DD Support Board and Research Team

[janice shell]

SEC target Mulholland in more than Cynk, says gov't

2016-02-02 10:36 ET - Street Wire

Also Street Wire (U-*SEC) U S Securities and Exchange Commission
Also Street Wire (U-CYNK) Cynk Technology Corp
Also Street Wire (U-PRTN) Pristine Solutions Inc
Also Street Wire (U-PWEI) Pacwest Equities Inc
Also Street Wire (U-VLNX) Vision Plasma Systems Inc

by Mike Caswell

New York prosecutors have released a list of the stocks that they claim were manipulated by West Vancouver resident Gregg Mulholland and his co-accused in a $300-million scheme. (All figures are in U.S. dollars.) The list includes some previously known companies, such as Cynk Technology Corp. (the pink sheets listing that was briefly worth $4.5-billion in 2014). It also includes new names such as Pacwest Equities Inc., a purported green farming company that went to $1.04 before collapsing.

The list comes as Mr. Mulholland and his co-accused are awaiting trial on charges that he was part of a scheme to fraudulently manipulate several U.S. listings and then launder $300-million in proceeds. Much of the publicity to date has surrounded Cynk Technology, a purported social networking company. Prosecutors claim that Mr. Mulholland controlled a large block of shares through complex offshore structures as the company went to $13.90 from six cents over two months.

A few other companies have appeared in court filings as well, but on Monday prosecutors provided the full list of 10 symbols of the companies they say were manipulated. The government has not stated exactly what evidence it will present about those manipulations, but the companies all look to have been the subject of promotional campaigns. They each went from barely trading to substantial highs, some within weeks and some with paid tout sheets boosting them. They then collapsed just as quickly, and most are now defunct.

With Pacwest Equities, the company suddenly became very active in October, 2012, after barely trading for months. On Oct. 9, 2012, it had volume of 90.8 million shares and reached 21 cents, on its way to a $1.04 high. The stock then trailed off over several months, going under 10 cents on May 15, 2013, before the U.S. Securities and Exchange Commission halted it on Sept. 17, 2013. In halting the stock the SEC cited concerns about the company's business operations and assets. Among other things, Pacwest had claimed to have a deal to acquire a company that was worth $55-million. It was also the subject of paid tout sheets, including some sent by Awesome Penny Stocks, the now-defunct service run by Montreal's John Babikian (who is not a defendant in the case).

Another of the companies in the list is Pristine Solutions Inc., which claimed to be developing a non-hormonal treatment for hot flashes in menopausal women. The stock went to a 49-cent high on Sept. 18, 2012, on volume of 11.9 million shares after Awesome Penny Stocks called it "our most anticipated alert" of the summer. Unfortunately for shareholders, the gains were brief, and the stock was under a penny about four weeks later. (The company is now defunct.)

The other companies that the government named Monday were: Amwest Imaging Inc. (which had a $1.39 high on Dec. 7, 2011, and is now defunct); Cannabis-Rx Inc. (which went to $4.85 on April 11, 2011, and was last at 27.5 cents); Endeavor IP Inc. (which had a $1.25 high on Nov. 11, 2013, and was last at 0.02 cent); Sunpeaks Ventures Inc. (which went to $2.23 on April 17, 2012, and is now defunct); Superior Venture Corp. (which went to 33 cents on Nov. 30, 2012, and is now defunct); and Vision Plasma Systems Inc. (which had a 30.5-cent high on Aug. 16, 2012, and was last at 0.04 cent).

For Mr. Mulholland, the list comes about six months after his arrest in the case on charges of securities fraud and money laundering conspiracy. U.S. authorities took him into custody as he was on a flight to Mexico from Canada. The flight had a layover in Phoenix, where he was arrested on a sealed criminal complaint. He has since pleaded not guilty to the charges, but remains in jail awaiting trial. (He is residing at Brooklyn MDC. The jail houses about 1,900 inmates, including Sandy Winick, the Toronto man who pleaded guilty to an unrelated $140-million scheme that included the pump-and-dumps of 11 U.S. listings.)

The charges against him are contained in a superseding indictment that named him and several others, including a Kelowna man named Philip Kueber. Prosecutors claimed that the men were connected to a Belizean operation called IPC Corp., which specialized in allowing corrupt clients to secretly buy and sell shares of public companies. IPC had more than 100 clients, who dumped hundreds of millions of dollars worth of stock, according to prosecutors.

One of the stocks that prosecutors named was Cynk, a "fraudulent manipulation" that purportedly operated a social networking site. According to the indictment, Mr. Mulholland obtained control over all of the free-trading shares of the company prior to the scheme. Law enforcement agents intercepted him in wiretapped conversations (using the aliases "Stamps" and "Charlie Wolf") admitting to his control of the stock, the government said.

Right after those conversations, the stock substantially rose (going to $13.90 from six cents). Prosecutors said little about what drove the stock up, beyond calling it a manipulation. They did point out that the company's $4-billion-plus valuation came despite the fact that it had no revenue or assets. (The SEC later halted Cynk, citing potentially manipulative transactions. After it resumed, the stock dropped, and was last at two cents.)

Besides Mr. Mulholland, the only person in custody in the case is Bob Bandfield, a 71-year-old Oregon resident. Prosecutors claim he ran IPC. He was arrested at the outset of the case, and pleaded not guilty on Oct. 10, 2014. The other Canadian defendants in the case are Cem Can, Brian De Wit and Paula Psyllakis. U.S. authorities have not arrested any of the three.

Unlike the others, Mr. Kueber surrendered to U.S. authorities last year and pleaded guilty. He is free on a $150,000 bond and is awaiting sentencing.

In addition to the criminal charges, most of the defendants are facing a parallel civil case from the SEC.

© 2016 Canjex Publishing Ltd. All rights reserved.

http://www.stockwatch.com/News/Item.aspx?bid=Z-C:%2aSEC-2343834&symbol=%2aSEC®ion=C