Stock promoter pleads guilty in U.S. to $250 million scheme

By Nate Raymond

NEW YORK (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 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.

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)