NEW YORK, Aug 31 (Reuters) - A Canadian citizen has surrendered to U.S. authorities in connection with a $300 million penny-stock manipulation fraud that prosecutors say drove the market value of little-known Cynk Technology Corp past $6 billion.
Philip Kueber, who authorities say lived in California and Belize, is expected to appear in federal court in Brooklyn, New York, on Tuesday after pleading not guilty last week to charges including securities fraud, his lawyer said Monday.
He was charged in a July 31 indictment that added him to a pre-existing case over a massive offshore stock fraud that authorities allege was run by a group controlled by Gregg Mulholland, a U.S.-Canadian citizen arrested in June.
“As soon as he found about it, he made arrangements to surrender, which he did,” said Stanley Greenberg, Kueber’s lawyer. “We will deal with the legal issues in court.”
Kueber was released on Aug. 24 on a $150,000 bond.
Two other men, Mulholland and Robert Bandfield, who authorities say operated a business in Belize that helped clients carry out stock manipulation schemes, are being held pending trial and have pleaded not guilty.
Six other defendants have been charged but have not appeared in U.S. court.
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 allege Bandfield, Mulholland and Kueber conspired to manipulate Cynk’s stock as part of a pump-and-dump scheme. Authorities say that as part of the fraud, Kueber enlisted relatives and associates to act as straw shareholders in Cynk.
Those shareholders then sold their stock to a group controlled by Mulholland, enabling it to fraudulently manipulate the shares, 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, the indictment said.
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 Noeleen Walder and Alan Crosby)