Canadian suspect in Cynk stock fraud surrenders to U.S.
31/08/2015 19:52
By Nate Raymond
NEW YORK, Aug 31 (Reuters) - A Canadian citizen has
surrendered to U.S. authorities in connection with a $300
million penny-stock manipulation fraud that prosecutors say
drove the market value of little-known Cynk Technology Corp
CYNK.PK past $6 billion.
Philip Kueber, who authorities say lived in California and
Belize, is expected to appear in federal court in Brooklyn, New
York, on Tuesday after pleading not guilty last week to charges
including securities fraud, his lawyer said Monday.
He was charged in a July 31 indictment that added him to a
pre-existing case over a massive offshore stock fraud that
authorities allege was run by a group controlled by Gregg
Mulholland, a U.S.-Canadian citizen arrested in June.
"As soon as he found about it, he made arrangements to
surrender, which he did," said Stanley Greenberg, Kueber's
lawyer. "We will deal with the legal issues in court."
Kueber was released on Aug. 24 on a $150,000 bond.
Two other men, Mulholland and Robert Bandfield, who
authorities say operated a business in Belize that helped
clients carry out stock manipulation schemes, are being held
pending trial and have pleaded not guilty.
Six other defendants have been charged but have not appeared
in U.S. court. ID:nL1N10L1DK
U.S. regulators in July 2014 suspended trading in Cynk, a
social media company with no revenue or assets, after its share
price soared without explanation to $21.95 from 6 cents in less
than a month.
That surge, which followed a month when no Cynk shares were
traded at all, briefly gave the company a market value higher
than three dozen members of the Standard & Poor's 500.
Prosecutors allege Bandfield, Mulholland and Kueber
conspired to manipulate Cynk's stock as part of a pump-and-dump
scheme. Authorities say that as part of the fraud, Kueber
enlisted relatives and associates to act as straw shareholders
in Cynk.
Those shareholders then sold their stock to a group
controlled by Mulholland, enabling it to fraudulently manipulate
the shares, the indictment said.
Cynk was among about 40 public companies whose shares were
manipulated by individuals overseen by Mulholland, resulting in
$300 million in proceeds that were laundered through at least
five offshore law firms, the indictment said.
Prosecutors say Mulholland also secretly owned Legacy Global
Markets SA, a broker-dealer based in Panama and Belize that was
part of a scheme to launder about $500 million in fraudulent
proceeds for over 100 U.S. citizens and residents.
The case is U.S. v. Bandfield, U.S. District Court, Eastern
District of New York, No. 14-00476.
(Reporting by Nate Raymond in New York; Editing by Noeleen
Walder and Alan Crosby)
((Nate.Raymond@thomsonreuters.com and Twitter @nateraymond;
646-223-6752; Reuters Messaging:
nate.raymond.thomsonreuters.com@reuters.net))
Keywords: USA FRAUD/CYNK TECHNOLOGY