Hack, Pump And Dump

At 3:28 p.m., an intruder hit a Charles Schwab account, buying 20,000 shares.

At 3:32 p.m., an E-Trade account was hacked, boosting that investor's portfolio by 68,000 Thomas Equipment shares.

At 3:35 p.m., Kamardin began to sell the Thomas shares.

One minute later, Schwab, evidently onto the fraud, canceled an order to buy 50,000 Thomas shares in a second hacked account.

By 3:53, Kamardin had unloaded all his Thomas shares, netting $13,158.

The SEC is not saying how Kamardin's ring obtained the user names and passwords on the investors' accounts. Typically, authorities said, hackers use keystroke monitoring software placed on a public computer, or they purchase personal data, such as stolen Social Security and credit card numbers, from criminal enterprises.

The fraud affects not only the investors, but the market and companies whose stocks are pumped then dumped.

Hugo Cancio was stunned when trading on his company's stock increased from fewer than 1,000 shares a day to 1.1 million shares last Aug. 24.

"For no reason whatsoever," he said, the share price for Fuego Entertainment, a Miami-based entertainment firm targeting the burgeoning Latino media market, zoomed from 88 cents to $1.28.

"My phone rang off the hook," he said. "We couldn't figure out what was going on."

Allegedly, between 11:51 a.m. and 3:05 p.m. that day, Kamardin had bought and sold 55,000 Fuego shares, raking in $9,164.

In the interim, 10 accounts with Fuego holdings were hacked into at TD Ameritrade, Scottrade, E-Trade and Schwab.