SEC defendant Kueber avoids jail
2017-12-08 12:46 PT - Street Wire
Also Street Wire (U-CYNK) Cynk Technology Corp
by Mike Caswell
Kelowna's Phil Kueber has avoided a jail term, receiving three years of probation for his part in the manipulation of Cynk Technology Corp., a pink sheets listing that was briefly worth $4.5-billion. (All figures are in U.S. dollars.) He received the sentence in a court appearance on the morning of Friday, Dec. 8, before New York Judge Leo Glasser. The three years of probation is in addition to a $1.2-million forfeiture order that Mr. Kueber previously agreed to.
Prosecutors claimed that Mr. Kueber participated in the manipulations of Cynk and another company, Vision Plasma Systems Inc. According to the government, he recruited friends and associates to serve as nominee shareholders. In the subsequent manipulation, Cynk went to a $13.90 high before being halted.
Mr. Kueber's sentence is considerably lighter than those of others charged in the scheme. Those others include West Vancouver resident Gregg Mulholland, who is serving 12 years in jail, and former B.C. dentist Robert Bandfield, who is serving six years. Part of the reason that Mr. Mulholland and Mr. Bandfield received jail terms is the larger role that they played in the scheme. Mr. Bandfield, 72, was the architect of a money laundering operation that contributed to the manipulations of Cynk and many other companies, prosecutors said. Similarly, prosecutors said that Mr. Mulholland was responsible for 40 manipulations, contributing to "one of the largest market manipulation schemes ever charged in this district."
Phil Kueber
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Phil Kueber
Undoubtedly playing a part in Mr. Kueber's light sentence is the fact that he co-operated with the government. After he was charged, he voluntarily went to the U.S. from Canada and entered a guilty plea. Any subsequent co-operation is not entirely clear, however. Many of the documents surrounding his participation in the case are sealed, including all of the sentencing materials.
The charges against Mr. Kueber and the others are contained in a superseding indictment that prosecutors filed on Aug. 5, 2015, in the Eastern District of New York. Much of the indictment contained allegations against IPC Corp., an entity run from Belize that prosecutors claimed aided in manipulations that generated $500-million. According to prosecutors, IPC had more than 100 corrupt clients who used the firm to secretly buy and sell public companies and then launder the proceeds.
The indictment identified one of IPC's largest clients as Mr. Mulholland. He used a complex offshore structure to conceal fraudulent activity and evade U.S. laws, according to prosecutors. Mr. Kueber, in turn, was working on Mr. Mulholland's behalf.
Mr. Kueber's role in the scheme was mostly with the manipulation of Cynk. The company purportedly ran a social networking website, but was secretly controlled by Mr. Kueber and Mr. Mulholland, the indictment stated. The men had acquired all of the company's tradable shares between 2011 and 2014.
The manipulation, as described by prosecutors, took place over a few weeks beginning on May 15, 2014. Prior to that date, the stock had not traded for 24 business days and was under 10 cents. Over the following weeks, it suddenly traded millions of shares and rose to a $13.90 close. According to prosecutors, the company's rise was only because of fraudulent activity by Mr. Mulholland. They said that the company had no revenue or assets, yet was worth over $4-billion.
The Cynk manipulation came to an abrupt end on July 11, 2014, when the U.S. Securities and Exchange Commission suspended the company, citing a possible manipulation in progress. (By that point the company had attracted significant attention. Reporters who attempted to find its office in Belize discovered that the address did not exist. There were also many questions surrounding its purported business.) After the SEC's halt, the stock fell to 60 cents.
Prosecutors also linked Mr. Kueber to the manipulation of Vision Plasma, a company that supposedly sold systems to remediate hazardous waste. The indictment did not say exactly what his role was with Vision Plasma, only accusing him of participating in a fraudulent conspiracy to manipulate the stock. The manipulation took place in August, 2012. That month Montreal touting website Awesome Penny Stocks (which was not charged in the case) advertised Vision Plasma as a pick. The stock substantially rose afterward, going to 39 cents from 14 cents on volume of 308 million shares. Meanwhile companies that Mr. Mulholland controlled sold 83 million shares, realizing $21-million in gains, prosecutors claimed.
The charges against Mr. Kueber were conspiracy to commit securities fraud, money laundering conspiracy and two counts of securities fraud. He pleaded guilty to conspiracy to commit securities fraud and money laundering conspiracy.
In addition to the criminal charges, most of the defendants, including Mr. Kueber, are facing a parallel civil case from the SEC. That case has been on hold.
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