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   Gold/Mining/EnergyCasavant Mining Kimberlite International (CMKM)

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From: CBurnett4/30/2007 11:33:21 PM
   of 2593
I think we know this was a sham from the beginning ?
I like the lawsuit...kinda explains the actions of the stock price. Urban is in Canada now....go figure.

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From: StockDung5/1/2007 10:51:14 AM
   of 2593
This is interesting. Mark Faulk is not listed in the Internet Off-Broadway database.

He must have meant "high school productions"

Mark Faulk, CEO & President of TOGI Entertainment
Mark Faulk has over 25 years experience in management, as the owner and president of a successful business with a client list that includes the biggest names in the music and film industry, major Broadway producers, high-ranking political leaders at all levels, and CEOs of Fortune 500 companies. He has written and produced theatrical productions that have run off-Broadway, has an extensive background in music management, and has helped launch the careers of numerous musical artists currently with major record labels.

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From: StockDung5/3/2007 8:46:12 AM
   of 2593
Recently I was reading through a lawsuit filed last week by a little mining company called CMKM Diamonds. CMKM, based in the all-American city of Las Vegas, was the subject of a vigorous stock promotion a few years ago, in which it accumulated $200 million from shareholders--60,000 small investors all over this great country. The company alleges in its lawsuit that all but $558 of that $200 million is gone, the rest having been "looted," the suit alleges, by the former management.

This kind of allegation, albeit with less massive numbers attached, has become lamentably commonplace in our society--which might explain why the CMKM suit has received zero publicity. Yet this is a real scandal, with tens of thousands of real people allegedly hurt, and not a trumped-up political circus.
Muckraker Defending Wolfowitz Gary Weiss 05.03.07, 6:00 AM ET

I'm having a hard time whipping myself up into a state of indignation over Paul Wolfowitz. Sorry. Could it be me? Could it be the onset of delightful weather? Or could it be that Paul Wolfowitz is being railroaded? Could it be that the World Bank, which Wolfowitz has used as an instrument of a significant anti-corruption crusade, would be better off if he stays on as president?

I know, it's tempting to pile on this former deputy secretary of defense, this architect of a vastly unpopular war, this unpretty man with the abrasive style. He is, after all, an official Washington piñata, who is snared in a controversy involving such mom-and-apple-pie concepts as "ethics" and "conflicts of interest." He arranged for a hefty compensation increase for his companion (horrible!), at precisely the same time that he was pushing a drive against corruption (hypocritical!).

In Pictures: Most Corrupt Nations

Forum: Tell us whether you think Paul Wolfowitz deserves to be snared.
Wolfowitz once said, "If you want to make poverty history, you have to make corruption history." Wolfowitz actually meant what he said, and upset countries such as China--the second-largest recipient of World Bank loans--by linking the Bank's lending policies to a country's record at fighting corruption. Yet this veritable Eliot Ness of development is now a subject of scorn, with the European Parliament proclaiming the other day, with unsuppressed glee, that Wolfowitz's "withdrawal from the post would be a welcome step toward preventing the bank's anti-corruption policy from being undermined.''

To make the whole thing even more of a "slam dunk" (pardon the expression) from the lynch-mob standpoint, it is increasingly apparent that Wolfowitz is being cornered into a forced resignation.

And yet, the more I look at this whole affair the more I think it stinks, and that Wolfowitz is being railroaded not because of lofty "ethical" issues but because of bureaucratic resistance to his anti-corruption drive--and that he is being punished for being the epitome of political incorrectness as a leading neoconservative and Bush administration official.

As best as I can tell, the man did absolutely nothing wrong. So it's hard for me to figure out precisely how his resignation would "restore the credibility of the institution," as his critics contend.

At issue is the very smallest of small potatoes. Let's dwell on it for a moment, because this anthill has been turned into an Everest by the people who want to kick him out. Did Wolfowitz bend or break the bank's ethics rules when he arranged a hefty pay increase for his girlfriend, bank staffer Shaha Riza? At the time, she was being forced to transfer to the State Department to avoid a conflict of interest. Riza didn't want to leave. She--rightly--didn't think it was fair that her career at the bank was being cut short. So Wolfowitz arranged for her transfer, and for her to get additional cash as recompense for the forced departure.

If Wolfowitz had been a rogue elephant, scheming behind everybody's back on behalf of his girlfriend, I could understand why this might be a slightly distressing incident. However, it has been known for weeks--since Rich Behar broke the story on April 14--that the bank's own ethics committee "had known the terms of the settlement with Riza for at least a year." Fox found that while Wolfowitz "did indeed dictate the lucrative terms of Riza's salary to the bank's human resources chief, he also took steps to try and determine if what he was doing was right--seemingly trying to navigate his way through an arcane bureaucracy with a maze of unusual rules and procedures."

Wolfowitz has already apologized for what he describes as a "mistake"--about as severe a term as one can use--so he has already shown the requisite remorse. So why not let him stay?

The reason is that this whole, grotesquely exaggerated "conflict of interest" baloney is a ploy to remove a man who is actually fighting corruption. To me, that is the central irony--not that a corruption fighter engaged in corruption, as Wolfowitz clearly did nothing wrong, but that a corruption fighter is being forced out on trumped up charges. "Smears," as he rightly puts it.

Wolfowitz has made some powerful enemies who would be delighted to see him leave precisely because of his anti-corruption fight.

Let's not forget that in late March, word leaked out that China had threatened to stop borrowing if the anti-corruption drive wasn't watered down. "Making loans to developing countries is central to the bank's very reason for existence," FoxNews reported at the time, "so the threat to quit borrowing is a blow at its mission, and to the job security of some 26,000 World Bank bureaucrats, staffers and consultants around the world."

Not long afterward, word about the stale and insignificant "girlfriend affair" leaked out to the media. Wolfowitz became a full-fledged piñata, with the World Bank's staff association being among the chief voices calling for his head. A coincidence? I don't think so.

So let's stop the phony indignation. If you're in the mood to be indignant about real conflicts of interest or real corruption, there's plenty of raw material out there--and you don't have to go to developing nations or even Washington D.C. You can find plenty of examples right in the heart of middle America.

Recently I was reading through a lawsuit filed last week by a little mining company called CMKM Diamonds. CMKM, based in the all-American city of Las Vegas, was the subject of a vigorous stock promotion a few years ago, in which it accumulated $200 million from shareholders--60,000 small investors all over this great country. The company alleges in its lawsuit that all but $558 of that $200 million is gone, the rest having been "looted," the suit alleges, by the former management.

This kind of allegation, albeit with less massive numbers attached, has become lamentably commonplace in our society--which might explain why the CMKM suit has received zero publicity. Yet this is a real scandal, with tens of thousands of real people allegedly hurt, and not a trumped-up political circus.

Sometimes it’s hard to distinguish between a nonscandal and the real thing. And sometimes--as in the case of Paul Wolfowitz and the World Bank--it is grotesquely easy. That is the tragedy of the Wolfowitz affair

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From: StockDung5/3/2007 8:54:49 AM
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When lawyers sanction fraud By Floyd Norris

Thursday, May 3, 2007
NEW YORK: If you are going to commit fraud, you may need a good lawyer. In some cases, you have to have a lawyer to pull off the fraud at all.

So it was in one of the simpler cases of e-mail "pump-and-dump," a case that has now ended in guilty pleas from two men who created and made millions from selling worthless stock in four companies that had no operations or assets but were touted in millions of lying e-mails.

In a companion civil case announced this week, the Securities and Exchange Commission says that a crucial part of the fraud was securing a legal opinion that newly issued stock could be traded immediately, despite a general rule that bars such trading unless the shares are registered with the SEC.

The SEC says letters proffering such a legal opinion regarding all four companies were provided by David Stocker, a Phoenix securities lawyer, and that the letters were "used as a pretext" for companies to issue millions of shares of purportedly unrestricted stock. Those shares were then sold for millions of dollars to suckers who received spam e-mails touting the stocks.

The men who used those letters, Stephen Luscko of Sarasota, Florida, and Gregory Alphonse Neu, of Boca Raton, Florida, have each been sentenced to five years in prison.

The letters were important because stock transfer agents rely on them in allowing unregistered shares to be traded. Normally, such shares are subject to rules that keep them from being traded for at least a year. But there are exceptions, and Stocker's letters said the shares fell into one exemption.

The SEC disagrees with that opinion, but it has not charged him with any wrongdoing. Through his lawyer, Donald Christie of Las Vegas, Stocker declined to comment.

In some pump-and-dump frauds, a legal opinion is crucial to getting the scam going. But it appears that the only cases in which the SEC has brought civil cases against lawyers who provided the opinions came when those lawyers also directly profited from selling the unregistered shares. No cases have been brought against lawyers who simply issued such opinions.

In this case, as in most e-mail pump-and-dump schemes, the shares were sold on the Pink Sheets, a market largely used to trade stocks of companies that are not registered with the SEC

"In the Pink Sheet trading of emerging companies, the fraud risk is the primary risk, not the investment risk," said R. Cromwell Coulson, the chief executive of the Pink Sheets. Many companies traded on the Pink Sheets are legitimate, he said, but some "seem to exist just to issue shares and press releases."

Coulson said he was working to change that. Companies in which trading has been temporarily halted by the SEC, often because a pump-and-dump scheme appears to have been used, have a warning on the Pink Sheet Web site, although deciphering that warning is not easy.

More than 60 Pink Sheet companies that have been the subject of spam promotions now are blocked from having quotes posted, but that does not stop them from trading if investors put in orders.

Coulson said that by this summer he hopes to start putting a "skull-and-crossbones symbol" next to such stocks to warn investors off. He would also put a stop sign next to companies that do not make financial information available.

That could help investors who do their homework, but it is unlikely that group includes many of those who buy shares advertised in e-mails from people they do not know.

Coulson said the Pink Sheets had spotted eight lawyers with a history of submitting dubious opinions and told them they were no longer welcome to submit filings to the Pink Sheets on behalf of corporate clients.

But he would not name any of the lawyers. "They can do their own litigation for free," he explained.

Government action against lawyers who issue phony opinions but do not trade shares could be difficult, facing a defense that the lawyer acted in good faith even if the opinion was wrong. But such an action could serve as a deterrent to other lawyers tempted to make money by signing letters they know misstate the law.

That would not end fraud, but it might make it a little more difficult.

International Herald Tribune

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From: StockDung5/3/2007 3:46:42 PM
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From: StockDung5/3/2007 3:47:55 PM
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From: StockDung5/3/2007 4:06:39 PM
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From: StockDung5/3/2007 4:11:53 PM
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CMKX JUNGLE FEVER TO SURPASS BRE-X........................

Jungle Fever

The Bre-X saga is the greatest gold scam ever. But to understand the enormity of the fraud, you had to be there. Our man in Borneo tells his story.

Richard Behar

When I stepped off the plane in Jakarta, I was, like the rest of the world's lemmings, swept up in the Bre-X Minerals euphoria. The Canadian company had found the largest gold deposit of the century, buried deep underground in a dense Indonesian jungle on the island of Borneo. As Bre-X vice chairman John Felderhof later explained to me, a volcano had essentially "collapsed back onto itself" three million years ago, causing a massive buildup of heat and pressure, which created the miraculous treasure. He drew a diagram. It made sense. After all, he was on his eighth beer of the evening; I was on my fourth. What's more, everyone believed him--fellow geologists, engineers, financial analysts, business journalists, the world's largest mining companies, government officials, even a former U.S. President. "Geologically, it's the most brilliant thing I've ever seen in my life," Felderhof sputtered. "It's so big, it's scary. It's f--ing scary!"

Horrifying is a better word. Bre-X was a gold-mining hoax--the largest of any century--until it collapsed onto itself last month. Allegedly thousands of rock samples were "salted" with flakes of gold before they were tested. Today Felderhof is rich and sends his regrets from the Cayman Islands, where he professes his innocence and is applying for permanent residency. His deputy geologist, Mike de Guzman, is not so fortunate, having apparently jumped 800 feet into the jungle from a helicopter once the jig was up. Bre-X CEO David Walsh is holed up at the company's Calgary headquarters, scuffling with camera crews. Class-action lawsuits are flying, while criminal investigators are poring over the company's books.

The numbers are heart-stopping. The market value of Bre-X had topped $4 billion--a growth rate of 100,000% in three years. In early May the company melted into bankruptcy. But not before Walsh, his wife, and Felderhof had mined roughly $50 million from stock sales. And the gold? In the weeks before the fraud was exposed, some 71 million ounces of the yellow metal, worth $25 billion at today's prices, had supposedly been "proven" by Bre-X. Then Felderhof said he was "comfortable" with 200 million ounces--far more than the California gold rush. One Bre-X official told me "400 million."

The numbers tell only part of the story. To grasp the enormity of the scam, you had to be there. You had to see the cosmos that Bre-X had created, like an elaborate Hollywood set with hundreds of actors who could be loaded onto trucks and barges once the tickets had been sold. "You have to understand, this thing is like a 20-foot man," gushed Research Capital mining analyst Chad Williams after returning from an early pilgrimage. "For someone in our business, it's like taking the biggest Elvis fan to Graceland."

I spent two weeks in Indonesia in February to chronicle an epic tale of how a bunch of average Joes stumbled onto the holy grail, only to find powerful and greedy forces conspiring to take it away from them. Felderhof told me only one other publication (the Northern Miner) had ever been permitted inside Busang, the exploration camp on the island of Borneo. I felt lucky. I proved even luckier when I returned to New York with an illness that delayed my story for several weeks. ("Saved by a parasite," FORTUNE managing editor John Huey now says.) We held our fire again after Freeport-McMoRan Copper & Gold, Bre-X's new partner, said it was conducting its own drilling tests--the first time in nearly four years anyone independent had checked beneath the surface. Looking back, I don't have the answers. But the trip provided a fascinating look at several characters who may be the century's greatest scam artists.

By the time I got to Indonesia, both Walsh and Felderhof were trapped in a Javanese version of It's a Mad, Mad, Mad, Mad World, the timeless movie farce in which Mickey Rooney, Milton Berle, and a slew of other characters try to outsleaze one another in a manic race to recover buried treasure. The Bre-X version came complete with payola, private eyes, and break-ins. It led from the leech-infested swamps of Borneo to the presidential palace in polluted Jakarta. It featured a dictator's greedy kids and some of the world's biggest mining firms, stabbing one another in the dark.

The story is familiar now. For nearly a year, until Freeport was awarded the contract, the Indonesian government had delayed giving Bre-X control over Busang. Big mining companies jockeyed for position. As the gold estimates grew, Indonesian officials were determined to select an established firm as the operator. Mining giants were lobbying for the post, none harder than Peter Munk, CEO of Toronto's Barrick Gold, the world's second-largest gold producer. Munk hired Kroll Associates, the world's biggest detective agency, to dig up dirt on Bre-X in anticipation of a hostile takeover bid. He enlisted former U.S. President George Bush to lobby Suharto, the Indonesian ruler. He retained the services of a daughter of Suharto to get an edge. (Bre-X offered $40 million to a son.)

When I arrived in early February, Jakarta had become a corporate war zone centered on five-star fortresses. Bre-X was at the Shangri-La (the "Bre-X Shangri-La"). From his window Walsh could see the enemy--the "Barrick Hyatt." Just up the road, at the Regent Hotel, a Houston lawyer was assembling spies to help him figure out whom to sue on behalf of Bre-X shareholders. It was impossible to figure out what was going on. The man holding the cards: Suharto's golfing buddy, a secretive timber tycoon named Mohamad "Bob" Hasan. The dictator had asked him to clean up the Bre-X mess. At one point it wasn't clear whom Suharto's government was favoring as Bre-X's partner. "This place is like Casablanca," complained Doug MacIntosh, Bre-X's investment banker at J.P. Morgan. "The story changes every day."

In Jakarta, I talked with Walsh, Felderhof, and other Bre-X officials dozens of times. We met separately. We met together at lunches and dinners. Not once did a yellow flag go up during those talks. Were they all just playing their parts in an elaborate scheme? If so, they were playing those parts quite well.

Even now, I have trouble believing that Walsh participated in the scam. He was a miserable soul when we were introduced in his Jakarta suite, just hours after he'd had it swept for electronic bugs. He was chain-smoking Dunhills and hacking his brains out. He hadn't exercised in years, he said, which was apparent from a huge deposit hanging over his belt. He was depressed and distracted, and often stared out his window at the litter and sewage that flowed continuously down a muddy canal--a metaphor, we joked, for the corruption that thrived in Indonesia. "We all find it hard to believe that we're responsible for the largest gold discovery probably in the history of the world," he said without much feeling. Indeed, Walsh looked more like some poor schlemiel who had just won the lottery and couldn't locate the ticket.

Walsh told me his story: A former stockbroker, he launched Bre-X in 1989. He hunted for gold in Quebec and joined a diamond rush in the Northwest Territories. His luck was so abysmal that he opened his 1991 annual report with the line "Yes, we are still in business." After filing for personal bankruptcy, he decided he needed "a proven gold finder." Enter Felderhof, whose claim to fame was the co-discovery of one of the world's biggest silver and gold mines in Papua New Guinea in 1968. It took Walsh two weeks to track down Felderhof, whom he hadn't seen in ten years. Using his last $10,000, Walsh flew to Indonesia, where Felderhof talked him into buying the rights to part of the Busang property in 1993.

Looking back, maybe I should have been suspicious when I met the Dutch-born Felderhof. He had a shifty mug, a gruff manner, and a hideous laugh trapped in the back of his throat ("Kkh! Kkh! Kkh!...Kkh! Kkh! Kkh!"). Still, his talent for storytelling made him more enjoyable than Walsh. Here was a pirate without the eye patch--a hard-drinking, swashbuckling explorer who had prowled the world's jungles, dodging flash floods and poisonous snakes. He wore his 14 bouts with malaria like medals on his chest. He said he was so poor that in 1992 he had to steal a Christmas tree for his family. Never again. He pulled out a photo of Ingrid, his second wife. "She just bought me a Lamborghini for Christmas," he said. "It's two seats strapped to a f--ing engine. I think she's trying to kill me. Kkh! Kkh! Kkh!"

Shortly after we met, Felderhof took me to dinner with de Guzman, his longtime pal whom he'd invited to join the Bre-X team. The Filipino geologist beamed like a jewel when Felderhof explained that he couldn't have discovered the gold without his deputy's "pioneering theories." De Guzman boasted that his IQ ranged from 150 to 170, which came in handy when he hiked 32 kilometers through dense jungle "with the camp on my back, eating noodles every meal for a week," and hunting for signs of mineralization. The first two drill holes were failures. "We almost closed the property," recalled de Guzman. "In December 1993 John said, 'Close the property,' and then we made the hit." Never mind that more than a dozen mining companies had dismissed the property as worthless. The previous operator had even drilled 19 holes, but "they were all in the wrong places," snickered Felderhof during the meal. Or they were "too shallow." Or the workers used a wet-drilling method that, ironically, washed away whatever gold they did strike. "Geology wasn't on their minds," added Felderhof. "They were spending all their time in town chasing girls and naming creeks after them." De Guzman, who, as it turns out, had at least four wives simultaneously, laughed as he recalled the various creeks--"Karen, Jenny, Martha, Ann." After consulting with a local tribe of Christian Dayaks, he gave the creeks back their traditional names.

As I continued my work, things got tense. Walsh complained about a break-in at his Calgary office; two weeks earlier his wife had found a spy rifling through the garbage at their Bahamas estate. He claims he sent a memo advising employees to "shred sensitive materials." (If true, that will make it harder for investigators to solve the mystery.) The company's top financial officer, Rolando Francisco, was also caught up in the hysteria. He would talk in his hotel room only after cranking up the volume on the TV. Over at the Hyatt, Barrick spokesman Luc Lavoie was waxing philosophical: "If this was the biggest oil discovery, so what? More oil. But gold is different...It brings up more emotions. It clouds the minds of people." It clearly fogged the mind of his client. I later learned that Barrick, last November, couldn't find gold in many Bre-X samples. "This can't be a scam!" Munk screamed at his deputies. "Do some more tests! Figure it out! I know it's there, okay? You confirm it's there."

I looked forward to seeing the gold. After four days in Jakarta, Felderhof joined me on the flight to Balikpapan, the only place in Borneo with a runway big enough to handle the plane. During the trip he explained that Bre-X had spent more than $1 million on a social-development program for the tribe of Christian Dayaks that comprised the bulk of the 400 workers. "I've always been interested in developing people," he said. From Balikpapan, it was an exhilarating two-hour jaunt in a helicopter to Busang. The dense, swampy jungle stretched as far as the eye could see. Felderhof leaned over and said that a chopper once made an emergency landing in the area. "When the pilot was found, four days later, his body was covered with leeches," yelled Felderhof, over the roar of the engine. "Kkh! Kkh! Kkh!" Little did I know that, six weeks later, Felderhof's sidekick, de Guzman, would apparently throw himself out of the same chopper we were sitting in. It would also take four days to find the body, which had been partly devoured by wild pigs and other creatures.

Once on the ground, you would never know that this wasn't the real deal. What a production! If Busang was a Hollywood set, the 2,000 Dayaks were the extras. Bre-X had electrified their village, built a new church, opened a kindergarten, and organized sewing classes for the local women. A swath of jungle had been cleared for an airport. Bre-X planned to open a fishery and a poultry-farming venture to enable the tribe to sell products to the mine.

I shared a cigar with a young villager who had just received a scholarship from Bre-X to study engineering. I met Pebit, the barefoot Dayak leader, as he was helping construct new homes for the workers--a tribal Levittown, courtesy of Bre-X. Through a translator, Pebit boasted that it was his decision to sacrifice a pig to God that "allowed the gold to be pulled from the ground." Then there was the army of young geologists working the site. At the exploration camp, I drank Bintang (a local beer) deep into the night with ten of these workers, many of whom were fresh out of geology school in Canada, Indonesia, or the Philippines. As we listened to wild monkeys screech like sirens in the darkness, the young men talked about the rigors of life in the bush. They complained about the grueling work schedule (eight weeks on, two weeks off) and the lack of sex. But they believed they were making history. They were the geological equivalent of batboys for the World Champion Yankees. They didn't know that they were pawns in a crooked game that was fixed from the get-go.

After two days, my tour was over. I saw no gold. But then again, I didn't know what real gold was supposed to look like buried in those long, tubular core samples. My return trip included a seven-hour speedboat ride down the narrow Mahakam River with Cesar Puspos, de Guzman's 36-year-old deputy. We spent the day waving to the locals, who lived in shabby huts and washed in the muddy water they used for defecation. Puspos, by contrast, had struck it rich. He drove a BMW. He described how de Guzman, "my mentor," awakened him in the middle of the night in a frenzy to announce that he had solved Busang's geological puzzle. When we arrived at Bre-X's office in the city of Samarinda, I noticed huge piles of core sample bags and persuaded Puspos to climb atop for a picture. Investigators say Bre-X's samples were "probably" salted in Samarinda before being delivered to testing labs in Balikpapan. (Walsh had once said that the bags were transported directly from Busang to the labs.)

After a few more days in Jakarta, I returned to the States on February 17. Bre-X soon unraveled. Even then, many believers chose to stay blind. In March, after de Guzman's death, Barrick's Peter Munk told FORTUNE, "I don't believe that those guys salted the couldn't have fooled that many analysts for that long." When Freeport said its drilling showed "insignificant" gold, Bre-X's flacks at Hill & Knowlton suggested that Freeport was behind a scheme to lower the stock price (see following box). The last time I heard from Walsh, March 20, he left me a phone message confirming some arcane historical facts in my story--a day after de Guzman's death and a week after Freeport called Walsh with the news that they were coming up dry at Busang. This is a crook? Or the Mr. Magoo of mining?

Looking back, some things seemed suspicious. Like the "accidental" fire at Busang that destroyed a building containing de Guzman's papers and visible gold samples. I was also disappointed to see no gold at the century's biggest gold deposit. A geologist, Steve Hughes, took me through the bush to a creek. We panned. We found nothing. "That's strange," said Hughes. "You'd think we'd find something." The next day I needled Felderhof, telling him I had bad news for Bre-X. "No gold, huh?" he snapped back. "Kkh! Kkh! Kkh!" There was another peculiar moment. In one of my last meetings in Jakarta with Felder-hof, de Guzman walked in. I rose and slapped him on the back, congratulating him on Freeport's emerging as Bre-X's new partner. He should have been thrilled. Instead, he was stone cold. Grim. Icy. He didn't even look at me. It was clear he wanted to talk to Felderhof alone.

No matter who pulled off the crime, Bre-X has left a mother lode of victims--from individual investors to the poor tribal people counting on the mine to earn a meager living. But even the pros got burned in this tale of greed. Recently I caught up with MacIntosh of J.P. Morgan, the Bre-X banker. We'd shared several meals in Jakarta, where he jabbered for hours about how the gold mine would be the most lucrative in the world. Doug is a mining engineer with 30 years of experience. I was curious how it felt to be suckered. "I have been surprised at every turn of this thing," he said, noting how fortunate I was that we had held the presses. "I hope that we're as lucky as you have been." Not a chance, mate.

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From: StockDung5/4/2007 11:36:30 AM
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"On Monday he wrote about CMKM Diamonds, a little-known penny stock that blamed its precipitous decline on naked short-selling. Its shareholders bought the explanation wholesale, and some even went to New York and Washington to stage loony protests against the evils of naked short-selling. Turns out it wasn't naked shorts after all. It was the company's dishonest management, which is currently being sued by new management for fraud and "looting" the company. They sold over $200 million in stock to the public, but almost none of it went to the company."

Bookmark this blog: Gary Weiss

May 04, 2007: 11:33 AM
DJIA +26.16 13,267.54
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Bookmark this blog: Gary Weiss
Posted May 3rd 2007 8:35PM by Zac Bissonnette
Filed under: Management, Law, Blogs, Scandals, Columns

If you enjoy following the nakedshort-selling "scandal," you absolutely must bookmark Gary Weiss's blog. He tracks the ongoing shenanigans surrounding Inc. (NASDAQ: OSTK), which he referred to this morning as a "fascinating slow-mo corporate train wreck." You can also read his commentary on lesser-known but still interesting market scandals.

On Monday he wrote about CMKM Diamonds, a little-known penny stock that blamed its precipitous decline on naked short-selling. Its shareholders bought the explanation wholesale, and some even went to New York and Washington to stage loony protests against the evils of naked short-selling. Turns out it wasn't naked shorts after all. It was the company's dishonest management, which is currently being sued by new management for fraud and "looting" the company. They sold over $200 million in stock to the public, but almost none of it went to the company.

This is a great example of the tactic of diversion in action. Corporate criminals will often toss red herrings to divert the public's attention from their own misdeeds and poor management. Blaming naked short-selling seems to be the diversionary tactic du jour, and investors should probably head for the hills anytime a company complains about it.

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From: StockDung5/4/2007 12:29:23 PM
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Update: CMKM Diamonds, Inc. - Will Patricide Lead To Financial Suicide?
Investigative Reports
May 3 2007

Is it patricide in progress? CMKM Diamonds, Inc., the failed penny stock company that broke hearts, emptied pocketbooks and dashed investors’ hopes, is suing its founder, Urban Casavant. A lawsuit filed by the Company on April 25, 2007 in U.S. District Court, charges that Casavant and his cohorts fleeced CMKM out of almost $200 million.

The Complaint claims that Casavant’s scheme began in 2000 when he conspired with a group of Las Vegas-based penny stock promoters to raise $100 million to develop mineral claims in Saskatchewan, Canada. As reported, in late 2002, Casavant acquired control of a publicly traded shell corporation and the hype surrounding CMKM began to take hold. A series of press releases claimed that the Company had discovered valuable kimberlite pipes and diamondiferous ore in Canada, was exploring for gold and zinc in South America, and had entered into valuable alliances with other mining companies. CMKM Diamonds, Inc. - A Familiar Drill.

These promises proved hollow – but, according to the newly-filed complaint, they achieved their goal. Chat rooms and message boards buzzed with rumors that CMKM would be taken over by a major mining company – resulting in a windfall for investors who were “wise” enough to buy CMKM shares while they still lingered at a fraction of a cent. The Complaint charges that Casavant and his co-defendants orchestrated this promotion and facilitated the scheme by dumping 700 billion shares of CMKM common stock on the market. Along the way, billions of shares purportedly were transferred to family and friends of CMKM insiders.

According to the Complaint, the Casavant group diverted funds from the Company – paying gambling debts and buying real estate (including a $3.5 million home in Las Vegas). As CMKM’s trading accelerated, so did the Company’s profile, and observers began to pay attention to the fact that the Company had ceased filing financial reports with the SEC shortly after Casavant assumed control of the public shell. Press releases promised that CMKM had retained a prominent securities attorney to assure regulatory compliance. The Complaint charges that the lawyer, Roger Glenn, was not retained for that purpose, but instead facilitated the Company’s sale of shares by providing necessary legal opinion letters.

CMKM’s failure to file public reports proved to be the Company’s undoing. In 2005 the SEC terminated CMKM’s public registration after a series of hearings at which the Company’s financial practices were exposed. Casavant declined to testify at the SEC proceedings, invoking his 5th Amendment right against self-incrimination. Most recently, in March 2007, Casavant stepped aside as Chairman of the Board and President of CMKM, turning over the reins – and the remaining $558 in the Company’s bank account – to an individual named Kevin West.

CMKM’s sole asset consists of 45 million shares of Entourage Mining, which is slated to be distributed to CMKM’s shareholders. There are, however, two serious impediments to that process: CMKM has not been able to identify all of its valid shareholders and it lacks the funds – estimated at $250,000 – to pursue that process.

And there is one other – perhaps insurmountable – hurdle. There are other likely competitors for any CMKM assets. CMKM recently revealed that it has become the subject of yet another SEC probe as well as investigations by at least four other government agencies. And the bad news does not end there. CMKM evidently has forfeited all of its claims and mineral rights, has no corporate records for the past 4 ½ years of business and has never filed taxes.

Not so long ago, on March 30, 2007, CMKM’s new Chairman, Kevin West, was thanking Urban Casavant for “having the trust and the faith in me to turn over the reigns (sic) of the Company so that I can have the authority needed to make decisions in the best interests of the shareholders.” And what was in the best interest of those shareholders? Suing Casavant and his alleged co-conspirators – and seeking to recover the funds that were diverted from the Company. But for whom? The IRS?


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