U.S.-Canadian man charged for Cynk trades, $300 mln fraud (updated)
23/06/2015 23:23
* Gregg Mulholland arrested during Phoenix layover
* Cynk market cap soared past $6 billion without explanation
(Adds allegations, Cynk background, case citations, byline)
By Jonathan Stempel
NEW YORK, June 23 (Reuters) - A dual U.S. and Canadian
citizen has been criminally charged with running a stock
manipulation fraud that generated $300 million of illegal
profit, and included a pump-and-dump scheme that caused the
market value of little-known Cynk Technology Corp CYNK.PK to
rocket past $6 billion.
Gregg Mulholland, 45, is charged with securities fraud and
money laundering conspiracies following his arrest on Tuesday at
Phoenix International Airport during a layover of his flight to
Mexico from Canada.
Mulholland's arrest and criminal charges were announced by
Acting U.S. Attorney Kelly Currie in Brooklyn, New York.
The U.S. Securities and Exchange Commission filed a related
civil lawsuit against Mulholland, who authorities said lives in
Vancouver, British Columbia, and San Juan Capistrano,
California.
It was unclear whether Mulholland has hired a lawyer.
Last July, U.S. authorities suspended trading in Cynk, a
development stage company with no revenue or assets, after its
share price soared without explanation to $21.95 from 6 cents in
less than a month. ID:nL2N0PM0RX
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.
Using wiretaps to build their case, authorities believe
Mulholland, who sometimes went by the names "Stamps" and
"Charlie Wolf," was behind that volatility, having previously
amassed tens of millions of Cynk shares to conduct a "classic"
pump and dump scheme.
Prosecutors accused Mulholland of also manipulating the
shares of numerous other public U.S. companies, and laundering
the profit through at least five offshore law firms to avoid
Internal Revenue Service reporting requirements.
They said Mulholland was also the "secret" owner of Legacy
Global Markets SA, a Panama- and Belize-based broker-dealer and
investment manager indicted last September in Brooklyn over a
separate alleged $500 million fraud scheme.
"Mulholland used an elaborate offshore corporate structure
built on lies and deceit," and fled the United States after the
earlier indictment, Currie said in a statement.
The defendant is expected to appear on Wednesday before a
federal judge in Phoenix. Mulholland faces up to 20 years in
prison if convicted.
The cases are U.S. v. Mulholland, U.S. District Court,
Eastern District of New York, No. 15-mj-00562; and SEC v.
Mulholland in the same court, No. 15-03668.
(Reporting by Jonathan Stempel in New York; Editing by Andre
Grenon)
((jon.stempel@thomsonreuters.com;)(646 223-6317; Reuters
Messaging: jon.stempel.thomsonreuters.com@reuters.net))
Keywords: USA CRIME/MULHOLLAND FRAUD