August 10, 2015 / 6:54 PM / 2 years ago

'Wolf' suspect behind $300 million Cynk fraud pleads not guilty

NEW YORK, Aug 10 (Reuters) - A man accused by U.S. prosecutors of running a $300 million penny-stock manipulation fraud that drove the market value of little-known Cynk Technology Corp past $6 billion pleaded not guilty on Monday.

Gregg Mulholland, also known as "Stamps" and "Charlie Wolf," was arraigned on charges including securities fraud in an indictment recently filed in federal court in Brooklyn, New York, following the dual U.S.-Canadian citizen's arrest in June.

Mulholland, 46, was detained during a layover in Phoenix on a flight from Canada to Mexico. He is one of three new defendants added in the July 31 indictment to a pre-existing case brought in September against six other people.

Those prior six defendants included Robert Bandfield, a U.S. citizen who authorities say operated a business in Belize that helped clients carry out stock manipulation schemes.

The latest indictment added as defendants Philip Kueber, a Canadian citizen who prosecutors say was Mulholland's associate, and Paula Psyllakis, a Canadian citizen believed to manage the back offices of an offshore brokerage firm.

Only Mulholland and Bandfield, 70, are in U.S. custody. Bandfield, who the latest indictment accused of participating in the Cynk securities fraud, appeared at Monday's hearing and also pleaded not guilty.

Lawyers for Mulholland and Bandfield declined comment after the hearing. Attorneys for Kueber and Psyllakis could not be identified.

U.S. regulators in July 2014 suspended trading in Cynk, a social media company with no revenue or assets, after its share price soared without explanation to $21.95 from 6 cents in less than a month.

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.

Prosecutors said that Mulholland was behind that volatility after amassing tens of millions of 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 $300 million in proceeds that were laundered through at least five offshore law firms.

Prosecutors say Mulholland also secretly owned Legacy Global Markets SA, a broker-dealer based in Panama and Belize that was part of a scheme to launder about $500 million in fraudulent proceeds for over 100 U.S. citizens and residents.

The case is U.S. v. Bandfield, U.S. District Court, Eastern District of New York, No. 14-00476. (Reporting by Nate Raymond in New York; Editing by Bill Rigby)

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