| To: StockDung who wrote (2529) | 2/14/2007 1:04:42 PM | | From: scion | | | | Re: WOMAN GETS 90 MONTHS IN PRISON FOR SECURITIES FRAUD SCHEME
By: elbac in FAKE
Wed, 14 Feb 07 12:07 PM Msg. 00765 of 00767
You are aware of her current husband, John Edwards, of CMKX and NevWest fame right??
convert.neevia.com |
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| To: StockDung who wrote (2529) | 2/14/2007 9:21:04 PM | | From: scion | | | | (In a July 14, 2006, pleading in an unrelated criminal trial where Mr. Edwards's wife Diana Lee Flaherty is awaiting sentencing after being convicted of securities fraud in connection with Phoenix Metals U.S.A. II Inc.'s "gold from volcanic cinders" scam, the prosecution claims that "the source of wealth offered as bond by defendant's current husband is uncertain in light of the SEC's continuing investigation of reports that he has engaged in significant securities fraud."
CMKM Diamonds Features in NASD Enforcement Action
by Lee M. Webb
Canada StockWatch
September 29, 2006
CMKM Diamonds Inc., Saskatchewan native Urban Casavant's revoked pink sheet woofer, features prominently in a National Association of Securities Dealers (NASD) disciplinary proceeding against Nevada-based NevWest Securities Corp. and two of its top officers.
The NASD complaint alleges that NevWest president Sergey Rumyantsev and vice-president Antony M. Santos violated anti-money laundering rules and failed to file suspicious activity reports (SARs) as a client with 32 accounts dumped 259 billion CMKM shares for proceeds of more than $53-million. (All amounts are in U.S. dollars.)
"Broker-dealers have an obligation to investigate 'red flags' indicating suspicious activity and, where appropriate file SARs," NASD enforcement head James Shorris said in a Sept. 26 news release. "Despite a multitude of very obvious red flags, NevWest chose to look the other way, earning millions for itself in the process."
The respondents have not yet filed a response to the NASD complaint and no findings have yet been made regarding the allegations.
The client
According to the NASD, the CMKM transactions executed on behalf of a NevWest client identified by the initials "JE" in the complaint were "highly suspicious" and should have caused the firm and its officers "to suspect that the customer was violating federal securities laws."
The client, who is known to many followers of the wild CMKM saga as John Edwards, is not a broker and is not a party to the NASD enforcement proceeding and there have been no findings that he violated securities laws.
(In a July 14, 2006, pleading in an unrelated criminal trial where Mr. Edwards's wife Diana Lee Flaherty is awaiting sentencing after being convicted of securities fraud in connection with Phoenix Metals U.S.A. II Inc.'s "gold from volcanic cinders" scam, the prosecution claims that "the source of wealth offered as bond by defendant's current husband is uncertain in light of the SEC's continuing investigation of reports that he has engaged in significant securities fraud."
Mr. Edwards was not implicated in the Phoenix Metals fraud and, as noted in a subsequent court order in Ms. Flaherty's criminal case, there has been no appropriate showing that the collateral offered by Mr. Edwards constitutes the illegal proceeds of criminal activity. Ms. Flaherty, who faces a sentence of 12 to 18 years in prison and forfeiture of $5.7-million, filed a motion for a new trial on Sept. 19.)
The NASD claims that Mr. Edwards opened five accounts at NevWest in 2002; 19 accounts in 2003; and another eight accounts in 2004. The regulator says that the same UPS postal box address was used for 30 of Mr. Edwards's 32 accounts in the names of various trusts and corporate entities.
"Shortly after JE began opening accounts at NevWest, he developed a trading pattern of physically carrying into the firm certificates of low-priced securities," the complaint alleges. "In February 2003, JE began to deposit shares of CMKM into the various accounts he opened at NevWest.
"JE instructed NevWest, through his registered representative, to expeditiously liquidate the certificates and to immediately wire all sales proceeds to various bank accounts.
"The bank account owner of record rarely matched the name of the NevWest account holders."
The NASD says that between January of 2003 and December of 2004, NevWest wired $43-million through 139 wire transfers from at least 28 of Mr. Edwards's accounts as he unloaded a staggering 259 billion CMKM shares.
The transactions
According to the allegations in the 27-page NASD complaint, the number of CMKM shares Mr. Edwards unloaded increased over time. During 2003, the regulator says that he sold 4.3 billion CMKM shares in 66 transactions for proceeds of $401,000.
Mr. Edwards allegedly ramped up his selling in 2004, "aggressively" implementing his CMKM trading strategy.
"In many instances, JE carried into NevWest billions of CMKM shares at a time," NASD claims. "Through NevWest he liquidated billions of shares per month."
The regulator says that as Mr. Edwards began dumping billions of shares per month in early 2004, NevWest's anti-money laundering compliance officer recommended to Mr. Santos that the firm file an SAR regarding his CMKM transactions. That recommendation was not followed, nor was a subsequent recommendation to file an SAR made by Mr. Edwards's registered representative in August of 2004.
During 2004, as sub-penny CMKM's promotion was ratcheting up, Mr. Edwards allegedly managed to unload 207 billion shares in 368 transactions for proceeds of more than $49-million. The complaint alleges that the busy CMKM seller wired $41.5-million from his NevWest accounts in 2004.
By 2005, the wheels were falling off Mr. Casavant's pink sheet promotion, particularly after the U.S. Securities and Exchange Commission (SEC) temporarily suspended trading in CMKM in March of 2005 and then followed up with an administrative proceeding against the company.
Notwithstanding the badly floundering promotion and the SEC investigation, Mr. Edwards allegedly managed to unload approximately 48.5 billion shares of CMKM in 133 transactions for proceeds of $3.7-million between January and May of 2005.
The red flags
According to the NASD complaint, Mr. Rumyantsev and Mr. Santos should reasonably have been aware of "red flags" with respect to Mr. Edwards's CMKM transactions and wire transfer activity, which should have triggered anti-money laundering procedures.
Among other things, the regulator says the fact that Mr. Edwards suspiciously refused to reasonably explain how he acquired his CMKM shares should have raised a red flag.
The regulator also says that Mr. Edwards "suspiciously opened and maintained 32 accounts at the firm for no business or apparent lawful purpose."
The NASD complaint suggests that Mr. Edwards hand-delivering CMKM certificates to the brokerage firm should have raised concerns.
"The CMKM certificates JE deposited for sale were not always registered in the name of a specific account holder with NevWest," the NASD continues. "Instead, beginning in or about August 2004 and continuing into 2005, JE began depositing certificates registered in the name of NevWest's clearing firm."
In addition to pointing to Mr. Edwards's wire transfer activity as another red flag, the regulator says that he "suspiciously exhibited a lack of concern regarding the commissions and other transaction costs relating to the liquidation of CMKM shares."
According to the NASD complaint, NevWest earned $2.5-million in commission revenue from Mr. Edwards's CMKM dumping, accounting for 36 per cent of the firm's total revenues during the relevant period.
Rounding out the list of red flags, the regulator goes on to say that the substantial number of shares unloaded by Mr. Edwards and the significant proceeds of those sales "should have prompted NevWest to conduct a searching inquiry to ensure that CMKM was complying with relevant laws and regulations."
Among other things, NASD claims that NevWest failed to conduct a reasonable inquiry to obtain specific details concerning how and when Mr. Edwards acquired his CMKM shares.
Moving on from the discussion of red flags, the NASD claims that Mr. Rumyantsev and Mr. Santos were, or should have been, aware of public information regarding CMKM.
Among other things, the regulator claims that the brokers should have known that the company had not filed any quarterly or annual reports for years, leaving investors in the dark as NevWest unloaded approximately 37 per cent of CMKM's outstanding shares for Mr. Edwards.
The regulator further claims that the respondents should have been aware of CMKM's NHRA funny car promotional campaign in which the company sponsored a car called the CMKXTREME vehicle. At the time, the company's trading symbol was CMKX.
"Promotional items such as T-shirts and hats with "Got CMKX?" written on the front were handed out at race events," the complaint notes. "All of this activity was used to encourage investors to purchase shares of CMKM through trading activity on the pink sheets."
NevWest should also have been aware of the SEC suspension and subsequent administrative proceeding against CMKM, which was initiated on March 16, 2005. The hearing was held on May 10, 2005.
"Despite the aforementioned events, NevWest from March 17, 2005, through May 11, 2005, continued to sell at least 22.5 billion shares of CMKM for JE's accounts in approximately 77 transactions," the complaint notes.
The SEC finally yanked CMKM's stock registration on Oct. 28, 2005.
According to the NASD, Mr. Rumyantsev and Mr. Santos should also have known that Mr. Edwards had liquidated a substantial number of shares of Pinnacle Business Management Inc., which later became Serac Holdings Inc., and Barrington Foods, which became U.S. Canadian Minerals Inc., a company with close ties to Mr. Casavant and his pink sheet dog of dogs.
The complaint alleges that Mr. Edwards deposited almost six billion Pinnacle shares with NevWest and approximately 6.2 million U.S. Canadian Minerals shares.
In May of 2002, the SEC temporarily suspended Pinnacle and subsequently filed fraud charges against the company. Pinnacle's stock registration was revoked in July of 2004.
The SEC temporarily suspended U.S. Canadian Minerals in October of 2004, just as the OTC Bulletin Board promotion that had traded as high as $18.75 per share was executing a 3-for-1 forward split. The company was booted down to the pink sheets where it now occasionally ekes out a trade for less than 10 cents.
It is not clear just what the NASD thinks NevWest and its senior officers should have drawn from Mr. Edwards's apparent penchant for dumping wads of shares of dubious penny and sub-penny companies with regulatory problems.
Indeed, in the absence of any evidence that Mr. Edwards did anything at all illegal while unleashing his flood of 259 billion CMKM shares that were apparently eagerly sponged up by naive investors, it is far from clear just how strong a case the NASD will be able to bring against Mr. Rumyantsev and Mr. Santos.
Among the proposed sanctions, the NASD wants the respondents to disgorge any ill-gotten gains and pay such costs of the proceedings "as are deemed fair and appropriate under the circumstances."
Stockwatch will follow developments in the NASD proceeding and the continuing CMKM saga |
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| From: StockDung | 2/22/2007 12:25:39 PM | | | | | | ...................O-Smear................................
Must Reading For Train Wreck Fans garyweiss.blogspot.com
Thursday, February 22, 2007
A new blog is required reading for regulators or anyone following the self-destruction of Overstock.com.
It's called "O-Smear," and it was created by the Internet sleuth "ScipioAfricanus." Scipio was largely responsible for Overstock.com's "director of social media," Judd Bagley, being outed as operator of Overstock's corporate smear site antisocialmedia.net. He also has done excellent work chronicling Bagley's use of spyware to track Patrick Byrne's critics, and above all in tracking Byrne's dissembling and contradictory statements in public message boards.
Anyone probing Overstock will find this blog a comprehensive source of information on this third-rate retailer's disgraceful, unethical, and possibly illegal conduct. It is a rich source of information for anyone interested in antisocialmedia.net, its nauseating proprietor, and his "bellowing" (to quote Bloomberg) overlord.
The URL is o-smear.blogspot.com .
© 2007 Gary Weiss. All rights reserved. |
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| From: StockDung | 2/23/2007 9:35:54 AM | | | | | | Update - CMKM Diamonds, Inc. - Lights, Camera, No Action
Investigative Reports
February 22 2007
stockpatrol.com
CMKM Diamonds, Inc. has faded from the news, and its shares no longer trade in the public market, but the Company’s fans and foes still are seeking satisfaction – or at least resolution of the Company’s long-unfulfilled promises.
On the fan front, the clamor has become familiar; CMKM’s legion of believers cling to dreams of the Company’s resurrection. And they continue to wait – seemingly in vain - for the Company to distribute shares of Entourage Mining Ltd. (OTCBB: ETGMF).
On the flip side, one CMKM investor, evidently frustrated by the Company’s failed promises and limited disclosure, filed a federal lawsuit charging the Company and Casavant with a long litany of offenses, including fraud, mismanagement and racketeering.
Meanwhile, a tiny over-the-counter movie company has temporarily shelved plans to film a biography of CMKM’s controversial leader, Urban Casavant. Fuego Entertainment, Inc. (OTCBB: FUGO) has been promising to film Casavant’s story since at least mid-2005. Back then, Fuego said that its projects included “One Million Millionaires,” a documentary on the life of “a controversial individual, Mr. Urban Casavant and his dream of making 1 million millionaires.” Fuego claimed that the movie would “cover his life from being a low-income earning prison guard to multimillion-dollar businessman.”
CMKM shareholders seem unlikely to join that vaunted millionaires’ club. The Company has hardly been the path to millions – at least not for public investors. If the movie ever is released, the filmmaker may have to change the title. “Urban Cowboy” has been used, but maybe “Silent Urban” would do in its stead. After all, Casavant repeatedly invoked the 5th Amendment and refused to answer questions under oath during the SEC proceedings against CMKM. Will he be more talkative for the Fuego cameras?
The Casavant biography appeared to be an odd choice for Fuego, which was formed to develop crossover entertainment from Latin to mainstream U.S. markets. On the other hand, the Casavant biopic is in line with Fuego’s other planned projects - documentaries on stock fraud and Ecuadorian gold mines and a reality-based television program focusing on the activities of professional stock traders. So far, however, none of these films seem to have made their way to the screen – small or large.
In any event, Fuego’s Casavant project has been placed on the backburner – so it will not be vying for an Oscar anytime soon. In its Form 10-K for the year ended May 31, 2006, Fuego reported that “One Million Millionaires” has not been finished “because the company is waiting for the outcome of an ongoing investigation of the individual whose life this documentary life is based on.” Since “[t]here have also been several legal complaints filed against this person,” – presumably Casavant – Fuego would “wait and see the outcome of this pending legal matter in order to include it in the film project.”
Fuego may also be waiting until it has sufficient funds to proceed. As of November 30, 2006, Fuego had no cash.
The litigation involving Casavant and CMKM is not likely to end soon. One of the lawsuits that Fuego may be following was filed earlier this month by a CMKM shareholder in federal court in Nevada – CMKM’s corporate home. The Complaint cites the Company’s prolonged failure to file required public documents, a series of allegedly dubious financial transactions, and the unexplained disappearance of millions of dollars that purportedly were in the CMKM coffers.
Was that money making millionaires – as Urban Casavant dreamed? Who might they be?
For that answer, observers may have to wait for the movie.
IF YOU HAVE QUESTIONS OR COMMENTS FOR STOCKPATROL.COM, CONTACT US AT editor@stockpatrol.com
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| To: StockDung who wrote (2537) | 2/26/2007 1:14:54 PM | | From: scion | | | | Shareholder Sues CMKM Diamonds, Directors for $57M
diamonds.net
By Jeff Miller Posted: 02/23/07 16:29
RAPAPORT... The statute of limitations was set to expire for filing civil action against CMKM Diamonds on February 19, 2007, said Gene Hurd, but as that date was a federal holiday in the United States, the date was extended to February 20.
Hurd, a shareholder in CMKM Diamonds, told Rapaport News he just made the deadline --by six hours in fact-- according to papers filed in United States District Court southern division for Nevada, where CMKM is registered.
Hurd is suing CMKM Diamonds for at least $57,151,950 in damages and cites 11 causes of action against CMKM Diamonds. "I believe I'm the only shareholder who filed action," he told Rapaport.
In court documents obtained by Rapaport, Hurd (plaintiff) names CMKM Diamonds Inc., Urban Casavant, Robert Maheu, David DeSormeau, Rupert Perrin, Caroly Casavant, Wesley Casavant, Cindy Casavant, and John Does 1-50 plus [Mary] Roes 51-200 "each a legal person."
The plaintiff is unaware of the "true names" and capacities of all defendants sued. The plaintiff purchased 200 million shares of CMKM (CMKX.PK) stock between June 4, 2004, and October 29, 2004.
Allegations in the complaint begin at the time Cyber Mark International Corporation acquired certain mineral claims owned by Urban Casavant and his family in November 2002. Upon the transaction the plaintiff claims Cyber Mark appointed the senior Casavant president and CEO, (wife) Carolyn Casavant was appointed vice president, (son) Wesley Casavant corporate treasurer, and (daughter) Cindy Casavant corporate secretary. In December the company changed its name to Casavant Mining Kimberlite International, which was then changed to CMKM Diamonds in February 2004. (See related links for the history of CMKM as followed by Rapaport News.)
The suit lists DeSormeau and Perrin as directors of CMKM beginning January 15, 2003, and Maheu for joining January 31, 2005.
"After Casavant was appointed president of CMKM, no periodic reports were filed with the Securities and Exchange Commission" as required, but on July 22, 2003, CMKM filed form 15-12G stating it was no longer required to file reports because it had fewer than 300 shareholders.
On February 17, 2005, CMKM amended the form stating it had 698 shareholders, at which time the company had issued 800 billion shares.
The plaintiff wrote that CMKM relocated offices to 5375 Procyon Street, Su. 101, Las Vegas, Nevada, on March 4, 2005, but "the subject property was in fact occupied by a 'hot rod' shop..." Corporate auditors at the time issued a statement in July 2005 that claimed CMKM "may have advanced $4 million for the benefit of CMKXtreme Inc., a drag racing enterprise owned and controlled by Casavant," which had not been approved by the board of directors. The plaintiff alleges too that the audit firm noticed "CMKM may have made loans to its officers and directors in violation of the Sarbanes-Oxley Act...that the books and records of CMKM were un-auditable, because they were incomplete, and that the books and records that did exist were not properly maintained."
In March 2003 the Securities and Exchange Commission suspended trading of CMKM securities, which was followed by a hearing on May 10, 2005, at which time Judge Brenda Murray ruled that "CMKM had neither and independent auditor nor financial statements to be audited," and that "the draft ledger for 2003 and 2004 reflected no business operations, that management 'deprived shareholders and investors of material information in official filings, but promoted the company to investors through informal news releases and public statements that contained false information.'"
To these charges, Urban Casavant took the Fifth Amendment and declined to answer questions except for the proper spelling of this legal name.
The ruling ultimately revoked CMKM's registration in October 2005.
Maheu testified to Murray that he was being paid $40,000 per month as a director of the company, but stated he did not know CMKM had any other directors other than Casavant, according to the court documents.
Opus Pointe, which was hired by CMKM to reconstruct financial records testified that 2.7 billion shares ($24.7 million) were issued to an unknown contract. Other transactions included $1.4 million in deposits and $116,000 in withdrawals were made in 2003, and that $35 million was deposited and $6 million was withdrawn in 2004. During these two years, CMKM had admitted to having no business operations.
In September 2006, the National Association of Securities Dealers (NASD) sought disciplinary action against Las Vegas-based NevWest Securities Corporation for having authorized 500 transactions between March 2003 and May 2005 for one customer referred to as "JE" in which 259 billion shares traded for $53 million.
For his cause of actions against CMKM, the plaintiff charges first that defendants failed to file financial reports, concealed the absence of business, understood the true number of shares outstanding and failed to report on board of directors meetings, thus leaving the plaintiff with false information for which to gauge investments.
In the second cause of action, "Maheu, DeSormeau, and Perrin failed to supervise the officers and to monitor the personal transactions between officers and CMKM, thereby breaching their fundamental duty to act in the best interest of shareholders."
The plaintiff states in a third cause of action that Maheu, in his capacity as board member, demonstrated "reckless disregard by allowing materially false and misleading information to be disseminated." Maheu admitted knowing of "problems" during the Murray hearing, "he made no independent effort to verify that management was cooperating with the accountants and professionals engaged to correct the filing deficiencies..."
Urban Casavant "together with one or more John Does, agreed and performed overt acts in furtherance of a conspiracy to convert CMKM funds to personal use through illegal loans or advances." In the fourth case of action, plaintiff charged that Casavant knew the NevWest customer identified as JE "was in fact the beneficial owner of significantly more than 5 percent of CMKM's securities and that Casavant conspired" with JE to conceal an 80-fold increase in authorized shares.
As officer of the company, Casavant is charged in the court filing with racketeering (in the fifth cause) for unlawfully, knowingly, and intentionally conducting and participating in CMKM's activities, which affected interstate and foreign commerce through a pattern of mail fraud, wire fraud, and securities fraud.
While the sixth and seventh causes of action involved securities documents, the eighth cause targets the $4 million loan to CMKXtreme, "an entity unrelated to the diamond exploration business, at a time the company had no exploration or other business activities whatsoever." The general ledger showed a $30 million deposit, on December 31, 2004, "yet CMKM announced less than 10 months later that it had defaulted on its obligations to United Carina for $500,000."
Corporate bylaws state that CMKM shareholders were entitled to annual meetings, which did not take place according to the ninth cause of action, and that "the term of each director shall expire on the day of the succeeding annual shareholder meeting." Casavant served continuously since 2002, without calling a shareholder meeting.
In a tenth cause of action, plaintiff alleged that Casavant "through his actions, including the loans, advances, and transfers to himself and CMKXtreme, maintenance of all records in his home, his appointment as sole director, officer, and employee at most times relevant to this action, and appointment of only immediate family members to corporate officer positions, is for all intents and purposes the alter ego of CMKM and is thus personally responsible for all debts of the corporation..."
The plaintiff determined that Casavant "enriched" himself at the expense of CMKM shareholders of at least $4 million, in the eleventh and final cause. As shown in stock ledgers, the plaintiff determined at least $53 million in transactions took place under Casavant's leadership and knowledge.
The plaintiff demanded a trial by jury, and seeks compensatory damages of at least $50,650, punitive damages of at least $101,300, and disgorgement of all gains by defendants of at least $57 million. He also seeks the appointment of receiver or trustee to manage CMKM, until such time an annual meeting of shareholders would convene to elect new directors.
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