Facebook & Twitter used in stock fraud

It seems that someone has found a way, albeit illegal, to make money off social networking: defrauding investors.

Facebook and Twitter were used to tout stocks in a classic “pump and dump” fraud of about $7 million that was uncovered during a cocaine-trafficking probe, U.S. prosecutors said on Tuesday.

Investigators discovered the fraud in a two-year probe of suspected trafficking by longshoremen and others of 1.3 tons of cocaine worth $34 million through the Port of New York and New Jersey officials said.

A statement by the Manhattan U.S. Attorney’s office said 11 out of 22 people charged used more than 15 web sites, Facebook pages, and Twitter “feeds” to “defraud the investing public into purchasing stocks that were being manipulated by participants in the conspiracy.”

None of the stocks were identified in court documents, which said more than $3 million was accrued in illegal gains by the accused and that shareholder losses amounted to more than $7 million.