The man who called himself “Stamps” may finally be licked.
Gregg R. Mulholland, a Vancouver, Canada, stock promoter with dual U.S. and Canadian citizenship, was arrested in Phoenix by federal agents on Tuesday during the layover of a flight from Canada to Mexico on charges that he orchestrated a $300 million stock manipulation scheme.
In a complaint filed in the U.S. District Court’s Eastern District of New York in Brooklyn, Mulholland was charged with securities fraud conspiracy and money laundering. In a parallel action, the SEC filed civil charges against Mulholland in the same jurisdiction on Tuesday for selling unregistered securities.
Mulholland, who allegedly used aliases like “Stamps” and “Charlie Wolf” as part of the scheme, was the owner of Legacy Global Markets S.A., a broker-dealer and investment management company based in Panama City, Panama, and Belize City, Belize, which was indicted in September 2014.
The complaint alleges that Mulholland controlled a group of individuals who conspired to induce U.S. investors to purchase shares in various penny stock companies through fraudulent promotions, concealment of their ownership interests and price manipulation, then covered up their activity by circumventing the IRS reporting requirements and finally laundered the proceeds of the schemes to and from the U.S. through five offshore firms. The group laundered approximately $300 million in fraudulent proceeds.
Mulholland and his conspirators allegedly established shell companies in Belize and on the island of Nevis in the West Indies designed to conceal their ownership interest in the stock of American companies, and this enabled them to engage in pump-and-dump schemes.
The group allegedly manipulated the stock of Cynk Technology Corp (CYNK), a Belize-based company operating a small social network whose stock raised eyebrows after its price soared 36,000 percent over less than two months.
Mulholland admitted to owning “all of the free trading” on CYNK on a court-authorized wiretap in May 2014. Before this admission, there had been no trading on CYNK for 24 days, but over the next two months the stock’s price rose from 6 cents per share to $13.90 per share, creating a stock valuation of more than $4 billion for a company that had no revenue or assets.
In another example of the group’s schemes, the SEC alleges that Mulholland accumulated 84 percent of the outstanding shares of Vision Plasma Systems Inc. Once he controlled the company through majority ownership, Mulholland liquidated his shares for at least $21 million in proceeds, but did not file a registration statement covering his sales.
Mulholland allegedly employed a U.S.-based lawyer to funnel $300 million to five law firm accounts offshore and then transmit them back to conspirators, which enabled him to evade IRS reporting requirements.