Joseph Taub, a New Jersey-based securities trader, was sentenced on Tuesday to 18 months in prison over a market manipulation scheme and tax fraud that netted more than $17 million in illegal profits.

Taub previously pleaded guilty before U.S. District Judge John Michael Vazquez in Newark federal court to counts four and five of a superseding indictment charging him with securities fraud and conspiracy to defraud the United States. Judge Vazquez imposed the sentence on Tuesday, December 22, 2020.

From 2014 to 2016, Taub and others conspired to manipulate the securities prices of numerous public companies by coordinating trading in dozens of brokerage accounts he secretly controlled. He used “straw accounts” that were held in the names of others to conduct much of his trading. Taub funded many of these straw accounts and used the straw account holders to conceal the scheme from regulators and law enforcement.

To manipulate securities prices, Taub engaged repeatedly in a series of contemporaneous transactions designed to artificially influence the market price of the securities of various publicly traded companies, and induce other market participants to trade in those securities based on the false impression that there was real market interest in the securities, using Run Based Manipulation and Order Based Manipulation.

Run Based Manipulation is a type of securities manipulation in which a manipulator takes either a long or a short position in a security, enters orders or trades in a manner designed to inflate or deflate the price of the security while attracting others to trade the security and finally reverse their position at the inflated or deflated price.

Order Based Manipulation is a type of securities manipulation involving orders, sometimes but not always accompanied by trades, that are intended to give other market participants a false signal about the security’s demand or supply.

Taub also admitted defrauding the United States by hiding from the brokerage firms and the IRS the identities of those who actually controlled the straw accounts and who reaped the majority of the profits from the scheme. As a result, the profits from the straw accounts were taxed at the lower tax rates applicable to the straw account holders instead of the higher tax rates applicable to Taub, which allowed Taub to avoid $394,424 in taxes.

In addition to the prison term, Judge Vazquez sentenced Taub to one year of supervised release, ordered him to forfeit $17.1 million and pay restitution of $394,424 to the IRS.