Cynk’s epic penny-stock bubble is a big headache for Seattle Business publisher
A company created years ago by Seattle Business magazine publisher John Kueber has blossomed into a penny-stock scandal of legendary proportions long after he ended his connection to it.
Seattle Times business reporter
A half-forgotten company that Seattle Business publisher John Kueber conceived and sold off years ago has suddenly ballooned into an epic bubble of penny-stock speculation, sending the world’s financial press to his telephone and inbox.
The unlikely rise of Cynk Technology, a purported social-networking company that was briefly worth nearly $6 billion although it has no operating website, came to a halt last week. The Securities and Exchange Commission (SEC) suspended trading in its shares, citing “potentially manipulative transactions” in the stock.
But that was just the start for Kueber, a 42-year-old University of Washington graduate, who says he sold the company to a friend of his brother in 2011, well before its shares were publicly traded, and hasn’t been involved since.
The situation “has been difficult, as I value my reputation, and have been involved in pretty straightforward business situations for the duration of my career,” he said.
The company that became Cynk was originally founded as Introbuzz, first incorporated in Nevada by Kueber in 2008 when he came up with the idea as a possible startup: a social-networking website where members would pay other members to get introduced to people they know.
Kueber said in an interview that he sat on the project and didn’t do anything with it after he became involved with Tiger Oak, the company that publishes Seattle Business and Seattle Magazine, two glossy monthlies.
Kueber says that in 2011 his elder brother Philip suggested he sell it to a friend of his, Kenneth Carter.
He sold it for a nominal $600 plus a $6,000 consulting fee, Kueber said, and “I didn’t think anything of it since then.”
But Kueber’s name is on the documents of incorporation, and it’s in the securities filings made by Cynk when it went public with a stock offering in 2012.
So last week when Cynk’s valuation started soaring and captured the attention of the global-financial media, Kueber’s phone started ringing.
Kueber said he got the first call Thursday night — from BuzzFeed, a popular news website, as he was walking his kids out of the house. It came as a surprise.
He added that he regrets “having any connection with this, especially since I have reaped next to no benefit.”
According to his LinkedIn profile, Kueber has launched and sold several small technology or media companies, including a publishing firm that he sold to Tiger Oak, his current employer. The Seattle Business website credits him with moving “quickly to put the magazine on solid ground.”
The key twist in the story is Kueber’s 53-year-old brother, Philip, a Vancouver, B.C.-area businessman who has long been in the rakish world of penny stocks — speculative shares in so-called “development stage” firms in fields such as mining, technology and biotechnology.
They’re called penny stocks because they generally trade for next to nothing in over-the-counter markets, away from regulated stock exchanges.
Sometimes legitimate entrepreneurs resort to the over-the-counter markets to finance their fledgling ventures. But at other times the lack of oversight in these markets is used by unscrupulous promoters to lure naive investors into buying shares of what turns out to be a worthless company. The Vancouver area historically has been a hub for these unsavory ventures — as has Washington state.
The elder Kueber has been involved in penny stocks such as Pepper Rock Resources, which saw brief spikes in the price of its shares in 2010 and 2011 but now sees them listed for a fraction of a penny.
In a securities filing Phil Kueber is described as a 1983 graduate of the University of British Columbia who is a screen writer in addition to being an investor and manager.
John Kueber said that he hasn’t seen his older brother in more than a year, and that they have talked only once since the incident blew up, when he called Phil to find out what was going on. “It was not much of a conversation,” he said.
Kueber said he doesn’t know any of the players involved in the story, “nor do I really understand what their connection is, if any,” to his brother.
“We’re family; it’s a very awkward position,” Kueber said, adding that he’s familiar with what’s on the Internet about his elder brother’s dealings in penny-stock ventures.
“You don’t tell your brother what to do. He’s his own person, I’m my own,” Kueber said. “If there’s one thing I regret is, when I decided I didn’t want to do this idea, I wish I had just put this away” instead of following his brother’s advice.
“Everything I have done has been with an eye to this community and living in this community for a long time.”
In an email, Phil Kueber confirmed his younger brother’s account about the sale of the company, and agreed that John hasn’t had any involvement with the company since that time.
The elder Kueber said that he has “had very limited involvement with company operations since then, except to consult from time to time.”
He didn’t comment on questions about the SEC’s concerns or its order to halt the trading of Cynk.
As for Carter, his friend the buyer, Kueber said he “was the logical successor as president due to his connections in the entertainment industry.”
Carter, who appears to run an Internet marketing company, didn’t return a request for comment. He’s also not in charge anymore: Last year he was replaced by Marlon Luis Sanchez, who filings say took part in a medical-services company in Southern California. Sanchez, in turn, earlier this year gave his seat to Javier Romero, an alleged fisheries officer from Belize.
Seattle Times news researcher Miyoko Wolf contributed to this report. Ángel González: 206-464-2250 or firstname.lastname@example.org.