SEC charges Belize ‘neighbors’ of summer market sensation Cynk

September 9, 2014, 7:56 PM UTC
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The U.S. Securities and Exchange Commission (SEC) headquarters stands in Washington, D.C., U.S., on Wednesday, Oct. 26, 2011. The SEC approved a rule requiring hedge funds and private-equity funds to reveal internal information to U.S. regulators. Photographer: Andrew Harrer/Bloomberg via Getty Images
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We may not have heard the last from Cynk Technology.

On Tuesday, the Securities and Exchange Commission and the Department of Justice charged several companies located on the same floor of an office building in Belize that was also the address claimed by this summer’s market wonder, social networking hot stock Cynk (CYNK). Shares of Cynk soared by 25,000% this summer, giving the company a $6 billion market valuation, even though the company had no assets, no sales, quickly rotating CEOs, and few employees. What or who had driven up the stock was briefly the source of a lot of speculation on Wall Street. The SEC temporarily halted trading of Cynk shares, saying the stock jump looked to be the product of manipulation. But no charges have been filed, and the stock is trading again, though it has slumped to $0.25. Cynk’s former accountant is reportedly under investigation.

The SEC charged IPC Corporate Services and its owners Robert Bandfield and Andrew Godfrey with civil fraud for helping individuals to evade U.S. securities laws through the registration of offshore entities. The SEC said the charges related to a larger money laundering investigation. The Justice Department’s indictment names Bandfield and Godfrey as well, along with four other individuals and the firms Legacy Global Markets, Titan Securities, and Unicorn International Securities. The Justice Department alleges that Bandfield and Godfrey’s firm IPC, along with the others, assisted U.S. citizens in the manipulation of the stock prices of publicly traded companies.

IPC, Legacy Global, and Titan securities were all featured in a Fortune article published this summer that examined why so many firms with ties to questionable stock deals seemed to be located on the same floor of the Matalon office building in Belize City, Belize. Cynk also claimed to be located on the same floor of the Matalon. The Matalon’s owner told Fortune that Cynk was not actually located in the building.

The Justice Department’s complaint, which is sealed, says the brokerage firms conspired to manipulate the shares of three companies, including Cannabis-RX, a microcap company that was supposedly in the business of providing medical marijuana, according to a Department of Justice press release.

In addition to the similar address, IPC had other ties to Cynk. Bandfield and Godfrey were once major shareholders in penny stock Tiger Oil, which was brought public by lawyer Howard Gewerter, who had worked for Cynk. In June, Gewerter filed a statement saying he had verified that Cynk was located on the fourth floor of the Matalon building. It was not. Legacy Global also told regulators it was located on that floor. Instead, the address Legacy claimed was, in fact, occupied by IPC.

There is no mention of Cynk in the documents that the Department of Justice filed on Tuesday. The mystery continues.

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