Stock promoter pleads guilty in U.S. to $250 million scheme
09/05/2016 17:31
By Nate Raymond
NEW YORK, May 9 (Reuters) - A microcap stock promoter
pleaded guilty on Monday to engaging in a scheme to launder $250
million obtained by manipulating the shares of more than 40
companies, including the little-known Cynk Technology
Corp CYNK.PK whose value was driven past $6 billion.
Gregg Mulholland, also known as "Stamps" and "Charlie Wolf,"
pleaded guilty in federal court in Brooklyn, New York, to
conspiracy to commit money laundering, almost a year after he
was arrested and three weeks before he was set to face trial.
Mulholland could be sentenced to up to 20 years in prison,
prosecutors said in a statement. His lawyer did not respond to a
request for comment.
U.S. regulators in July 2014 suspended trading in Cynk, a
social media company with no revenue or assets, after its share
price soared in less than a month to $21.95 from 6 cents for no
apparent reason.
That surge followed a month when no Cynk shares were traded
at all, and briefly gave the company a market value higher than
three dozen companies in the Standard & Poor's 500.
Prosecutors said Mulholland, 46, was behind that volatility
after he and his co-conspirators amassed control over the free
standing Cynk shares to conduct what is known as a pump-and-dump
scheme.
The indictment said Cynk was among about 40 public companies
whose shares were manipulated by individuals overseen by
Mulholland, resulting in $250 million in proceeds that were
laundered through at least five offshore law firms.
Prosecutors said Mulholland and his group of stock
manipulators conducted the scheme through shell structures and
offshore brokerage firms established by Robert Bandfield, a U.S.
citizen who founded Belize-based IPC Corporate Services.
"Mulholland's staggering fraud perpetrated on the investing
public was built on an elaborate offshore shell game, which
included his secret ownership of an offshore brokerage firm,"
Brooklyn U.S. Attorney Robert Capters said in a statement.
That brokerage firms was Legacy Global Markets SA, a
broker-dealer based in Panama that Bandfield claimed to have
created and that Mulholland secretly owned, prosecutors said.
Mulholland was arrested in June 2015 during a layover in
Phoenix on a flight from Canada to Mexico, and became one of
nine people to be charged in connection with the massive
fraudulent scheme. urn:newsml:reuters.com:*:nL1N0Z92FI
Bandfield, who prosecutors say schemed to help more than 100
clients including Mulholland evade U.S. securities and tax laws,
is scheduled to face trial on May 31. He has pleaded not guilty.
The case is U.S. v. Bandfield et al, U.S. District Court,
Eastern District of New York, No. 14-cr-00476.
(Reporting by Nate Raymond in New York; Editing by David
Gregorio)
((Nate.Raymond@thomsonreuters.com and Twitter @nateraymond;
646-223-6752; Reuters Messaging:
nate.raymond.thomsonreuters.com@reuters.net))
Keywords: STOCKS MONEYLAUNDERING/CYNK TECHNOLOGY