The U.S. Department of Justice in Brooklyn announced Monday that stock promoter Gregg Mulholland pleaded guilty to money laundering conspiracy and securities fraud charges related to the manipulation of the stocks of more than 40 publicly traded firms, which generated more than US$250 million in illicit profits.
Mulholland, 46, is a dual citizen of the U.S. and Canada who was awaiting trial in custody after his arrest in Phoenix, Arizona, in June 2015.
As part of his plea-bargain agreement, Mulholland agreed to forfeit a private jet, a Range Rover, two properties in British Columbia and funds and securities “on deposit at more than a dozen bank and brokerage accounts,” according to a statement issued from the U.S. Attorney’s Office for the Eastern District of New York.
“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,” said U.S. Attorney Robert Capers in the statement.
Mulholland’s fraud scheme between 2010 and 2014 involved an elaborate and wide-ranging network of shell companies and nominees used to conceal ownership in publicly traded firms. The “pump and dump” schemes allowed Mulholland and others to fraudulently manipulate stock prices, in one instance sending the value of a company traded on the poorly-regulated OTC Bulletin Board called CYNK Technology Corp. above US$4 billion. Mulholland was caught on wiretaps admitting ownership of CYNKs free trading shares, which enabled him and his co-conspirators to inflate the firm’s stock price.
“Mulholland used the services of a U.S.-based lawyer to launder the more than US$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,” the release states. “These concealment schemes also enabled Mulholland to evade reporting requirements to the IRS.”
The guilty plea comes just a week after lawyers for the U.S. Securities and Exchange Commission (SEC) and Mulholland’s wife were in BC Supreme Court in connection with a lawsuit over properties bought with the ill-gotten gains in West Vancouver and Whistler. Mulholland's wife Delia, as a director for Vision Crest Consulting Group Ltd., claimed she was suffering hardship and inconvenience due to the SEC’s lawsuit, which prevented her from selling a property in Whistler.
The SEC’s lawyer Michael Schalke and Mulholland’s lawyer Robert Millar argued for several hours over the minutia of fraudulent conveyance law in front of BC Supreme Court Justice Gordon Funt.
Schalke detailed the suspicious nature of property transactions involving the Mulhollands and Vision Crest. He told the court that there was a “solar system of Vision Crest entities” incorporated in several jurisdictions as part of an effort to defraud or hinder the SEC’s attempts to collect on a debt from an earlier pump-and-scheme helmed by Gregg Mulholland.
Justice Funt eventually lifted the certificate of pending litigation from the Whistler property, allowing the sale, but ordered that the proceeds go toward the mortgage holder and the remainder be held by Millar’s firm, Fasken Martineau DuMoulin, which also told the court that Delia Mulholland and Vision Crest owed the firm more than $1.8 million.
Both Millar and Schalke did not respond to requests for comment about the guilty plea and its implications on the BC Supreme Court action.
Gregg Mulholland faces up to 20 years in prison.
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