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Thursday, July 24, 2014 8:46:20 AM
Searching for Cynk: The $6 Billion Penny-Stock Debacle, From Belize to Las Vegas
By Zeke Faux and Dune Lawrence July 24, 2014
http://www.businessweek.com/articles/2014-07-24/cynk-the-6-billion-penny-stock-debacle-stretches-from-belize-to-las-vegas
The Matalon, a six-story glass building in Belize City, Belize, towers over a lot littered with old refrigerators and washing machines. Jagged rebar sticks out of unfinished cinderblock structures nearby, and the view, across Haulover Creek, is of a cluster of corrugated metal shacks. This is the listed address for Cynk Technology (CYNK), a company with no assets, no revenue, and one employee, that for one hour in July had a market value of more than $6 billion.
Until that inconceivable run, no one had ever heard of Cynk or the social network it claimed to operate—no one, that is, outside the murky, volatile market for penny stocks, where fraud is rampant and regulation scant. Cynk had begun trading in 2013, for a few cents a share. The price stayed there, hugging the bottom, until June 17, 2014, when shares that had last changed hands at 6¢ spiked to $2.25, a gain of 3,650 percent. The stock kept surging, drawing the attention first of penny stock gossips, then the sharper finance blogs, and finally—as Cynk’s gain topped 36,000 percent, giving it a greater worth on paper than companies such as Urban Outfitters (URBN)—all of Wall Street. On CNBC, in the New York Times, and all over Twitter (TWTR), the strangest story of the summer was the mystery listing from Belize.
Calls to Cynk go unreturned. In filings with the Securities and Exchange Commission, Cynk lists its offices as the Matalon’s Suite 400. There is no Suite 400. The building manager says the company has never had an office there. There are no $6 billion companies in all of Belize, a country where workers earn as little as $80 a week. What Belize does have is a reputation as a haven for offshore businesses with difficult-to-trace records and little oversight.
Among the operations that have set up shop are penny stock promoters who blast out e-mails and tweets hyping shell companies. One of the biggest boosters tied to Belize, AwesomePennyStocks, was able to stay anonymous until the Bugatti- and Lamborghini-driving 26-year-old behind it was sued in March by U.S. regulators. He settled on July 7 for $3.6 million without admitting the allegations. Another promoter, Victory Mark, lists an address in the nearby town of Ladyville. A visit there confirms the road exists, but it has no street numbers and is patrolled by stray dogs. Victory Mark didn’t respond to a phone call and an e-mail.
The person identified in filings as Cynk’s chief executive officer until mid-June, Javier Romero, grew up in the island town of San Pedro, where everyone knows everyone. Romero worked as a park ranger at a local marine reserve, says Daniel Guerrero, San Pedro’s mayor. On YouTube, under the name “Young Soldier,” Romero can be seen singing the hook on a reggae music video titled San Pedro (I Love You). His weathered family home, constructed of plywood sheets, stands out as particularly decrepit in a poor settlement a little out of town. An overturned golf cart lies in front amid ferns strewn with buckets and trash. There’s an outhouse off to one side.
Romero’s grandfather, Joe, is sitting outside on a recent afternoon. He says Javier, whose age he gives as 26 or 29, has left for the U.S., where he’s studying to be a pilot. Asked about Cynk, he explodes. “He doesn’t own anything!” he says. “That is crap. All the crap on the Internet—those are crap! He has nothing to do with it.”
Cynk Technology was born on May 1, 2008, when a Seattle man named John Kueber incorporated a company in Nevada under the name Introbuzz, according to state records. Nearly four years passed, with no apparent activity, until January 2012, when Introbuzz filed with the SEC to sell shares to the public. The startup wanted to raise as much as $100,000 to launch a new type of social network competing with the likes of Facebook (FB) and LinkedIn (LNKD). The difference was that Introbuzz users would pay for introductions—to celebrities, business contacts, or even “the right squash player.” The company would make the networking lunch passé: “Instead of paying for a lunch that neither party wants to eat, parties can get down to business knowing that their time has been valued.”
Kueber (pronounced Keeber) sold Introbuzz in late 2011 to a Las Vegas man named Kenneth Carter for $600, the documents say. The risks section of the SEC filing noted, in capital letters, that Carter had zero public-company experience. Carter, who went by the name Kenny Blaque, ran a promotions company called Blaque Technology, which lists life-size stickers called Wall Dawgz and Wall Dolls among its products.
http://www.businessweek.com/articles/2014-07-24/cynk-the-6-billion-penny-stock-debacle-stretches-from-belize-to-las-vegas
By Zeke Faux and Dune Lawrence July 24, 2014
http://www.businessweek.com/articles/2014-07-24/cynk-the-6-billion-penny-stock-debacle-stretches-from-belize-to-las-vegas
The Matalon, a six-story glass building in Belize City, Belize, towers over a lot littered with old refrigerators and washing machines. Jagged rebar sticks out of unfinished cinderblock structures nearby, and the view, across Haulover Creek, is of a cluster of corrugated metal shacks. This is the listed address for Cynk Technology (CYNK), a company with no assets, no revenue, and one employee, that for one hour in July had a market value of more than $6 billion.
Until that inconceivable run, no one had ever heard of Cynk or the social network it claimed to operate—no one, that is, outside the murky, volatile market for penny stocks, where fraud is rampant and regulation scant. Cynk had begun trading in 2013, for a few cents a share. The price stayed there, hugging the bottom, until June 17, 2014, when shares that had last changed hands at 6¢ spiked to $2.25, a gain of 3,650 percent. The stock kept surging, drawing the attention first of penny stock gossips, then the sharper finance blogs, and finally—as Cynk’s gain topped 36,000 percent, giving it a greater worth on paper than companies such as Urban Outfitters (URBN)—all of Wall Street. On CNBC, in the New York Times, and all over Twitter (TWTR), the strangest story of the summer was the mystery listing from Belize.
Calls to Cynk go unreturned. In filings with the Securities and Exchange Commission, Cynk lists its offices as the Matalon’s Suite 400. There is no Suite 400. The building manager says the company has never had an office there. There are no $6 billion companies in all of Belize, a country where workers earn as little as $80 a week. What Belize does have is a reputation as a haven for offshore businesses with difficult-to-trace records and little oversight.
Among the operations that have set up shop are penny stock promoters who blast out e-mails and tweets hyping shell companies. One of the biggest boosters tied to Belize, AwesomePennyStocks, was able to stay anonymous until the Bugatti- and Lamborghini-driving 26-year-old behind it was sued in March by U.S. regulators. He settled on July 7 for $3.6 million without admitting the allegations. Another promoter, Victory Mark, lists an address in the nearby town of Ladyville. A visit there confirms the road exists, but it has no street numbers and is patrolled by stray dogs. Victory Mark didn’t respond to a phone call and an e-mail.
The person identified in filings as Cynk’s chief executive officer until mid-June, Javier Romero, grew up in the island town of San Pedro, where everyone knows everyone. Romero worked as a park ranger at a local marine reserve, says Daniel Guerrero, San Pedro’s mayor. On YouTube, under the name “Young Soldier,” Romero can be seen singing the hook on a reggae music video titled San Pedro (I Love You). His weathered family home, constructed of plywood sheets, stands out as particularly decrepit in a poor settlement a little out of town. An overturned golf cart lies in front amid ferns strewn with buckets and trash. There’s an outhouse off to one side.
Romero’s grandfather, Joe, is sitting outside on a recent afternoon. He says Javier, whose age he gives as 26 or 29, has left for the U.S., where he’s studying to be a pilot. Asked about Cynk, he explodes. “He doesn’t own anything!” he says. “That is crap. All the crap on the Internet—those are crap! He has nothing to do with it.”
Cynk Technology was born on May 1, 2008, when a Seattle man named John Kueber incorporated a company in Nevada under the name Introbuzz, according to state records. Nearly four years passed, with no apparent activity, until January 2012, when Introbuzz filed with the SEC to sell shares to the public. The startup wanted to raise as much as $100,000 to launch a new type of social network competing with the likes of Facebook (FB) and LinkedIn (LNKD). The difference was that Introbuzz users would pay for introductions—to celebrities, business contacts, or even “the right squash player.” The company would make the networking lunch passé: “Instead of paying for a lunch that neither party wants to eat, parties can get down to business knowing that their time has been valued.”
Kueber (pronounced Keeber) sold Introbuzz in late 2011 to a Las Vegas man named Kenneth Carter for $600, the documents say. The risks section of the SEC filing noted, in capital letters, that Carter had zero public-company experience. Carter, who went by the name Kenny Blaque, ran a promotions company called Blaque Technology, which lists life-size stickers called Wall Dawgz and Wall Dolls among its products.
http://www.businessweek.com/articles/2014-07-24/cynk-the-6-billion-penny-stock-debacle-stretches-from-belize-to-las-vegas
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