|From: StockDung||4/8/2008 11:43:31 AM|
|The SEC Cracks a Naked Short Nut-Case garyweiss.blogspot.com|
Monday, April 07, 2008
In the "Baloney Blitzkrieg" chapter of Wall Street Versus America, I describe the looniness surrounding a grimy little diamond mining shell company called CMKM Diamonds -- a company that barely existed except for a share-generating mechanism, a loudmouth CEO named Urban Casavant, and a handful of exceedingly stupid shareholders who made fools of themselves on picket lines when they weren't sending threatening emails to journalists and regulators.
It was a good example of how a small group of determined crackpots can cause damage to our regulatory system, in this case by pushing a fraudulent "stock counterfeiting" conspiracy theory.
Above all, CMKM was a textbook case of corporate blame-shifting, and today the SEC put the blame where it really belonged, charging the company sec.gov with a massive fraud in which Casavant personally raked in $31 million.
The SEC complaint sec.gov observes:
Casavant generated investor interest in CMK by using false press releases, Internet chat boards, and "funny car" race events across the country. To divert attention from their own dumping of CMK shares, Casavant persuaded CMK's investors that the reported high trading volume in CMK stock reflected extensive "naked short sellng" rather than ordinary stock dilution. This promotion was extremely successful, and about 40,000 investors purchased CMK stock during the period of the fraud. In reality, Casavant ran the company from his house in Las Vegas, and CMK had no meaningful operations other than issuing and promoting its own stock. [emphasis added]
Patrick Byrne of Overstock.com has taken over the naked shorting banner from Casavant, and, naturally, his company has never made a dime in profits and is also under SEC investigation.
Unfortunately, it took CMKM years to grind its way through the SEC system, and the Overstock case is "only" two years old. So stay tuned--but be patient.
Floyd Norris, commenting norris.blogs.nytimes.com on a typically paranoid email from a naked shorting nut, says "Do you think that reader will admit he was fooled? I don’t."
I agree, and the snail-like SEC, which did not "set any speed records for filing," as Floyd points out, must share the blame for that.
Apart from its extreme slowness in processing this and other cases -- Overstock's is a good example -- the SEC has made matters worse by pandering to naked shorting loons. The agency has diverted valuable resources in pursuit of its "Regulation SHO" idiocy, which has no real effect on the markets while fueling conspiracy theories that gull the naive.
© 2008 Gary Weiss. All rights reserved.
Labels: CMKM Diamonds, naked short-selling, Overstock.com, Patrick Byrne
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|From: StockDung||4/8/2008 12:04:43 PM|
|Alberta Securities Comm. Hearing Against CMKM Diamonds on April 9 |
By Jeff Miller Posted: 03/19/08 14:02 [Submit Comment]
RAPAPORT... The following notice was issued today against CMKM Diamonds. For more information on CMKM, please scroll past this notice to read related stories.
The Alberta Securities Commission (ASC) has issued a Notice of Hearing to seek an order reciprocal to Saskatchewan and Manitoba orders against CMKM Diamonds Inc. ASC staff alleges that CMKM sold shares to Alberta residents without registering with the ASC or filing the proper documents required for distribution of securities under the Alberta Securities Act. The ASC hearing is scheduled for Wednesday, April 9, 2008.
CMKM is the subject of orders issued by the Saskatchewan Financial Services Commission, Securities Division (SFSC) on November 9, 2004 and by the Manitoba Securities Commission (MSC) on October 31, 2007. The SFSC issued its orders based on allegations that CMKM violated securities laws in Saskatchewan by trading CMKM securities in Saskatchewan despite the facts:
- it was not registered to do so;
- SFSC had not issued a receipt with respect to those securities;
- SFSC had not issued an order granting exemptions from
registration and prospectus requirements.
The MSC issued its order under the reciprocal enforcement provisions of the Manitoba Securities Act. Both jurisdictions have banned all trading of CMKM securities and the use of securities law exemptions.
A copy of the Notice of Hearing outlining the allegations in their entirety is available on the ASC website at www.albertasecurities.com.
The ASC is the regulatory agency responsible for administering the province's securities laws. It is entrusted to foster a fair and efficient capital market in Alberta and to protect investors. As a member of the Canadian Securities Administrators, the ASC works to improve, coordinate and harmonize the regulation of Canada's capital markets.
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|From: StockDung||4/8/2008 12:27:14 PM|
|CMKM Diamonds players named in $64-million SEC lawsuit|
2008-04-07 20:16 ET - Street Wire
Also Street Wire (U-*SEC) U.S. Securities and Exchange Commission
by Lee M. Webb
CMKM Diamonds Inc., a revoked pink sheet woofer, and its founder, Saskatchewan native Urban Casavant, are among 14 defendants in a securities fraud lawsuit filed by the U.S. Securities and Exchange Commission (SEC).
The U.S. regulator claims that Mr. Casavant and his cronies pocketed more than $64.2-million during the fraudulent CMKM stock promotion. (All amounts are in U.S. dollars.)
The SEC, which acknowledges the assistance of the Financial Industry Regulatory Authority and the Saskatchewan Financial Services Commission, filed its complaint against the alleged fraudsters in the U.S. District Court for the District of Nevada on April 7.
None of the defendants has yet filed an answer to the SEC complaint and the allegations have not been tested in court.
In addition to 51-year old Mr. Casavant, who skedaddled from Las Vegas, Nev., back to Saskatchwan about a year ago, the SEC tags 65-year-old John Edwards as one of the two masterminds and principal beneficiaries of the fraudulent scheme.
According to the U.S. regulator, Mr. Casavant made approximately $31.5-million from the stock scam and Mr. Edwards's take came in at a more modest $26.4-million.
Ginger Gutierrez and James Kinney, both 37-years old, are identified as two of Mr. Casavant's nominees. The pair served as CMKM investor relations representatives for a time and were allegedly instrumental in unloading more than 88 billion shares for Mr. Casavant and his family members, keeping a significant cut of the proceeds for themselves.
A husband-and-wife team of paperhangers from Boca Raton, Fla., 67-year-old Anthony Tomasso and 56-year-old Kathleen Tomasso, allegedly served as nominees for Mr. Edwards.
According to the SEC, approximately 77.3 billion CMKM shares were issued to five entities owned by the Tomassos, who generated at least $6.5-million by dumping stock. They allegedly wired more than $2.2-million to Mr. Edwards and transferred substantial amounts of money to some of his associates, keeping approximately $648,500 for themselves.
CMKM's transfer agent, 1st Global Stock Transfer, and its owner, Helen Bagley, are also named as defendants. According to the complaint, CMKM stock issuances and transfers accounted for more than 50 per cent of the transfer agent's business from 2003 to 2005.
The SEC claims that 61-year-old Ms. Bagley accepted suspicious payments from Mr. Edwards and his nominees while turning a blind eye to obviously bogus opinion letters and issuing more than 589.7 billion unrestricted CMKM shares to several of the defendants and others.
NevWest Securities Corp., which had its registration yanked last July, its chief executive officer and chief trader, 37-year-old Sergey Rumyantsev, chief compliance officer and general counsel, 42-year-old Anthony Santos, and 39-year-old broker Daryl Anderson are also named in the lawsuit.
According to the U.S. regulator, Mr. Edwards opened at least 36 brokerage accounts at NevWest where his accounts were handled by Mr. Anderson. With the help of NevWest and its accommodating broker, Mr. Edwards allegedly unloaded approximately 259.9 billion CMKM shares for proceeds of more than $53.3-million.
The SEC claims that NevWest and its principals turned a blind eye to the suspicious share dumping, which generated more than $2.5-million in commissions for the firm and accounted for more than 35 per cent of its revenue. Mr. Anderson earned approximately $2.3-million for handling Mr. Edwards's CMKM trades.
Nevada-licensed attorney Brian Dvorak, now living in Colorado, rounds out the list of defendants.
The U.S. regulator alleges that Mr. Dvorak wrote at least 464 attorney opinion letters authorizing the issuance of more than 606 billion unrestricted CMKM shares. The vast majority of those opinion letters were fraudulent.
In return for writing hundreds of bogus opinion letters, the regulator says that Mr. Dvorak received at least $495,000 from Mr. Casavant and his nominees during 2004.
Given that Stockwatch has published more than 60 articles dating back to October of 2003 about Mr. Casavant's wild pink sheet promotion, many readers may be familiar with the saga of the enterprising Saskatchewan native who managed to unload a staggering 703.5 billion shares on gullible investors before the SEC pulled the plug on the company in October of 2005.
In addition to Mr. Casavant, almost all of the defendants in the lawsuit have featured in previous Stockwatch articles.
SEC attorney Leslie Hakala, who is handling the regulator's civil complaint against the 14 defendants, is also quite familiar with the outrageous CMKM promotion. Ms. Hakala represented the SEC in the administrative proceeding that finally led to CMKM's revocation in 2005.
In future articles, Stockwatch will examine the Nevada lawsuit more closely and flesh out some of the details, but for now will offer a bare bones review of the promotion as it is laid out in the April 7 filing.
As noted in the SEC suit, CMKM fraudulently stopped filing periodic reports with the U.S. regulator in July of 2003. At the same time, the company gagged the transfer agent and would not publicly disclose how many of its shares were outstanding.
As part of the early promotion, CMKM asked shareholders to help "combat naked short selling" by holding their shares in certificate form. The naked short selling bogeyman figured prominently in the CMKM promotion.
Mr. Casavant then set about touting the company's purportedly fantastic mineral properties in Saskatchewan, which consisted of nothing more than untested moose pasture that saw almost no exploration work during the promotion.
In early 2004, the company dramatically announced a "kimberlite ore discovery" after some limited drilling on one of its properties, sparking a frenzy among some gullible investors who believed that CMKM had made a fantastic diamond find.
Mr. Casavant named the supposedly "new kimberlite discovery" the "Carolyn Pipe" after his wife. As Stockwatch quickly reported, however, the kimberlite body had actually been found in 1996.
"CMKM and Casavant also propped up interest in the company's stock -- while selling into the market -- through a variety of Internet activities designed to foster shareholder interest and excitement," the SEC claims.
Indeed, Mr. Casavant was incredibly successful in attracting a huge, cult-like Internet following.
"Perhaps Casavant's most effective tool to promote CMKM was 'CMKXtreme,' a team of motorbike, truck and 'funny car' racers," the U.S. regulator says.
Whether by luck or design, the funny car promotion was also a fantastic success.
"Hundreds of CMKM shareholders attended the races and visited the CMKM-sponsored tent, where they could study a map of CMKM's alleged mineral claims, watch a video loop of CMKM's purported drilling work, and meet and greet Casavant and his family," the SEC states.
"The press releases, Internet hype, and racing promotions were successful in attracting and maintaining a loyal shareholder base for CMKM for almost two years," the regulator continues. "The sustained demand for CMKM stock fueled by the constant promotional efforts allowed the defendants to continue selling newly issued stock to the public.
"About 40,000 people purchased CMKM stock in market transactions during the fraud, particularly after June 2004 when CMKXtreme became extremely popular."
As it happens, more than 40,000 people still hold worthless CMKM shares and some of them believe that the company will be revived.
The saga continues.
Comments regarding this article may be sent to email@example.com.
(Further information regarding CMKM Diamonds and associated companies can be found in Stockwatch articles dated Oct. 21, 2003; June 22; Sept. 16 and 24; Oct. 1, 15 and 20, 2004; Feb. 11, 14, 18, 22 and 23; March 1, 3, 4, 7, 14, 15, 16 and 21; June 6, 8, 9, 10, 13, 14, 15, 16, 17, 20, 21, 22, 29 and 30; July 1, 4, 6, 12 and 13; Aug. 2, 5 and 9; Sept. 7, 12, 27 and 30; Oct. 24, 26 and 31; Nov. 7, 11, 22 and 25; Dec. 1, 6, 9, 15 and 22, 2005; Jan. 3; Sept. 29; Oct. 4, 2006; and Aug. 30,2007.)
Reader Comments - Comments are open and unmoderated, although libelous remarks may be deleted. Opinions expressed do not necessarily reflect the views of Stockwatch.
Sounds just like $0.0001 Indocan Resources run by Jeffrey R. Bruhjell out of North Vancouver, BC, 5 BILLION shares!
Posted by Jeffrey @ 2008-04-07 20:24
LOL 5 billion Jeffery?? That's peanuts man!
Posted by I was scammed by CMKX @ 2008-04-07 20:39
got to hand it to Urban, he fleeced 'em good. Has to go down as one of the all time best scams.
Posted by Ron @ 2008-04-07 20:54
There is a day of reckoning coming for everyone and we all reap what we sow. Will Urban disappear before he is brought to justice? Go into hiding? Receive a visit from one of his many enemies looking for restitution? One thing is certain he will stand and give account for what he has done. We'll see what the next chapter of the unfolding saga delivers.
Posted by Kerry @ 2008-04-07 21:31
What took the SEC so long? How could they have possible let these crooks dump 700 billion shares?
Posted by Jeffrey @ 2008-04-07 21:41
Does the Urbie love-in cult now realize that they were duped? I bet there's still some out there that believe there's diamonds in d'em dar hills...and this is all just part of Urbie's master plan to make a million millionaires!
Posted by skruggs @ 2008-04-07 23:28
hey urban, saskatchewan is not that big, especially prince albert.welcome home!!!????????
Posted by night vision @ 2008-04-08 00:48
I didn't invest in CMKM, but it's too bad I didn't know Urban was involved or maybe I could have done something to warn everyone before it was too late. Then again, maybe shareholder greed would have made them deaf any ways.
Some of you might remember how he screwed everyone over quite a number of years ago with Petro Plus Ventures on the old Alberta exchange.
Sooner or later he will get what he deserves. Eventually everyone does!
Posted by Burned, but wiser for it @ 2008-04-08 01:27
Urban is a good Catholic boy and we must pray for him and dear Carolyn. They are losing their house. Please send anything you can in care of the Salvation Army in Saskatoon Saskatchewan.
Posted by Donny Brasco @ 2008-04-08 02:19
Urban will get what he deserves. The US sec will see to that. What a rotten piece of garbage he is,I hope he's proud of himself.
Posted by Jimmy Crusher @ 2008-04-08 02:42
If the SEC knew of this since 2003/4 why have they not done anything till now.
Posted by art brown @ 2008-04-08 11:17
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|From: StockDung||4/8/2008 1:40:49 PM|
|GunnAllen told to pay ex-manager|
By Helen Huntley, Times Staff Writer
Published Monday, April 7, 2008 8:36 PM
Tampa brokerage GunnAllen Financial and the national sales manager it fired over allegations of sexual misconduct three years ago both are claiming victory after a recent arbitration ruling.
Arbitrators for the Financial Industry Regulatory Authority ordered GunnAllen to pay former sales manager David McCoy $333,000 for compensatory damages for "intentional and malicious" breach of contract and for termination for a wrongful reason.
GunnAllen maintains that McCoy "engaged in extremely inappropriate conduct involving activities of a sexual nature at the GunnAllen offices," said Tampa lawyer William Schifino Jr., who represented the company. McCoy's New York lawyer, Richard Roth, says GunnAllen offered a female employee money to file a complaint against McCoy, but she refused.
"The panel never believed Dave did anything wrong," Roth said. The panel ordered GunnAllen to shoulder the costs of the arbitration, which involved 20 days of courtlike hearings, and to reimburse McCoy for $54,428 in costs incurred.
But the award was a whole lot less than the $34-million McCoy had requested. In fact, GunnAllen said it offered to settle the case years ago for more than McCoy received through arbitration. "We are ecstatic with the award," Schifino said. He said the company plans to bring a court action to confirm the arbitration decision and ask for an award of attorney's fees against McCoy based on his claims arbitrators rejected, including allegations of fraud.
The panel settled a stock dispute by ruling McCoy is obligated to sell 200,000 shares of GunnAllen stock back to the private company for $150,000, but he can keep 200,000 shares and options for 400,000 more shares. At one time McCoy claimed his shares were worth $12-million. The panel also said McCoy has to repay a GunnAllen loan of $182,407 but doesn't have to reimburse the company for $40,332 in business expenses charged to the company's American Express card.
McCoy now works in New York as national sales director for National Securities. Arbitration is commonly used to settle disputes between brokerages and employees or investors.
Helen Huntley can be reached
or (727) 893-8230.
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|From: anniebonny||4/8/2008 2:44:26 PM|
|Craig J. Shaber - another Attorney behaving badly...|
UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934 Release No. 57635 / April 8, 2008
ADMINISTRATIVE PROCEEDING File No. 3-13003
In the Matter of
Craig J. Shaber, Respondent.
ORDER INSTITUTING ADMINISTRATIVE
: PROCEEDINGS PURSUANT TO RULE
: : : : 102(e) OF THE COMMISSION’S RULES OF PRACTICE, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS
The Securities and Exchange Commission (“Commission”) deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted against Craig J. Shaber (“Respondent” or “Shaber”) pursuant to Rule 102(e)(3) of the Commission’s Rules of Practice.1
In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party and without admitting or denying the
Rule 102(e)(3)(i) provides, in relevant part, that:
The Commission, with due regard to the public interest and without preliminary hearing, may, by order, . . . suspend from appearing or practicing before it any attorney . . . who has been by name . . . permanently enjoined by any court of competent jurisdiction, by reason of his or her misconduct in an action brought by the Commission, from violating or aiding and abetting the violation of any provision of the Federal securities laws or of the rules and regulations thereunder.
findings herein, except as to the Commission’s jurisdiction over him and the subject matter of these proceedings, and the findings contained in Section III., Paragraph 2, below, which are admitted, Respondent consents to the entry of this Order Instituting Administrative Proceedings Pursuant to Rule 102(e) of the Commission’s Rules of Practice, Making Findings, and Imposing Remedial Sanctions (“Order”), as set forth below.
On the basis of this Order and Respondent’s Offer, the Commission finds that:
1. Shaber, age 48, is an attorney licensed to practice in California.
1 On September 30, 2003, the Commission filed a complaint against Shaber and others in SEC v. Craig J. Shaber, et al. (Civil Action No. 3:03-CV-2247/NDTX). On November 2, 2007, the court entered an order permanently enjoining Shaber, by consent, from future violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, and Sections 10(b), 13(d) and 16(a) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, 13a-13, 13d-1, 16a-2 and 16a-3 thereunder. Shaber was ordered to pay $200,000 in disgorgement relief.
2 The Commission’s complaint alleged that from 1998 to 2002 Shaber, assisted by an associate, engaged in an elaborate scheme to manufacture and sell 18 public shell companies. To carry out the scheme, the Commission alleged that Shaber and his associate installed nominee officers and directors in dormant companies and caused the dormant companies to file false registration statements with the Commission and NASD, Inc. The Commission’s complaint further alleged that Shaber concealed his beneficial ownership and control of the public shell companies in filings with the Commission and realized substantial benefits from the sale of his undisclosed beneficial interest in the entities.
In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanction agreed to in Respondent Shaber’s Offer.
Accordingly, it is hereby ORDERED, effective immediately, that Shaber is suspended from appearing or practicing before the Commission as an attorney for five years. Furthermore, before appearing and resuming practice before the Commission, Respondent must submit an affidavit to the Commission’s Office of the General Counsel truthfully stating, under penalty of perjury, that he has complied with this Order, that he is not the subject of any suspension or disbarment as an attorney by a court of the United States or of any state, territory, district, commonwealth, or possession, and that he has not been convicted of a felony or misdemeanor involving moral turpitude as set forth in Rule 102(e)(2) of the Commission’s Rules of Practice.
By the Commission.
Nancy M. Morris Secretary
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|To: anniebonny who wrote (103259)||4/8/2008 2:49:34 PM|
|U.S. Securities and Exchange Commission|
Litigation Release No. 18381 / September 30, 2003
Securities and Exchange Commission v. 2DoTrade, Inc., George Russell Taylor, Barry William Gewin aka Barry Peters, Eric T. Landis, Dominic Roelandt, Michael D. Karsch, L. Van Stillman, David A. Wood, Jr., Clinton Walker, Oxford and Hayes, Ltd., FG & P Consulting, Ltd., Hackney Holdings, Ltd., Weston Partners, Inc., Infiniti Corporate Services, Ltd., Argo Financial, Ltd., 21st Equity Partners, Inc., MCG Partners, Inc., and LMR, Ltd., Civil Action Number 3:03-CV-2246-N(Godbey) (N.D. Texas, Dallas Division)
Securities and Exchange Commission v. Craig J. Shaber, Stephen R. Wright, and Bonaventure Capital, Ltd., defendants, and Aspen International Marketing, Inc. and Wright & Geis, Inc., relief defendants. Civil Action No. 3:03-CV-2247-G(Fish) (N.D. Texas, Dallas Division).
SEC Files Lawsuit Against 2DoTrade, Inc., Its President, Several Stock Promoters, and Two Attorneys In Bogus Anti-Anthrax, Pump-and-Dump Scheme -- Also Files Related Lawsuit Against California Attorney and Accountant for $7.5 million "Shell-Factory" Scheme
On September 30, 2003, the Securities and Exchange Commission filed a lawsuit against 2DoTrade, Inc., its president, several recidivist stock promoters, and two attorneys in a "pump-and-dump" market-manipulation case. 2DoTrade is an SEC-reporting company whose stock was formerly quoted publicly on the OTC Bulletin Board. According to the SEC's complaint, from July to November 2001, the defendants engaged in a fraudulent scheme in which they artificially pumped 2DoTrade's stock with false press releases, spam e-mail, and a fraudulent website and then illegally dumped millions of shares into the inflated market. At one point in the scheme-amid recurring reports of fatal anthrax attacks in the United States-several of the defendants sought to profit from the nation's fear of terrorism with false press releases about 2DoTrade's purported imminent distribution of an anti-anthrax compound in the United States. In a separate civil lawsuit filed on the same day, the SEC alleged securities fraud and other violations against a California attorney and accountant who created and sold the public shell company used in the 2DoTrade scheme.
The 2DoTrade complaint alleges that, in June 2001, defendants Barry W. Gewin, 36, of Enon Valley, Pennsylvania, Eric T. Landis, 38, of Charlottesville, Virginia, and Dominic Roelandt, 26, of Dehderhoutem, Belgium, gained de facto control of 2DoTrade-a shell company with no assets or revenue-by acquiring control over virtually all of its "free-trading" stock. Then, in collusion with 2DoTrade's president, defendant George R. Taylor of Ayrshire, Scotland, they manipulated 2DoTrade's stock price in two fraudulent promotional campaigns. The first campaign, which took place in July and August 2001, touted 2DoTrade's ownership of certain import/export contracts supposedly worth $300 million. In reality, these contracts were worthless. The second campaign, which began in October 2001, claimed that 2DoTrade was testing an anti-anthrax compound called "ATHOQ" at a hospital and a university in the United Kingdom for imminent distribution in the United States. In reality, ATHOQ was a sham, and no anthrax testing or product distribution ever occurred.
During the bogus-contract campaign, the defendants dumped millions of shares into the market, collectively realizing approximately $1.6 million in trading profits. As the defendant's sold their shares, the share price gradually declined by the end of August 2001. Beginning on October 31, 2001, however, the bogus anti-anthrax campaign drove up 2DoTrade's stock price again, this time by approximately 400%. During this period, certain defendants dumped over 700,000 shares into the market, for which they collectively received approximately $240,000. An SEC trading suspension on November 6, 2001, halted trading in 2DoTrade's stock and prevented some of the defendants from dumping millions of additional shares.
Other defendants named in the SEC's 2DoTrade complaint are:
Oxford and Hayes, Ltd., DBE Consulting, Ltd., and FG&P Consulting, Ltd., three Belize-registered companies controlled by Gewin. Gewin used offshore accounts in their names to sell approximately 869,000 shares of 2DoTrade stock during the fraudulent promotional campaigns, realizing approximately $318,288 in ill-gotten gains.
Infiniti Corporate Services, Ltd., a Bahamas corporation, and Argo Financial, Ltd., a Cayman Islands corporation, both controlled by Roelandt. Roelandt used offshore accounts in their names to sell approximately 1.85 million 2DoTrade shares during the fraudulent promotional campaigns, realizing approximately $474,005 in ill-gotten gains.
Hackney Holdings, Ltd., a Cayman Islands corporation, and Weston Partners, Inc., a Connecticut corporation, both controlled by Landis. Landis used domestic and offshore accounts in their names to sell 216,000 2DoTrade shares during the fraudulent promotional campaigns, realizing approximately $154,300 in ill-gotten gains.
MCG Partners, Inc., a Florida corporation, and Michael Karsch, 41, an attorney licensed in Florida, Texas, and New York. Karsch was a managing director of MCG Partners, which provided $450,000 to Gewin, Roelandt, and Landis for the purchase of an OTC Bulletin Board shell company, which ultimately became 2DoTrade. In exchange for the $450,000, Karsch and MCG Partners received 1.1 million 2DoTrade shares and a guarantee that other defendants would sustain 2DoTrade's stock price by touting the bogus contracts in a promotional campaign. Under this arrangement, MCG Partners sold 1.1 million shares for approximately $555,191, realizing a profit of approximately $105,191. Karsch received a share of these profits.
21st Equity Partners, Inc., a North Carolina corporation, its president David A. Wood, Jr., 50, of Charlotte, North Carolina, and its vice-president Clinton Walker, 33, also of Charlotte. On June 26, 2001, Wood and Walker orchestrated a manipulative matched trade with Gewin and Landis to artificially set the initial market price of 2DoTrade stock at $1.25. Wood offered and sold approximately 293,000 2DoTrade shares through a 21st Equity Partners account for approximately $154,670. Walker received at least 101,350 shares of 2DoTrade stock, which he sold for approximately $52,520.
L. Van Stillman, 54, an attorney licensed in Florida and Pennsylvania, and LMR, Ltd., an offshore company that he controlled. Stillman prepared false SEC filings on behalf of 2DoTrade, concealing Gewin, Landis, and Roelandt's beneficial ownership of 2DoTrade's stock. Stillman sold approximately 192,000 2DoTrade shares, mostly through an LMR, Ltd. brokerage account in Bermuda, realizing approximately $95,370 in ill-gotten trading profits.
Several of the 2DoTrade defendants have prior disciplinary histories. In 1992, Taylor was convicted in the United Kingdom of conspiracy to commit theft. Roelandt was enjoined in August 2000 by the United States District Court for the Northern District of Arizona for securities fraud in an action bought by the SEC, and in 2001, in another unrelated SEC action, he received an administrative penny-stock bar from the SEC. In 1999, the NASD suspended Landis' brokerage license for one year and fined him for market manipulation. And in 1998, Wood was the subject of an SEC cease-and-desist order for violations of the anti-touting provisions of the federal securities laws.
The Commission's complaint alleges that defendant 2DoTrade violated the securities-registration, anti-fraud, and issuer-reporting provisions of the federal securities laws, specifically, sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 ("Securities Act") and sections 10(b) and 13(a) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5, 12b-20, 13a-1, 13a-11, and 13a-13 thereunder. It alleges that defendant Taylor violated the anti-fraud provisions and aided and abetted 2DoTrade's violations of the issuer reporting provisions. It alleges that defendants Gewin, Roelandt, and Landis, and the defendant companies they controlled, violated the securities-registration and anti-fraud provisions and also the beneficial-ownership and principal-shareholder reporting provisions of the federal securities laws, specifically, sections 13(d) and 16(a) of the Exchange Act and Rules 13d-1, 16a-2, and 16a-3 thereunder. And it alleges that defendants, Karsch, Stillman, Wood, and Walker, and the defendant companies under their control, violated the securities-registration and anti-fraud provisions and that Stillman also aided and abetted 2DoTrade's violations of the issuer reporting provisions of the federal securities laws.
The SEC seeks, among other relief, permanent injunctions, disgorgement of ill-gotten gains with pre-judgment interest, and civil money penalties against all the defendants; officer-and-director bars against Taylor, Gewin, Roelandt, and Wood; penny-stock bars against Taylor, Gewin, Roelandt, Wood, Walker, and Karsch; and an order enjoining Roelandt from violating section 15(b)(6)(B) of the Exchange Act, which prohibits participation in a penny-stock offering in contravention of an SEC order.
The Fraudulent "Shell Factory"
Also on September 30, 2003, the SEC filed a related lawsuit in the United States District Court for the Northern District of Texas against Craig J. Shaber, 45, a California-licensed attorney and Stephen R. Wright, 57, an accountant, both from the San Diego, California area. According to the complaint, from 1998 to 2002, Shaber and Wright engaged in an elaborate scheme to manufacture and sell 18 public shell companies, from which they derived at least $7.5 million in ill-gotten gains. To carry out the "shell factory" scheme, Shaber and Wright installed nominee officers and directors in dormant corporations that they controlled and caused these companies to submit false registration statements and reports to the SEC and the NASD, Inc. These false documents gave the bogus companies the appearance of legitimacy and permitted their securities to be eligible for quotation on the OTC Bulletin Board.
Among other things, the false registration statements and reports contained phony business plans, misrepresented the identity of the companies' true officers and directors, and contained false shareholder lists. In reality, Shaber and Wright owned virtually all of the companies' stock, and the individual shareholders listed in the documents were merely nominees for Shaber and Wright. In addition, Shaber and Wright served as the de facto officers and directors of the companies and intended not to pursue the stated business plans, but rather, to sell their controlling blocks of shares-and thus control of the shell companies-to stock promoters and other buyers for substantial profits. Shaber and Wright sold one of these fraudulently manufactured companies, Moranzo, Inc., for approximately $600,000 to certain 2DoTrade defendants, who then used it to create 2DoTrade and carry out that scheme.
The other defendant and relief defendants in the Shaber and Wright case are:
Bonaventure Capital, Ltd., defendant, a private Nevada corporation controlled by Shaber and Wright. Through Bonaventure Capital, Shaber and Wright maintained a bank account into which they deposited the funds from the sale of the stock in the public shell companies and maintained a brokerage account through which they sold securities in the public shell entities. Shaber and Wright, and entities they individually controlled, shared in the ill-gotten proceeds from the Bonaventure Capital accounts.
Wright & Geis, Inc., relief defendant, is a California corporation solely owned by Wright. It received at least $100,000 from a Bonaventure Capital bank account as proceeds from the scheme.
Aspen International Marketing, Inc., relief defendant, is a Nevada corporation owned by Shaber. It received at least $1 million in proceeds from the fraudulent scheme.
The complaint alleges that Shaber, Wright, and Bonaventure Capital violated the securities-registration, anti-fraud, beneficial-ownership, and principal-shareholder reporting provisions of the federal securities laws, specifically, sections 5(a), 5(c), and 17(a) of the Securities Act and sections 10(b), 13(d), and 16(a) of the Exchange Act and Rules 10b-5, 13d-1, 16a-2, and 16a-3 thereunder. It further alleges that they aided and abetted violations of the issuer-reporting provisions, specifically, sections 13(a) of Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder. The SEC seeks disgorgement with prejudgment interest from each defendant and relief defendant and further seeks permanent injunctions, an accounting, and officer-and-director bars against defendants Shaber and Wright.
The Commission acknowledges the assistance of the Cayman Islands Monetary Authority, the British Columbia Securities Commission, the Police Department of Tayside, Scotland, the London Metropolitan Police Department, the Hampshire Constabulary in England, the FBI's Dallas Field Office, and the United States Department of Justice in the investigation of this matter.
SEC Complaint in this matter
Second SEC Complaint in this matter
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|From: StockDung||4/8/2008 3:06:29 PM|
|New Zealand convicts 18-year-old "King of the Botnets"|
18-year-old New Zealander, Owen Thor Walker, pleaded guilty earlier this week to six charges of using computers for illegal purposes. Walker, has been accused of playing a key role in a gang that infected 1.3 million computers around the world, installing revenue-generating adware and stealing information worth US $20 million. At the time of his arrest he was dubbed the "botnet king" by media around the world. Learn more about Owen and his arrest by following the link below.
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|From: StockDung||4/8/2008 3:20:30 PM|
|=DJ IN THE MONEY: Utah Co In Middle Of German Probe Of Stk Deals|
Monday, April 07, 2008 3:38 PM
By Carol S. Remond
A Dow Jones Newswires Column
A Utah company has inadvertently gotten itself involved in a probe by German securities regulators into how a bank in that country got stuck with millions of shares of stock it didn't want in several companies after a client reneged on an agreement to pay for the stock bought on its behalf.
Norddeutsche Landesbank Girozentrale, or NordLB, earlier this year said it set aside 82.5 million euros to cover potential losses resulting from an unnamed client refusing to take delivery of stock.
As reported by Dow Jones Newswires, German fund Vatas Holding GmbH has stuck NordLB with 13% of Curanum AG, 15% of Balda AG, 20% of Euromicron AG and 23% of RemoteMDX Inc. (RMDX), a Utah-based maker of ankle "bracelet" monitoring equipment used by law enforcement.
NordLB spokesman Jan-Peter Hinrichs told Dow Jones Newswires that the German Federal Financial Supervisory Authority, or BaFin, began its investigation Monday. Hinrichs said BaFin is looking into the circumstances surrounding the trades and trying to determined how it happened. Hinrichs said the bank would cooperate with the investigation.
A spokesman for BaFin declined to comment.
Following the affair, four individuals have left NordLB. A trader and his supervisor were let go by the bank last month. More recently, a general vice president in charge of capital markets as well as Juergen Koesters, a member of the bank's management board and head of securities trading operations, have also stepped down.
Hinrichs declined to comment on reports that the bank is looking to sue Credit Suisse Group (CS) over its role in the failed stock deals. Hinrichs also declined to comment on German news reports that NordLB has taken steps to freeze some of Vatas' other stock holdings, slapping a lien on the fund's 18.5% stake in Air Berlin PLC in an attempt to recoup losses from the incomplete stock deals.
A spokesman for Credit Suisse declined to comment.
Vatas also declined to comment through an email.
The fund is a large strategic investor in RemoteMDX and, in December, suggested in a regulatory filing it was considering taking control of the company.
NordLB said last month in filings with the Securities and Exchange Commission that it holds 31 million shares of RemoteMDX, which it purchased on behalf of a client that refused to settle the order. NordLB said it isn't looking to hold the stock and plans to sell it.
According to a Dec. 28 filing with the SEC, Vatas held almost 17 million shares, including common stock and securities issuable upon exercise of warrants, or about 13% of RemoteMDX.
NordLB said in an SEC filing that it spent $116.6 million to acquire the RemoteMDX stock at an average price of $3.76 a share. RemoteMDX stock was recently trading at $1.55 a share.
Trades listed in NordLB's filing show that it bought and sold a huge amount of RemoteMDX shares, purportedly on behalf of Vatas, between Nov. 1, 2007, and Feb. 25, 2008.
Part of the filing doesn't make a lot of sense. For example, the filing shows that the bank bought 14.75 million RemoteMDX shares at $3.736 on Feb. 25. But 3.2 million shares traded that day and the stock never came close to that price, closing at $1.62 a share.
RemoteMDX offers TrackerPal, an ankle bracelet combining cellular and global-positioning-system technologies that help law-enforcement personnel track those who were the product through the company's SecureAlert subsidiary.
(Carol S. Remond is an award-winning columnist who won a Gerald Loeb Award in 2005 for best news service content with "Exposing Small-Cap fraud," a series of articles that described how three small companies unscrupulously pumped up their stocks.)
-By Carol S. Remond, Dow Jones Newswires; 303-997-5783; firstname.lastname@example.org
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|From: StockDung||4/8/2008 3:35:47 PM|
|=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; email@example.com
(END) Dow Jones Newswires
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