Sept. 24 (Bloomberg) -- A former broker pleaded guilty to a “pump and dump” scheme in which he assumed the identities of active brokers, placed large orders of penny stocks and induced the purchase of $1.8 million in seldom traded stock.

Eric T. Seiden said he conspired with three unidentified people when he admitted to fraud today in U.S. District Court in Brooklyn, New York.

“Between 2008 and 2009 I agreed with others to create a false demand for various stocks,” Seiden told U.S. District Judge I. Leo Glasser.

Seiden said he and the other three people placed orders for millions of shares of stock, including Universal Property Development & Acquisition Corp., a business in Juno Beach, Florida, that acquires and develops oil reserves.

He told Glasser he was paid kickbacks of 10 percent to 30 percent from these people who he said “owned or controlled” large shares of the stock he manipulated. He faces as many as 25 years in prison when he is sentenced on Jan. 5.

Seiden used different mobile phones and assumed the identities of brokers he knew, he told Glasser.

On the phone with brokerages, he claimed to be out of the office attending a conference, playing golf, fishing or at the hospital while his wife was giving birth, prosecutors said in court papers.

‘Great Shot!’

“On many of your calls to the brokerage houses while you were claiming you were out of the office, you shouted ‘great shot!’ or ‘great catch!’ to fictitious golfing or fictitious fishing partners to give credibility to your false statements,” Glasser said.

“How do you plead?” the judge asked Seiden.

“I plead guilty,” Seiden said.

In July, the U.S. Securities and Exchange Commission sued Seiden and Kamal Abdallah, the former chief executive officer of Universal Property Development and Heartland Oil and Gas Corp., accusing them of an “ongoing scheme.”

Abdallah was also named in a criminal complaint filed in federal court in Brooklyn, charged with engaging in a securities fraud scheme with another unidentified person.

Abdallah, as a former officer of Universal, held a substantial number of the company’s shares and conspired with an unidentified broker to drive up the price of Universal and other penny stocks he owned from June to August, according to the complaint.

Plea Negotiations

Abdallah remains free on bond and his lawyers filed a request for a delay in the case, saying he was engaged in plea negotiations, court records show.

Abdallah is no longer with Heartland, said a woman who answered the telephone at the Houston-based company’s office and who wouldn’t give her name. John Convery, Abdallah’s lawyer, couldn’t immediately be reached for comment.

Seiden didn’t name Abdallah in today’s court proceedings.

The SEC won a restraining order against both men in August and said Seiden had induced at least 15 broker-dealers to buy millions of shares of penny stocks.

Assistant U.S. attorneys James McMahon and Scott Klugman told Glasser they consented to Seiden remaining free on bond.

Seiden and his lawyer, Deirdre Von Dornum, declined to comment after they left court, as did prosecutors.

The case is U.S. v. Seiden, 09-cr-582, U.S. District Court, Eastern District of New York (Brooklyn).

To contact the reporter on this story: Patricia Hurtado in Brooklyn, New York, at pathurtado@bloomberg.net.

Last Updated: September 24, 2009 19:20 EDT