|From: StockDung||4/11/2008 4:16:31 PM|
|CMKM Diamonds promo leaves legacy of 40,000 victims|
2008-04-11 15:23 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 promotion formerly headed by Saskatchewan native Urban Casavant, has left a legacy of more than 40,000 naive investors holding the better part of 703.5 billion worthless shares. Meanwhile, the U.S. Securities and Exchange Commission (SEC) says that key players made off with at least $64.2-million. (All amounts are in U.S. dollars.)
On April 7, more than 29 months after yanking the pink sheet woofer's stock registration, the SEC filed a civil suit against CMKM, Mr. Casavant and 12 other defendants in the U.S. District Court for the District of Nevada.
The U.S. regulator alleges that the 14 defendants participated in "a massive and complex scheme" to fraudulently issue as many as 622 billion purportedly unrestricted CMKM shares and dump them on gullible investors between January of 2003 and May of 2005.
Mr. Casavant, a principal architect of the scheme and the company's public face, allegedly pocketed $31.5-million during the fraudulent promotion. Shadowy penny stock player John Edwards, who allegedly helped mastermind the scam, raked in a more modest $26.4-million. Mr. Casavant's nominees made approximately $6.3-million.
SEC attorney Leslie A. Hakala, whose considerable knowledge of the pink sheet company traces back to her leading role in the administrative proceeding that led to CMKM's revocation in October of 2005, offers a summary of the fraudulent scheme in the first few pages of the regulator's April 7 complaint.
In a nutshell
According to the U.S. regulator, the scheme began when several Canadian companies controlled by Mr. Casavant entered into a reverse merger with a public shell controlled by Mr. Edwards.
As reported in previous Stockwatch articles, with the help of some Saskatchewan associates, Mr. Casavant assembled a package of mineral claims largely consisting of untested moose pasture that he dealt off to a failed OTC Bulletin Board outfit, Cyber Mark International Inc., in November of 2002.
Along with the virtually worthless moose pasture, Mr. Casavant brought several members of his family into the play. In fact, one of the company's few SEC filings before it stopped reporting in July of 2003 reveals that, in addition to the Saskatchewan promoter, 22 members of the Casavant clan had an early stake in CMKM.
After folding into the OTC-BB shell, CMKM went on to fraudulently issue approximately 622 billion shares of purportedly unrestricted stock based on phony written authorizations and attorney opinion letters.
Lawyer Brian Dvorak, who issued hundreds of bogus opinion letters for the company, is among the defendants in the lawsuit.
"These authorizations and opinion were often facially inadequate, suspect and inconsistent," the SEC claims. "Nonetheless, CMKM's transfer agent, which was owned and run by Helen Bagley, issued sheaves of unlegended stock certificates."
Ms. Bagley and her transfer agent company, 1st Global Stock Transfer, are also named in the lawsuit.
Mr. Edwards and others deposited the certificates with various broker-dealers, including NevWest Securities Corp., and then dumped them into the market.
NevWest, two of its officers and a broker are defendants in the suit, along with four nominees who unloaded shares for Mr. Casavant and Mr. Edwards.
"Promptly after selling CMKM stock, Edwards and the others wired the proceeds to a series of bank accounts, provided large sums to Casavant, and used the money for various purposes including paying gambling debts, investing in real estate, and generating more shareholder interest," the SEC says.
The regulator goes on to highlight some of the key elements of the promotion.
"Casavant generated investor interest in CMKM by using false press releases, Internet chat boards, and 'funny car' race events across the country," the SEC alleges.
"To divert attention from their own dumping of CMKM shares, Casavant persuaded CMKM's investors that the reported high trading volume in CMKM stock reflected extensive 'naked short selling' rather than ordinary stock dilution," the complaint continues.
"This promotion was extremely successful, and about 40,000 investors purchased CMKM stock during the period of the fraud," the regulator notes. "In reality, Casavant ran the company from his house in Las Vegas, and CMKM had no meaningful operations other than issuing and promoting its own stock."
The SEC says that CMKM's stock price varied from one-100th of a penny to one-10th of a penny during the fraudulent promotion, "with volume sometimes exceeding two billion shares per day."
Apart from a couple of trading sessions when the share price nudged marginally above a tenth of a penny, the regulator has the correct price range for the subpenny pinky. However, the SEC significantly understates the daily trading volume.
In fact, through much of the promotion CMKM registered daily volumes of more than five billion shares, exceeded 10 billion shares on many occasions and once notched a staggering volume of more than 39.6 billion shares in a single session.
As previously reported by Stockwatch, the phenomenal CMKM trading triggered a 32-bit signed integer glitch that evidently went undetected by all quote services except Stockwatch.
In simple terms, because of the undetected glitch, quote services such as Bloomberg, which the SEC relied upon for trading data in its earlier administrative proceeding against CMKM, could not accurately report volumes that exceeded 2,147,483,647 shares.
Stockwatch discovered the 32-bit integer issue early on, created a fix and accurately reported the daily trading volumes.
For most of the time that Mr. Casavant was shearing his flock of gullible investors, a trading volume of two billion shares or so indicated a relatively slow day.
As noted by the SEC, "the individuals behind the CMKM fraud continued to sell stock" even after the regulator instituted an administrative proceeding to revoke its registration in March of 2005.
In fact, the SEC claims that the busy paperhangers did not stop unloading shares until the day after an evidentiary hearing in the administrative proceeding, "at which point substantial negative information about CMKM became public."
As previously reported, Mr. Casavant asserted his Fifth Amendment right against self-incrimination and refused to answer any questions at the May 10, 2005, hearing.
Another witness held in high esteem by CMKM's shareholders, then 87-year-old Robert Maheu, widely touted as the former right-hand man for Howard Hughes, provided some rather disappointing testimony during the hearing.
Prior to the hearing, fanatical CMKM supporters hailed Mr. Maheu as the heroic greybeard who was going to put the SEC in its place and set the company back on its ordained path to fabulous riches.
It turned out that Mr. Maheu did not have a clue about CMKM's operations or, for that matter, much of anything else about the company.
In October of 2005, the SEC revoked CMKM's stock registration, effectively ending public trading in the pink sheet dog of dogs.
The U.S. regulator claims that CMKM issued "numerous false and misleading press releases" to prop up interest in the pink sheet promotion.
For example, the SEC notes that in December of 2002, CMKM issued a news release claiming that it was sponsoring a representative office in Antwerp, Belgium, to promote "the Casavant diamond brand," but did not disclose that it had not yet found a single diamond.
While CMKM never did open an office in Antwerp, it did manage to attract a number of Belgian investors. Even now, "the Belgiums," as they are called by many of CMKM's followers, claim that shareholders will soon receive a massive return on their investment.
In January of 2003, as part of its efforts to divert attention from the massive share dumping by Mr. Casavant and his cronies, CMKM issued a news release asking investors to hold their shares in certificate form to help the company combat purported naked short selling.
The idea of a vast naked short selling conspiracy against the company was embraced by CMKM's gullible shareholders, many of whom have yet to disabuse themselves of that silly notion.
The SEC points to a Feb. 7, 2002, news release regarding a purported $50-million "ancient Chinese jade collection" as another example of CMKM's false and misleading claims.
In that news release, the company claimed that the jade collection had been appraised by experts and a random sample of the pieces authenticated by Elizabeth Childs-Johnson. According to the U.S. regulator, however, the noted expert never had any involvement with CMKM and never appraised any such collection.
At the evidentiary hearing in the administrative proceeding against CMKM, nobody could explain the share issuances related to the touted ancient Chinese jade collection.
In early 2004, Mr. Casavant began ratcheting up the promotion, issuing a number of news releases regarding the company's exploration progress on the touted Saskatchewan mineral claims.
On March 29, 2004, CMKM announced that it had made "new kimberlite discovery" on its mineral property in the Smeaton area. Mr. Casavant proclaimed that he was naming purportedly new discovery "the Carolyn Pipe" after his wife, Carolyn Casavant.
As Stockwatch subsequently reported, however, another company had drilled the ballyhooed kimberlite discovery in 1996 and the supposedly new Carolyn pipe was actually the old Smeaton kimberlite.
The SEC only discusses a few of CMKM's news releases in its April 7 complaint and it is difficult to assess just how much of an impact those announcements had on investors.
Stockwatch's records indicate that the company issued approximately 150 news releases during the period covered by the SEC lawsuit. Many of those news releases are laughable.
For example, On Oct. 30, 2003, CMKM announced that its exploration program would be delayed because of "unexpected magnetic storms caused by 'sunspots' or explosions on the sun."
On Jan. 21, 2004, Mr. Casavant proudly announced that the company had "purchased its own Drill Rigg (sic) and all equipment necessary to drill for diamonds."
"Now that we have purchased our own Drill Rigg (sic), the company is in a position to drill numerous holes at a reduced cost," the Saskatchewan tout declared. "This gives us a tremendous advantage in speeding the process of finding diamonds."
Some news releases, like the June 21, 2004, announcement that the company had temporarily closed its Internet message board, dealt with insignificant matters.
Many other announcements, such as the June 10, 2004, news release that caused a tizzy among naive investors by excitedly declaring that the touted "Carolyn pipe" was "confirmed to be diamondiferous" were notable for their vagueness.
In fact, considered on their own, most of CMKM's news releases are so insignificant that they even fall short of promotional puffery.
However, while they may have been vacuous, CMKM's public announcements were not issued in a vacuum.
The company's news releases were eagerly swallowed up by CMKM's cultish Internet followers, who evidently read between the lines and around the edges as they connected imaginary dots and concocted wild fantasies that were repeated, further embellished and eventually accepted by many as the gospel truth.
Mr. Casavant may well have filled his pockets while fleecing investors and leaving 40,000 of them holding the bag, but many shareholders rushed willingly to the shearing sheds, herding others along with them.
In future articles, Stockwatch will continue to follow the legal developments and review the role of Internet chat boards and the promotional "funny car" race events in the multimillion-dollar pink sheet debacle.
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; Aug. 30, 2007; and April 7 and 9, 2008.)
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|To: anniebonny who wrote (103284)||4/11/2008 7:20:39 PM|
|Shane Traveller resigns as CFO of AERP|
April 11, 2008 - 5:55 PM EDT
SOUTH JORDAN, UT, Apr 11, 2008 (MARKET WIRE via COMTEX) -- Aero Performance
Products, Inc. (PINKSHEETS: AERP), which operates Aero Exhaust, Inc., a world
leader in performance exhaust airflow technology and NASCAR Performance Partner,
today announced the resignation of Shane H. Traveller as interim chief financial
officer of the company.
Detailed information regarding the resignation will be included in a Current
Report on Form 8-K that will be filed with the Securities and Exchange
Aero's Chief Executive Officer Bryan Hunsaker will serve as interim chief
financial officer until such time as the company appoints a permanent CFO.
"Due to an issue Mr. Traveller has related to another public company, he has
chosen to resign, effective at the close of business today," commented Bryan
Hunsaker, chief executive officer of Aero Performance Products, Inc. "Mr.
Traveller felt the issue, while entirely unrelated to Aero, would hinder his
ability to fully perform his duties with the company. We fully support his
decision and wish him well in his future endeavors."
"Mr. Traveller's tenure as interim chief financial offic e r of Aero was always
intended to be an interim solution until the company was able to locate a
permanent CFO. The recent developments merely accelerated the timeline for
finding a permanent replacement. We still anticipate filing our Q1 report on
time and expect that it will not be affected by Mr. Traveller's resignation."
"We have been very busy lately tending to the activities of the company and look
forward to communicating these accomplishments to our shareholders in the near
future," Mr. Hunsaker added.
To sign up to receive information by email directly from whenever new press
releases, investor newsletters, SEC filings, and other written material is
issued, please visit aeroperformanceproducts.com.
About Aero Performance Products, Inc.
Aero Performance Products, Inc. (www.aeroperformanceproducts.com) operates Aero
Exhaust, Inc., a world leader in performance exhaust airflow technology,
manufacturing a nd distributing the most technologically advanced muffler on the
market. Aero's product lines are built to the highest industry standards and
offer the consumer a lifetime warranty. Aero Exhaust has been issued U.S. and
Australian patents on its innovations and development in the exhaust industry,
and its mufflers are available worldwide through major retailers, mass merchant
centers, automotive aftermarket supply stores and wholesalers. Aero Exhaust
mufflers are an exclusive National Association for Stock Car Auto Racing
(NASCAR) Performance product and carry the prestigious NASCAR brand on product,
packaging and related media. NASCAR legend Rusty Wallace is the official
spokesperson for Aero Exhaust products. Additional information on Aero Exhaust's
products, race team, and motorsports ventures can be found on its corporate
Safe Harbor Statement: The statements in this release that relate to future
pl a ns, expectations, events, performance and the like are forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 and the Securities Exchange Act of 1934. Actual results or events could
differ materially from those described in the forward-looking statements due to
a variety of factors, including the lack of funding, inability to complete
required SEC filings, and others set forth in the Company's report on Form 10-K
for fiscal year 2007 filed with the Securities and Exchange Commission.
Gemini Financial Communications, Inc.
|RecommendKeepReplyMark as Last Read|
|To: StockDung who wrote (103286)||4/11/2008 8:37:13 PM|
|Since when does a company announce that it plans on filing a lawsuit once it gets permission to do so? Karen Hinton sounds like she enjoys peddling garbage. She said they filed and then corrected it later - what's up with that.|
If they don't get permission can Overstock sue them for manipulating the market since clearly the market changed on a non-filed lawsuit? Maybe Gradient is looking for a double bagger on the lawsuit, drop on the intent and then drop again on the actual filing.
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|To: Kevin Podsiadlik who wrote (103295)||4/12/2008 10:34:21 AM|
|No problem with Gradient counter-suing for libel. I just find it amusing that Hinton sends out the message to reporters that a lawsuit is filed, impacting the market in doing so, and then has to retract that comment because it was not actually filed.|
You would think a professional such as Hinton would be able to wait until a lawsuit is filed to claim it was filed.
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|To: train_wreck who wrote (103296)||4/12/2008 2:15:26 PM|
|Overstock should initiated another round of litigation claiming manipulation. Didn't the stock drop a point and a half?|
If it were me, I would take them to the cleaners.
|RecommendKeepReplyMark as Last Read|
|From: StockDung||4/12/2008 3:53:38 PM|
|Libel is alleged Company targeted by Overstock to sue |
Arizona research firm claims defamation by Utah-based retailer
By Steven Oberbeck
The Salt Lake Tribune
Salt Lake Tribune
Article Last Updated:04/11/2008 11:35:56 PM MDT
Overstock.com Inc., the Utah-based Internet retailer that sells discounted brand-name merchandise, is facing a libel action by the research company that it is suing for allegedly driving down its share price.
Gradient Analytics Inc., of Scottsdale, Ariz., intends to file a counterclaim early next week in the legal dispute that will claim it was defamed by Overstock.com and its Chief Executive Patrick Byrne after it issued research reports that questioned the Utah company's financial performance.
"Public companies cannot have license to libel research firms and use litigation to retaliate against analysts who are critical of their business," said Gradient Chief Executive Brad Frost in a statement announcing the legal action.
Overstock.com sued Gradient in 2005, claiming the research company issued false and misleading reports to help the New York Rocker Partners hedge fund profit from selling Overstock.com's stock short - a technique that gives investors and speculators a way to benefit when a company's share price declines.
A California state court judge, who is= overseeing the dispute, gave Gradient permission to file its legal actions as a counterclaim earlier this week. Gradient is now waiting only for the judge to sign the formal order clearing the way for the counterclaim to be filed with the court.
"We expect the order to be signed early next week," said Gradient spokeswoman Karen Hinton.
Jonathan Johnson, Overstock.com's chief legal officer, however, said Gradient's action is "bogus" and something that will be beaten easily.
"Truth is a defense, and we can back up everything we've said about them."
Byrne was far less circumspect in his statements.
"These bullies have spent 2 1/2 years hiding in the locker room to avoid having to back up their words," Byrne said. "Now that they've been dragged by their heels kicking and screaming into the ring, they bounce up and begin pounding their chests."
Overstock.com contends that Gradient colluded with the New York Rocker Partners hedge fund to drive down its share price from a high of $77.18 in January 2005. And it went on to claim Gradient's false and misleading reports damaged its reputation and made it more difficult for it to raise investment capital.
Yet in February 2007, after a 16-month investigation, the U.S. Securities and Exchange Commission sent Gradient a letter stating that its own investigation had been closed without any enforcement actions recommended.
"We are strong believers in free speech," Frost said. "We believe our work serves an important function in the efficiencies and information flow in the equity markets. But the comments of Overstock and its CEO are of a different sort of flavor entirely."
Overstock.com's shares closed Friday at $13.16, up 35 cents for the day.
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|From: StockDung||4/12/2008 4:04:32 PM|
|Lawsuit accuses Bear Stearns of fraud|
A Beverly Hills billionaire says the firm, an employee and a broker misled him and his wife into buying stock as the company faltered.
By Thomas S. Mulligan and Tom Petruno, Los Angeles Times Staff Writers
April 12, 2008
Beverly Hills billionaire H. Roger Wang has accused Bear Stearns Cos. of duping him and his wife into buying 150,000 shares of the struggling brokerage's stock -- including 100,000 shares on March 14, the day that federal officials first intervened to keep the firm from tumbling into bankruptcy.
The lawsuit is one of many legal actions spawned by the near-collapse of the venerable Wall Street firm. Wang, who operates high-end retail stores in China, is seeking $10 million in damages.
The suit, filed Thursday, claims that Wang and his wife agreed to pay $6.56 million for the stock at prices ranging from $71.96 to $33.44 a share from March 6 to March 14.
Wang says Bear on March 18 illegally liquidated the account that held the stock after Wang and his wife refused to send in unpaid balances on their orders.
The liquidation value of the stock, according to the suit: $947,324 after expenses, or $6.32 a share.
The complaint, filed in Los Angeles County Superior Court, alleges fraud and breach of fiduciary duty. It names as defendants Bear Stearns, broker Joey Zhou and Garrett Bland, a senior managing director in Bear's Century City office.
Neither Zhou nor Bland returned calls for comment Friday. A spokesman at Bear Stearns' New York headquarters declined to comment.
The 59-year-old Wang, who has a net worth of $1.3 billion by Forbes magazine's reckoning, grew up in Taiwan and immigrated to the U.S. in 1971. In 1992, early in China's boom, he founded a real estate development firm called Golden Eagle International Group in the city of Nanjing. The centerpiece of his empire now is department stores.
Golden Eagle generated more than $1 billion in revenue last year, and analysts who follow the company say it has strong cash flow and is looking for merger and acquisition opportunities. Even so, Golden Eagle's stock, traded in Hong Kong, has languished in a lackluster market.
Wang, who has a home in Beverly Hills, spends about five months each year in the U.S. and the rest of the time in China. He couldn't immediately be reached for comment about the lawsuit.
In the suit, Wang says that he and his wife, Vivine, became customers of Bear in 1993 and that Zhou became their broker.
In February, the suit says, Roger Wang decided he wanted to buy shares of San Marino-based East West Bancorp. Vivine Wang called Zhou, according to the suit, and the broker set up an account in her name to use for the stock purchases. The suit doesn't explain why a new account was needed.
Roger Wang bought 50,000 shares of East West from March 3 to March 6. And beginning March 6, the suit says, he also started buying shares in Bear, and continued to do so even as rumors began to hit Wall Street that the company was having funding problems.
On March 11, according to the suit, Wang went to a lunch meeting at Bear's Century City office. The suit alleges that Bland told Wang that "Bear Stearns was financially sound, that its stock value should be at least $85 per share, and that now was a great time to invest in the stock."
On Friday, March 14, while Bear stock was plummeting from $57 to $30 amid rumors that it might fail, Wang put in an order to buy an additional 200,000 shares, relying in part on Bland's "favorable recommendations," the suit says.
Amid the day's wild trading, Wang -- who says he was scheduled to fly out of the country that day and was unaware of the latest news on Bear -- got just 100,000 shares.
Two days later Bear agreed to an emergency buyout by JPMorgan Chase & Co. at $2 a share, a price later raised to about $10.
Wang says when he learned of the "devastating news" of the buyout price, he refused to pay for his final orders of Bear stock. The brokerage, he alleges, then liquidated the account March 18 "without any authority, right or consent."
The Wangs allege that Zhou, Bland and other unnamed defendants "concealed highly relevant information about Bear Stearns, including specifically its extremely poor and disastrous financial condition."
Wang also says Bear Stearns wrongly provided him and his wife "with standardized paperwork that incorrectly purported to assert that Bear Stearns was not providing the Wangs with any investment advice." The suit does not say whether the Wangs signed the forms.
Wang's lawyer, William A. Stahr of Santa Ana, did not return calls for comment. It was not clear why Wang went to court because brokerage customers typically agree to handle disputes in arbitration.
latimes.com firstname.lastname@example.org Times staff writer Don Lee in Shanghai contributed to this report.
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|From: anniebonny||4/12/2008 6:49:46 PM|
|Accounting - Shane Traveller style....|
search Sequoia International
An example of what is happening - from AERP 10Q filings:
On November 7, 2007, the Company agreed to a court-ordered settlement for payment on services previously rendered by a director of the Company valued at $80,000. The director had previously sold the services contract to a third party who then sought payment and brought an action against the Company in the 12th Circuit Court in Sarasota, Florida. Under the terms of the settlement, the Company issued a total of 72,700,000 shares of common stock. As a result, the Company recorded settlement costs of $318,850 which represented the difference between the fair value of the shares issued and the value of the debt obligation.
Now bear in mind many of the companies listed in those lawsuits in Florida do business with Javelin Advisory Group. Shane Traveller at one time (still?) was 50% owner of Javelin.
There is a well connected group that have been playing a game of rotating CEO through numerous r/m they have arranged.
Since the shares are not restricted you can only imagine what typically happens - Dilution and r/s.
Is there such a thing as a friendly win win lawsuit? Except that shareholders are not part of the win win?
I am not an accountant - but does this seem right???
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