|CMKM Diamonds Kelowna litigant has more theories |
2010-03-02 13:36 ET - Street Wire
Also Street Wire (U-CMKX) CMKM Diamonds Inc
by Janice Shell
There is another legal filing by David Nelson, the Canadian shareholder of CMKM Diamonds Inc., who late last year filed a lawsuit in Kelowna against the U.S. Securities and Exchange Commission.
Following the filing of his statement of claim, Mr. Nelson provided a number of "updates" to his cult-like followers on various Internet message boards, and has appeared at one court hearing.
About three weeks ago, he submitted a lengthy affidavit to the Kelowna court. Unlike a usual affidavit, a sworn statement of fact, this ramble reads more like an amended statement of claim, that is, full of allegations, many repeated again and again. He furnished a copy of his affidavit to his online fans, using his familiar alias "Gus Jarvis." We review it below.
The SEC's lawsuit against the CMKM Diamonds perpetrators has left the company's cult-like shareholders unsatisfied. They believe they are owed large sums, though not by the actual perpetrators of the scam. These shareholders have found a fatter goose to pluck, and now demand to be "paid" by the SEC. Their earnest pleas (and constant grumbling) have resulted in the filing of two legal actions against the commission and its commissioners. Both actions are brim-full of conspiracy theories, the likes of which were a staple of the CMKM promotion.
Mr. Nelson, a shareholder, self-filed his lawsuit on Nov. 6, 2009, at the Supreme Court of British Columbia in Kelowna. A. Clifton Hodges, a Pasadena lawyer, filed his, a class-action, on Jan. 8, 2010, in U.S. Federal Court.
In Mr. Nelson's affidavit, he swears that now he, not the CMKX Shareholders Coalition for Justice, is the plaintiff: "I am the Plaintiff in this proceeding and as such have personal knowledge of the matters and facts hereinafter deposed to, save where stated to be on information and belief and where so stated I verily believe the same to be true." It comprises a few facts and a great many beliefs.
Mr. Nelson appears to have to some extent changed his mind about why he is suing the SEC. In the statement of claim, he alleged that the SEC had, through negligence, failed to stop the CMKM fraud in a timely manner, and that they further "colluded" with unnamed perpetrators in the supposed naked shortselling of CMKM stock. In the affidavit, he mentions those claims only briefly before going on to incorporate many elements of the complaint filed by Mr. Hodges in California -- the sting operation, the "frozen trusts", and of course the $3.87 trillion monetary demand -- all of which he believes to be true and well founded.
According to Mr. Nelson, all of the above has been clearly proved by Mr. Hodges, whose case "confirms CMKX was used as a vehicle in a sting operation, and statements made in the case are now confirmed by talks taking place to release the money from the frozen trust accounts between Al Hodges and the SEC and other Government entities."
As evidence he cites talks with lawyer Mr. Hodges. "In preparation for my filing I have had discussion with Al Hodges and he has confirmed directly to me that these trusts are there and the funds have been collected. His lawsuit is only to force the release of the already collected funds. Several plaintiffs who hired Al Hodges in this case have confirmed on public forums [that is, Internet message boards] that talks and actions are ongoing to release these monies, but the U.S. Government has repeatedly lied about the release of those funds, sending codes to release the money that did not work, and that money was missing out of the trust fund when access codes worked."
There follows a lengthy recitation from Mr. Hodges's complaint, which includes a number of astonishing allegations: "To fulfill the plan to criminally trap such wrongdoers, the Securities and Exchange Commission, with assistance from the Departments of Justice and Homeland Security:
"Encouraged the company to expand its promotional activities, assisted in the setup of the "racing activities" [CMKM sponsored a NASCAR Funny Car] of the company, and underwrote a substantial portion of the cost of such activities;
"Consented to, facilitated, and supported the sale of certain company [mineral claims to several foreign corporations;
"Consented to, facilitated, and supported the conferences between Robert A. Maheu and his associates on the one hand, and the wrongdoing short sellers on the other, all for the purpose of settling the potential liability of said wrongdoers with consent of the U.S. Government."
In addition, the SEC supposedly "consented" to the hiring of D. Roger Glenn, at one time CMKM's lawyer, and to the payment of stock dividends in shares of several companies related to CMKM. Both Mr. Hodges and Mr. Nelson mistakenly believe that Roger Glenn was the "drafter of [the] Sarbanes-Oxley [Act]."
"NSS" once more
Having read Mr. Hodges's allegations into the record, so to speak, Mr. Nelson mounts his favourite hobbyhorse, naked shortselling. In a breathtaking excursus on "collusion between the hedge funds, Wall Street firms, the SEC, DTCC, SIFMA [Securities Industry and Financial Markets Association], and the Federal Reserve," he veers off into a discussion of Bernie Madoff's crimes: "Bernie Madoff is just a small example of collusion that takes place on wall street, one in which the criminals made all the rules, one in which you don't even have to sell the public real shares. Here is from the Wall Street Jounal's Ianthe Jeanne Dugan, Feb. 21 2009: 'The trustee liquidating Bernard Madoff's investment firm said there was no evidence that Mr. Madoff bought any securities for clients in at least 13 years.'"
It is difficult indeed to see what Mr. Madoff's Ponzi scheme, which did not involve the actual trading of any stock, "real" or otherwise, has to do with CMKM. Mr. Nelson appears to believe that Mr. Madoff was "counterfeiting" stock (and options), rather than simply accepting money and pretending to invest it.
Mr. Nelson's concerns about "NSS" are so great that he plans to extend his suit to much of the penny stock market, "introduc[ing] dozens of examples of victim companies and how the SEC followed the same modus operandi of protecting the perpetrators at the expense of the victim companies, their employees, and the unsuspecting public who bought counterfeit shares in those companies." One of these "victim companies" is Eagletech, which was successfully sued by the SEC in 2005; its registration was revoked (like CMKM's) in 2006.
He says that now he also "seeks a full public enquiry into Canadian regulatory agreements with the SEC and a public enquiry into all thirteen Canadian Securities Regulators and the SEC themselves." That, however, may not be enough: since the RCMP, the DOJ, the FBI, the IRS, Homeland Security, and Interpol have all worked together at times, and, Mr. Nelson believes, knew the "size and scope" of the "NSS" fraud, they too, "and others to be named," should be investigated.
On Feb. 8, Mr. Nelson made his first appearance in court. The purpose of this hearing is unclear, given that the defendants have yet to be properly served in the case.
His online account of what transpired at the hearing is, alas, an imprecise narrative, but he was pleased with the outcome: "I was nervous I must admit, but I nailed a speech that asked the judge for the release of 3.87 trillion dollars to fifty thousand shareholders who are on the victim identification list handed in by CMKM Diamonds, which I produced the update from their website showing this was true."
He further reported that "the judge looked proud of me and there was an emphasis that they had looked this over, this was no normal case my friends."
Quite so. It is a most unusual case, but judges can be inscrutable, often allowing litigants to believe their case has received a favourable hearing. Sometimes even a goggle-eyed stare and a dropped jaw can be interpreted as an expression of pride.
Mr. Nelson is now accepting donations to help with his legal costs. He claims to have received more than $3000 so far, and plans to hire a lawyer to explain how to execute proper service on the SEC, something he has so far neglected to do. He has also announced his intention to issue two press releases about the suit in the very near future.
With a flash of bravado, Mr. Nelson warns: "If we are not paid by next week the heat will be turned up one hundred percent".
The saga continues.