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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony,

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From: StockDung4/9/2008 10:42:37 PM
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Better Late Than Never…SEC Files Charges in CMKX Case

by Mark Faulk

Three and a half years after the company was delisted, and over two and half years after the NASD filed charges against NevWest Securities in the same scam, the SEC charged 14 individuals in the CMKM Diamonds fiasco. Although thousands of shareholders were jubilant over the news, for many it seemed to be a case of too little, too late, and raised many questions about who wasn’t charged and why it has taken the SEC so long to bring charges in this case.

On September 9, 2006, an attorney representing a group of thousands of CMKX shareholders sent a letter to the company asking that they take action against six individuals and one company who he claimed illegally sold hundreds of billions of shares of stock to unsuspecting shareholders. In his letter, Bill Frizzell cited 36 trading accounts set up by John Edwards at NevWest Securities, both of whom were charged by the SEC yesterday. He also named CMKX attorney Brian Dvorak, CEO Urban Casavant’s secretary Ginger Gutierrez, and James Kinney, who received billions of shares of company stock, in the first of two shareholders’ derivative rights letters that Frizzell would pen. Edwards, Casavant, Dvorak, Gutierrez, Kinney, and NevWest (along with three individuals from NevWest) were among those charged by the SEC yesterday, along with Edwards’ associates Kathleen Tomasso and Anthony Tomasso and transfer agent Helen Bagley. Bagley’s company First Global Securities and CMKM Diamonds were charged as well.

Although the charges said that Edwards, Casavant, and their cohorts pocketed “at least $64.2 million” in the scam, estimates based on the average price of stock at the time that it was sold show that over 50,000 CMKX shareholders were defrauded of an estimated $250 million dollars. It is one of the largest financial scams in the history of the stock market.

Notable on the list of those who weren’t charged was another company attorney, former SEC attorney D. Roger Glenn, who wrote opinions letters that allowed hundreds of billion shares to be sold into the market based on little more than Brian Dvorak’s claim that the issuances were legitimate. Glenn was named by Frizzell in a second shareholders’ derivative rights letter on March 26, 2007 as another individual who defrauded shareholders. A soon to be released book about the CMKX saga, entitled The Naked Truth: Investing in the Stock Play of a Lifetime, discusses Roger Glenn’s involvement in CMKX:

Bill Frizzell laid out his case against the man who most shareholders had heralded as a savior to the company when he came on board in June of 2004. It was the trumpeted entrance of Glenn that almost single-handedly triggered the massive price run that sucked in thousands of shareholders when the stock rose over a thousand percent in a matter of days…and then dropped back to its original price of one one-hundredth of a cent. He ended his list with the most damning fact of all, that “Mr. Glenn had authored 11 opinion letters in a three-month period resulting in the issuance of 300 billion plus shares,” which were immediately sold to thousands of unsuspecting shareholders by John Edwards, David DeSormeau, James and Jeannie Kinney, and a host of others.

Another individual who wasn’t charged by the SEC was former CMKX Chief Financial Officer David DeSormeau, who was singled out in Frizzell’s first letter and later sued by the current company and its new CEO, shareholder Kevin West, who was named to take over just before Urban Casavant fled to Canada. The Naked Truth discusses DeSormeau’s involvement and comments by yet another company attorney, Donald Stoecklein, during the May 10, 2005, SEC hearing to delist CMKX:

Based on an average selling price at the time, David DeSormeau would have “earned” somewhere around $30 million from the sale of the more than 92 billion shares issued to his companies. It was an incredible amount of compensation considering that in return the company got, as Stoecklein phrased it during the SEC hearings, “25 sheets of paper that is merely shareholders’ equity.”

Among the others who shareholders feel should have been named by the SEC include convicted felon Michael Williams, U.S. Canadian Minerals CEO Rendal Williams (who has reportedly fled to Switzerland), Nevada Minerals president Ed Dhonau, and Casavant associate Emerson Koch, who made millions for simply holding the claims to the 1.9 million acres of mineral claims that were used to entice prospective shareholders to invest in the company. The SEC has still not addressed charges that brokers failed to deliver hundreds of billions of shares of stock in addition to the 703 billion shares that company insiders dumped.

CMKM Diamonds under the direction of Kevin West and Bill Frizzell has filed lawsuits against DeSormeau, John Edwards, Urban Casavant, Michael Williams, Brian Dvorak, James Kinney, Ginger Gutierrez and others. They are working to recoup money stolen from the company and have plans to widen their net to eventually include everyone who they believe defrauded the tens of thousands of CMKX shareholders.

Brian Pugh of the DOJ wouldn’t comment on a joint investigation into CMKM Diamonds by the FBI, the DOJ, and the IRS. He said that any criminal investigation within those departments would have to originate from a grand jury. However, the Faulking Truth confirmed the ongoing investigation in an interview with FBI agent Ryan Randall in September of 2007.

The SEC press release left the door open to additional action by ending with the statement: “The SEC’s investigation is continuing.”

Shareholders can only hope that eventually, all of the major players in the CMKX scandal will face both civil and criminal charges, as well as lawsuits filed by the company itself.

And that, as always, is the Faulking Truth.

(Editor’s note: We will present a special two-hour edition of The Faulking Truth Show on this Friday, April 11th, from 9-11 AM CST. Listeners are welcome to call in to the show on our toll free number at 1-877-864-4869. TogiEntertainment will conduct a drawing from among the show’s callers to give away six autographed copies of The Naked Truth: Investing in the Stock Play of a Lifetime. The book, authored by stock market reform advocate and writer Mark Faulk, has been updated to include this week’s events, and will be released sometime in May. The Naked Truth: Investing in the Stock Play of a Lifetime is available for pre-order at )

To read additional excerpts from The Naked Truth: Investing in the Stock Play of a Lifetime, go to:

To read the SEC complaint in its entirety, go to:
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