Spinning tales of using a robot that taught itself how to pick stocks, two British brothers—twins and then in their teens— bilked $1.2 million from American investors, according to the U.S. Securities and Exchange Commission.

The agency charged Alexander John Hunter and Thomas Edward Hunter with defrauding roughly 75,000 investors via an Internet-based pump-and-dump scheme. The brothers were only 16-years-old when they set the fraud in motion in 2007.

The scheme involved two parts, according to the SEC complaint.

The first part involved claims of a stock picking robot named “Marl,” based on the names of its purported inventors Michael Cohen and Carl Williamson.

Through their company, Global Marketing Corporation Ltd., the Hunter brothers touted the abilities of this robot in newsletters distributed via two websites doublingstocks.com and daytradingrobot.com. For a $47 annual subscription to either of the newsletters, investors (mostly American) received stock tips from Marl, which the brothers promoted as a “highly sophisticated computer trading program and the product of extensive research and development” according to the SEC complaint.

Marl boasted a variety of alleged functions. It used “technical analysis” of OTCBB and Pink Sheet stocks, predicting future price direction based on past performance.

In particular, Marl looked out for distinct bullish trading patterns, out of a range of some 6,578 held in the program’s internal database. It did all of this in “split-second timing,” purportedly handling 1,986,832 mathematical calculations per second.

According to the complaint, the Hunters claimed that when Marl identified a "clean, uncongested chart pattern that is proven to yield a good risk/reward," it added the stock to its “watch list.”

Further, the brothers claimed that Marl was programmed on an "evolutionary framework," meaning that as Marl watched hundreds of stock patterns it actually learned the most likely direction of stock prices under thousands of situations.

"The longer Marl is allowed to run on a computer—The More Advanced He Becomes!" the brothers allegedly claimed in their marketing materials.

The brothers offered a downloadable home version of the robot for $97. By way of newsletter subscriptions and downloads, the brothers earned $1.2 million in this part of the scheme.

One notable problem with this sophisticated software: it apparently was a work of fiction.

Rather than performing the analysis advertised, the software was actually designed to just deliver to its users stock picks supplied by the brothers.

When soliciting bids in 2007 from free-lance coders to create the software, Alexander Hunter wrote that the software should "not actually find stocks at all. It should connect to my database and simply request any new stocks I have put in."

He bluntly explained that the software "is almost a 'fake' piece of software and needs to simply appear advanced to the user." Like the newsletter, the home version of the stock picking robot was no more than a fraudulent delivery vehicle for stock symbols that the Hunters had been compensated to promote.

Hence, the second phase of the alleged fraud.

The brothers operated a third website, Equitypromoter.com, where they marketed their newsletter subscriber list to penny stock promoters, boasting, "One email to this list of people rockets a stock price."

According to the complaint, the Hunters then paid to send selected penny stock ticker symbols to their subscribers, who were misled to believe that the stock picks were made by the robot.

The Hunters sent out their newsletters near the beginning of the trading day, and the price and volume of the promoted stocks spiked dramatically as newsletter subscribers rushed to purchase shares. However, the stocks typically fell precipitously shortly thereafter, leaving investors with shares worth less than they had purchased them for earlier in the day.

The Hunters were allegedly paid at least $1.865 million in fees from known or suspected stock promoters. They did not disclose to their newsletter followers the conflicting relationship between the two businesses.

The SEC is charging the Hunters with violating the anti-fraud provisions of the U.S. securities laws, namely Section 17(a) of the Securities Act of 1933, which governs fraudulent interstate transaction. The agency has also charged the brothers with violating Section 10(b), and Rule 10b-5, of the Securities Exchange Act of 1934, governing manipulative and deceptive devices.

The agency is seeking permanent injunctions, disgorgement of all ill-gotten gains with prejudgment interest, and financial penalties.

The Hunter brothers’ attorney, Eric Bruce, did not answer requests for comment by press time.

The brothers have pled guilty to charges in England.