The rags-to-riches story of CYNK Technology Corp (OTCMKTS:CYNK), the penny stock whose shares 36,000% this summer, is apparently not going to have a happy ending.

CYNK Technology

On Thursday, September 11th, U.S. federal prosecutors announced they had filed money-laundering and stock manipulation charges this week in federal court in New York against a group of people working on the same floor of a Belize office building where Cynk was supposedly headquartered.

Although the legal filings in the case, which stem from a two-year undercover operation, don’t specifically mention Cynk, documents obtained by Bloomberg News show that some of the defendants held a large number of Cynk shares for clients in shell companies they created.

More on Cynk case

Cynk, supposedly a social-network operator which has no assets, no revenue and one employee, enjoyed a market value of more than $6 billion for around an hour in mid-July this year. This can of an extreme valuation is very unusual, even in the volatile and fraud-filled market for penny stock market. In regulatory filings, Cynk that it was headquartered on the fourth floor of the Matalon, a six-story office building in Belize City.

Of note, more than two months after regulators suspended trading in CYNK Technology Corp (OTCMKTS:CYNK) in July, with the rationale of suspected manipulative activity, no charges related directly to Cynk have been filed to date.

Details on the charges

Robert Bandfield, Andrew Godfrey, Rohn Knowles and Kelvin Leach were charged in the indictment; and worked out of offices on the Matalon’s fourth floor as Bloomber verified during a visit in July. The documents obtained by Bloomberg show that Titan International Securities, where Leach and Knowles are executives, held millions of Cynk shares, and that Cornerstone Corporate Services Ltd., which Godfrey works, founded companies to hide the ownership of the stock.

Belizean police raided Titan’s office September 9th, according to sources with knowledge of the matter. Belize police wouldn’t respond to questions when reached by phone.

U.S. prosecutors said Bandfield was apprehended in Miami and will extradite the others from Belize. Bandfield and Godfrey, who also ran Belize City-based IPC Corporate Services Inc. (also named in the indictment), denied any relationship with CYNK Technology Corp (OTCMKTS:CYNK) in interviews. Neither responded to messages left at their office and neither has an attorney of record.

In a brief phone interview, Leach that denied any knowledge of the charges.

Prosecutors allege that Leach, Knowles, Bandfield and Godfrey, along with another broker and a Belizean corporate agent, conspired to manipulate stocks and set up companies to hide their involvement. Moreover, they exploited Belize laws that let foreigners set up offshore companies with no local taxes or ownership disclosure requirements.

An agent posing as a stock promoter uncovered the scam when he was referred to Titan in late 2012 by an employee of Gibraltar Global Securities Inc., a Bahamas brokerage sued by the SEC regarding a global pump-and-dump scheme, according to prosecutors.

The agent paid Titan $3,300 to set up brokerage accounts under new corporate names to hide his ownership from the SEC and the IRS. He then traveled to Belize and met with Knowles, who offered to help him manipulate a stock by trading it back and forth at ever higher prices through accounts at Brian de Wit’s Legacy Global Markets SA (the other broker charged in the case).

According to the legal filings, Knowles told the agent, “Me and Brian do it all the time for other clients.”

Prosecutors allege the men laundered more than $500 million for clients like their undercover agent.