Pump and dump: Hacking schemes and a chimp

Andrea Day, Jeff Pohlman
Hackers, a chimp & a con man

An international ring of computer hackers, a chimpanzee, a con man and several scantily clad females: This is a peek into the strange world of a man named Christopher Rad.

Rad was found guilty of running a global conspiracy to manipulate stocks, raking in millions of dollars for himself. He began as a legitimate businessman, running a car wash and a carpet steam cleaning company but he clearly wanted more.

"It didn't matter how he was gonna make money. He just wanted more money," said Erez Liebermann, the assistant U.S. attorney who prosecuted Rad.

So Rad orchestrated a massive pump-and-dump scheme, where someone encourages investors to buy into a stock, driving the price up and allowing him or her to sell off their own shares at an inflated price. Rad hired hackers to not only manipulate the price and volume of approximately 40 stocks but also hack directly into private accounts to buy and sell stock.

"They controlled the stocks that they wanted to sell. And they were able to pump up the stock themselves without ever having to do with the whole boiler room operation," said Liebermann.

Rad convinced hackers all over the world to participate in the scheme and then paid them handsomely—more than $1.4 million during a 22-month period.

(Read more: The new health-care scam that's ripping off taxpayers)

"Rad was an individual who was eloquent, charming at times, really able to put on a good show," Liebermann said.

But prosecutors found Skype exchanges with a hacker known as "Egga" that show another side of Christopher Rad.

Egga warned Rad about possible SEC violations: "You need to understand me, too, if I show these servers and the SEC will see it. It is not good for me because spam goes through botnets and it is not good."

To which Rad responded: "Only talk about what I ask you, understand?!! I asked about logs!!!"

Rad continued: "If you ever tell me you use bots I will block you. I will go to jail for that. You are f**king stupid."

"Actresses" and chimp.
Source: CNBC Investigations Inc.

It's what Rad did when he wasn't running the pump-and-dump scam that still has prosecutors scratching their heads. He hired a chimp and paid women to "act" in videos that featured Rad himself.

They are hard to follow and poorly produced but Rad appears to be a warning the public about, of all things, fraud.

"I was involved with an insurance company," he said in one of the videos. "They basically sued me a couple of times for made-up stuff. And the claims that were being handled by this insurance company in my opinion have just tons of fraudulent activity."

(Read more: Why white-collar financial crime is here to stay)

Perhaps he fancied himself a public advocate or maybe the guilt of running the pump-and-dump scheme made him do it. Either way, his film career is over.

The FBI was able to follow the money trail right to Rad's front door. Special Agent Suzanne Beck of the agency's cybercrimes unit worked the case.

"We were able to find out who he was sending money to or receiving money from and who he was sending shares to," said Beck. "So at that point is when we identified Christopher Rad. It led me to two places, one of which was many international bank wire transfers out of the country to countries, such as Latvia, Cyprus, Panama, Seychelles and British Virgin Islands."

Rad was convicted on Nov. 30, 2012, and sentenced to 71 months. He's serving his sentence at Big Spring penitentiary in Texas.

Rad and his attorney declined comment for this story.

By CNBC's Andrea Day and Jeff Pohlman.