Mastermind of 40 Pump and Dump Schemes and Secret Offshore Brokerage Pleads Guilty to $250 Million Money Laundering Scheme

Transcription

1 Mastermind of 40 Pump and Dump Schemes and Secret Offshore Brokerage Pleads Guilty to $250 Million Money Laundering Scheme BROOKLYN, N.Y. Gregg R. Mulholland, a dual U.S. and Canadian citizen and secret owner of Legacy Global Markets S.A., an offshore broker-dealer and investment management company based in Panama City, Panama, and Belize City, Belize, pleaded guilty to fraudulently manipulating stocks, federal officials announced. As part of the plea agreement on Monday, the 46-year-old Mulholland agreed to forfeit, among other things, a Dassault- Breguet Falcon 50 aircraft, a Range Rover Defender vehicle, two real estate properties in British Columbia, and funds and securities on deposit at more than a dozen bank and brokerage accounts. Mulholland, of San Juan Capistrano, California, is facing up to 20 years in prison, according to authorities. He plead to money laundering conspiracy for fraudulently manipulating the stocks of more than 40 U.S. publicly-traded companies and then laundering more than $250 million in profits through at least five offshore law firms, officials

2 said. Mulholland s staggering fraud perpetrated on the investing public was built on an elaborate offshore shell game, which included his secret ownership of an offshore brokerage firm. Through manipulative trading, Mulholland generated profits of more than $250 million and used a corrupt lawyer to launder the proceeds into the United States to pay his fraudulent network of stock promoters and broker-dealers, stated U.S. Attorney Robert L. Capers. Mulholland pleaded guilty today for his role in a stock manipulation and profit hiding scheme totaling more than $250 million. Making sure our markets are fair to all investors and bringing charges against those who profit illegally remains a top priority for the FBI, stated FBI Assistant Director-in-Charge in New York Diego Diego Rodriguez In 2015, the New York Times reported that Mulholland was arrested because the international flight Mulholland, the penny stock trader, was traveling on from Canada to Mexico made a brief stop in Phoenix. The layover at the Phoenix Sky Harbor International Airport gave FBI agents enough time to arrest Gregg R. Mulholland and charge him with overseeing the manipulation of numerous penny stocks and then laundering the profits through accounts at no fewer than five offshore law firm, according to the Times. Here are the facts and circumstances surrounding this case, according to federal authorities. Between 2010 and 2014, Mulholland controlled a group of individuals, the Mulholland Group, who together devised three interrelated schemes: 1. Induce U.S. investors to purchase stock in various

3 thinly-traded U.S. public companies through fraudulent promotion of the stock, concealment of their ownership interests in the companies, and fraudulent manipulation of artificial price movements and trading volume in the stocks of those companies. 2. Circumvent the IRS s reporting requirements under the Foreign Account Tax Compliance Act (FATCA). 3. Launder the fraudulent proceeds from the stock manipulation schemes to and from the United States through five offshore law firms. Through these schemes, the Mulholland Group laundered more than $250 million in fraudulent proceeds. To facilitate the interrelated schemes, the Mulholland Group used shell companies in Belize and Nevis, West Indies, which had nominees at the helm. This structure was designed to conceal the Mulholland Group s ownership interest in the stock of U.S. public companies, in violation of U.S. securities laws. It enabled the Mulholland Group to engage in more than 40 pump and dump schemes. For example, this structure enabled the Mulholland Group to manipulate the stock of Cynk Technology Corp, which traded on the U.S. OTC markets under the ticker symbol CYNK. Using aliases such as Stamps and Charlie Wolf, Mulholland was intercepted on a court-authorized wiretap on May 15, 2014, admitting to his ownership of all the free trading or unrestricted shares of CYNK. Prior to this conversation between Mulholland and his trader at Legacy, there had been no trading in CYNK stock for 24 trading days. Over the next two months, the stock of CYNK rose from $0.06 per share to $13.90 per share, a more than $4 billion stock market valuation for a company that had no revenue and no

4 assets, according to federal officials. Mulholland used the services of a U.S.-based lawyer to launder the more than $250 million generated through his stock manipulation of CYNK and other U.S. companies directing the fraud proceeds to five law firm accounts and transmitting them back to members of the Mulholland Group and its co-conspirators. These concealment schemes also enabled Mulholland to evade reporting requirements to the IRS. The charges were brought in connection with the President s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, officials said the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants.

5 Nine Indicted for $6.5 Million International Stock Manipulation Scheme VIRGINIA An indictment unsealed today in federal court alleges nine the defendants artificially pumped or inflated the trading volume and price of the securities by touting business activities and deceptive revenue forecasts, and by engaging in coordinated trading activity to create the appearance of increasing market demand. The defendants then allegedly dumped or sold the securities at the inflated prices and laundered the proceeds from their scheme through bank accounts in the United States and overseas. The stock manipulation and money laundering resulted in $6.5 million in illegal profits, according to officials. The nine named in the indictment filed June 25 are the following defendants: 1. Harold Bailey Gallison II, 57, of Valley Center, California 2. Anna Hiskey, 42, of Costa Rica 3. Michael Randles, 47, of Costa Rica 4. Roger Coleman, 79, of Las Vegas 5. Carl Kruse Sr., 75, of Miami 6. Carl Kruse Jr., 50, of Miami

6 7. Frank Zangara, 52, of Locust Valley, New York 8. Mark Dresner, 59, of Dix Hills, New York 9. Charles Moeller, 46, of Sea Cliff, New York According to the allegations in the indictment, the scheme was facilitated through an offshore brokerage and money laundering platform controlled by Gallison that went by various names, including Sandias Azucaradas, Moneyline Brokers and Trinity Asset Services (collectively, Moneyline). The defendants allegedly used Moneyline to create nominee accounts in the names of shell companies, and used those accounts to conceal both the true source and ownership of the securities and the flow of funds. The indictment alleges that conspirators also took elaborate steps to hide their illegal conduct from law enforcement, including the use of internal chat and telephone systems In a recorded call from 2010, officials allege Gallison told Randles that Moneyline maintained a private internal telephone system that did not go through a U.S. server on which he and Randles could hold private conversation[s] that the Fed cannot get a wiretap on. In another conversation with Randles, Gallison noted that Moneyline s proprietary internal chat system, which did not retain records of chats, was better than an internet service provider because if the Fed came in with a search warrant, they d take your computer and it d have your last ninety days worth of Yahoo messengers and Skype chats. The defendants are presumed innocent until and unless proven guilty. Nine Defendants indicted Stock Manipulation