CMKM Diamonds Inc. (fka CMKX)

[rabblerouser]

interesting link to another lawsuit (diff company)

http://new.stockwatch.com/swnet/newsit/newsit_newsit.aspx?bid=B-651080-U:WHKA&symbol=WHKA&ne...

World Hockey sued over alleged massive dilution

2007-02-20 16:21 ET - Street Wire

by Mike Caswell

World Hockey Association Corp., a Vancouver pink sheets listing with NHL legend Bobby Hull on its board, is facing allegations it violated a private placement agreement by improperly issuing an "egregious amount" of shares to insiders and others. The claim was made in a Nevada lawsuit announced Monday by Global Developments Inc., a company that invests in junior stocks.

World Hockey runs the WHA Junior West Hockey League, which bills itself as an alternative league for players between 16 and 21. It has six teams, mostly located in B.C.

The company went public in late 2005 after acquiring the rights to the World Hockey Association name, then a defunct league that last played in 1979. The rebirth attracted some big names, with NHL hall of famer Brad Park running tryouts and Mr. Hull agreeing to serve as league commissioner.

It is impossible to measure the company's success, if any, because it has never filed financial results. It is also not clear how many shares the company has outstanding, because it does not appear to have ever disclosed the figure.

According to Monday's suit, World Hockey has issued massive amounts of shares and has defaulted on a loan.

It violated anti-dilution terms of a private placement agreement from last June when it issued 200 million shares to officers, directors and others, Global Developments says. Evidently Global was to receive a 40-per-cent interest in the company for a $500,000 investment, but the interest was badly diluted with improper share issues.

Global also claims it lent World Hockey $277,000, which it has not repaid. "Defendants took full advantage of the benefits received by them through [the private placement and loan]," the suit reads.

Global does not say who received the shares, but it names as defendants Mr. Hull, whose full name is Robert M. Hull, World Hockey's president, William Smith, and a company director, Peter Young.

Besides the share issue and loan allegations, Global says the company was poorly financed and it improperly co-mingled its assets with those of its president, Mr. Smith. Global is asking for appropriate damages plus court costs.

The company has not responded to the suit in court, but it denied any wrongdoing in a news release last month.

"Global [has] made unsubstantiated claims that the WHA has been issuing large amounts of common stock to insiders and management. The WHA denies any wrongdoing and assures shareholders that all undertakings of the company have been in compliance with all applicable securities regulations and as such, the statements made by Global are baseless and inaccurate. The WHA will vigorously defend its position in this matter," the company said. It was responding to an earlier news release by Global Developments which contained many allegations that ended up in the lawsuit.

World Hockey also denies it granted Global a 40-per-cent non-dilutive interest in the company.

The suit comes the same day another unrelated case against World Hockey was made public in B.C. Supreme Court. Vancouver Tours & Transit Ltd., a Richmond-based bus operator, says the company has not paid $71,000 it owes for charter services.

Vancouver Tours says it demanded the money, but the cheque never arrived. It is suing for $71,000, plus interest and court costs.

World Hockey has not answered Vancouver Tours' brief claim, and the allegations have not been proven in court.

The stock, which traded as high as $2 last June, last changed hands for 37-100ths of a penny.