovias later transferred the cryptocurrency to other blockchain addresses, bitcoin wallets and digital currency management services.
In 2020, Trovias was also planning his own auction site to sell illegal stock tips, according to the government.
Calcagni told Law360 after Trovias’ sentencing that there are far greater threats on the dark web than Trovias.
At the end of the day, Calcagni said, this was “akin to a nickel-and-dime fraud scheme” that resulted in Trovias’ forfeiture of $6,700 to the government. He further noted that Trovias’ time in a Pervian prison under deplorable conditions “would take the fight out of anyone.”
“We’re grateful the court agreed Mr. Trovias had been through enough and ordered his immediate release,” Calcagni said.
A spokesman for the U.S. Attorney’s Office for the Southern District of New York declined to comment.
The government is represented by Andrew Thomas and Matthew Podolsky of the U.S. Attorney’s office for the Southern District of New York.
Trovias is represented by Thomas R. Calcagni of Calcagni & Kanefsky LLP.
The case is U.S. v. Trovias, case number 1:21-cr-00378, in the U.S. District Court for the Southern District of New York.
By: Stewart Bishop
Editing by: Kelly Duncan