After Manipulating 40 Stocks, Caught On A Wire Tap

Gregg Mulholland pleaded guilty to charges based the manipulation of the securities of 40 different firms over a four year period, beginning in 2010. The manipulations yielded over $250 million in trading profits which were laundered through attorney accounts. Mr. Mulholland pleaded guilty to money laundering conspiracy. U.S. v. Mulholland (E.D.N.Y. May 9, 2016).

Defendant Mulholland, a citizen of Canada and the U.S., was the secret owner of Legacy Global Markets S.A., an offshore broker-dealer and investment management company. The firm was based in Panama City, Panama and Belize City, Belize.

Three inter-related schemes were used by Mr. Mulholland and a group of associates to conduct the manipulations:

Concealment of ownership: The group sought to induce U.S. investors to purchase stocks in thinly-traded U.S. public companies through the fraudulent promotion of the stock, concealment of their ownership interests and manipulation of artificial price movements and trading volumes;

Circumvent reporting: The IRS reporting requirements under the Foreign Account Tax Compliance Act were circumvented; and

Offshore law firms: The proceeds of the transactions were laundered through five offshore law firms.

Shell companies in Belize and Nevis, West Indies run by nominees were used to conceal the stock ownership of the group. While the group members also used aliases when conducting the market manipulations, in May 2014 Mr. Mulholland was caught on a court ordered wire tap admitting that he owned all the shares of a stock being manipulated. Following that statement the share price for the stock rose from $0.06 to $13.90 per share giving the firm a market valuation of over $ 4 billion at a time when it had no revenue or assets. The services of a U.S. based lawyer were used to launder the proceeds from that transaction and others.

In connection with the plea agreement Mr. Mulholland agreed to forfeit a private aircraft, a Range Rover vehicle, two real estate properties in British Columbia and funds and securities in more than a dozen bank and brokerage accounts.