|=DJ SEC Files Charges Against CMKM Diamonds In $64M Scheme|
Monday, April 07, 2008 4:02 PM
By Carol S. Remond
OF DOW JONES NEWSWIRES
Tiny mining company CMKM Diamonds Inc. (CMKX) and itsuse of billions of unregistered shares to finance various endeavors like a drag car racing team and corporate merger with other companies has long been a thorn in the side of securities regulators in the U.S. and Canada.
On Monday, the Securities and Exchange Commission finally caught up with the Pink Sheets company, charging CMKM, its chief executive Urban Casavant and several others with violating registrations provisions of federal securities laws by fraudulently issuing "hundreds of billions of shares," the SEC said.
The SEC alleged in its complaint filed in the U.S. District Court for the District of Nevada that the defendants "conspired to illegally issue and sell unregistered stock" and "lined their pockets with more than $64 million from 40,000 nationwide."
The complaint alleges that Casavant generated investors' interest in the company through false press releases, Internet chat boards and funny-car race events in events across the country without disclosing that he ran this purported gold and diamond company from his house in Las Vegas.
The SEC complaint charges CMKM, a broker dealer and transfer agent involved and 11 individuals including Casavant.
The commission identifies in its complaint John Edwards as the mastermind of the scheme. The SEC alleges that Edwards and others sold their unregistered stock into the public markets. The SEC alleges that Edwards profited by about $26.4 million from sales through a single brokerage firm and that Casavant received about $31.5 million.
The SEC alleges CMKM improperly issued up to 622 billion shares of purportedly unregistered stock between January 2003 and May 2005.
The complaint alleges that CMKM improperly issued up to 622 billion shares of purportedly unregistered stock between January 2003 and May 2005. The SEC claims that these stock issuances were based in large part on "inadequate, suspect and inconsistent" written authorization and opinion letters prepared by company lawyer Brian Dvorak.
CMKM transfer agent 1st Global Stock Transfer LLC and owner Helen Bagley are also charged with issuing stack of stock certificates without restrictive legends based on these faulty documents.
The SEC is seeking permanent injunctions against the defendants and disgorgement of profits. The Commission is also seeking penny stock bars against each named individual defendants and an order prohibiting Casavant from acting as an officer or director of any public company.
The SEC revoked the registration of CMKM in October 2005 after the company failed to file annual and quarterly financial reports since 2002.
-By Carol S. Remond, Dow Jones Newswires; 303-997-5783; firstname.lastname@example.org
(END) Dow Jones Newswires