|Update: CMKM Diamonds, Inc. - Will Patricide Lead To Financial Suicide?|
May 3 2007
Is it patricide in progress? CMKM Diamonds, Inc., the failed penny stock company that broke hearts, emptied pocketbooks and dashed investors’ hopes, is suing its founder, Urban Casavant. A lawsuit filed by the Company on April 25, 2007 in U.S. District Court, charges that Casavant and his cohorts fleeced CMKM out of almost $200 million.
The Complaint claims that Casavant’s scheme began in 2000 when he conspired with a group of Las Vegas-based penny stock promoters to raise $100 million to develop mineral claims in Saskatchewan, Canada. As StockPatrol.com reported, in late 2002, Casavant acquired control of a publicly traded shell corporation and the hype surrounding CMKM began to take hold. A series of press releases claimed that the Company had discovered valuable kimberlite pipes and diamondiferous ore in Canada, was exploring for gold and zinc in South America, and had entered into valuable alliances with other mining companies. CMKM Diamonds, Inc. - A Familiar Drill.
These promises proved hollow – but, according to the newly-filed complaint, they achieved their goal. Chat rooms and message boards buzzed with rumors that CMKM would be taken over by a major mining company – resulting in a windfall for investors who were “wise” enough to buy CMKM shares while they still lingered at a fraction of a cent. The Complaint charges that Casavant and his co-defendants orchestrated this promotion and facilitated the scheme by dumping 700 billion shares of CMKM common stock on the market. Along the way, billions of shares purportedly were transferred to family and friends of CMKM insiders.
According to the Complaint, the Casavant group diverted funds from the Company – paying gambling debts and buying real estate (including a $3.5 million home in Las Vegas). As CMKM’s trading accelerated, so did the Company’s profile, and observers began to pay attention to the fact that the Company had ceased filing financial reports with the SEC shortly after Casavant assumed control of the public shell. Press releases promised that CMKM had retained a prominent securities attorney to assure regulatory compliance. The Complaint charges that the lawyer, Roger Glenn, was not retained for that purpose, but instead facilitated the Company’s sale of shares by providing necessary legal opinion letters.
CMKM’s failure to file public reports proved to be the Company’s undoing. In 2005 the SEC terminated CMKM’s public registration after a series of hearings at which the Company’s financial practices were exposed. Casavant declined to testify at the SEC proceedings, invoking his 5th Amendment right against self-incrimination. Most recently, in March 2007, Casavant stepped aside as Chairman of the Board and President of CMKM, turning over the reins – and the remaining $558 in the Company’s bank account – to an individual named Kevin West.
CMKM’s sole asset consists of 45 million shares of Entourage Mining, which is slated to be distributed to CMKM’s shareholders. There are, however, two serious impediments to that process: CMKM has not been able to identify all of its valid shareholders and it lacks the funds – estimated at $250,000 – to pursue that process.
And there is one other – perhaps insurmountable – hurdle. There are other likely competitors for any CMKM assets. CMKM recently revealed that it has become the subject of yet another SEC probe as well as investigations by at least four other government agencies. And the bad news does not end there. CMKM evidently has forfeited all of its claims and mineral rights, has no corporate records for the past 4 ½ years of business and has never filed taxes.
Not so long ago, on March 30, 2007, CMKM’s new Chairman, Kevin West, was thanking Urban Casavant for “having the trust and the faith in me to turn over the reigns (sic) of the Company so that I can have the authority needed to make decisions in the best interests of the shareholders.” And what was in the best interest of those shareholders? Suing Casavant and his alleged co-conspirators – and seeking to recover the funds that were diverted from the Company. But for whom? The IRS?
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