CMKM Diamonds Inc. (fka CMKX)

[dia duit]

http://www.faulkingtruth.com/Articles/Investing101/1080.html

by faulkingtruth

Thread Started on Today at 10:59am

I'll post the Bob Maheu excerpt on Tuesday.

The Naked Truth: Investing in the Stock Play of a Lifetime (From Chapter 31 - Revelations)
by Mark Faulk

The Naked Truth: Investing in the Stock Play of a Lifetime
© 2008 Mark Faulk. All rights reserved.
No part of this book may be reproduced, stored in a retrieval system, or transmitted by any means without the written permission of the author. This excerpt may be reposted with a link back to http://www.faulkingtruth.com/Articles/Investing101/1080.html on public internet websites, and may be forwarded or mailed to public officials.
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This is an excerpt from the soon-to-be-released book “The Naked Truth: Investing in the Stock Play of a Lifetime”, which is currently at the printers and scheduled to ship in the next few weeks. This excerpt is from Chapter 31, entitled “Revelations”. It takes place following repeated demands from CMKX shareholder/attorney Bill Frizzell that CMKX take legal action against individuals associated with the company who he believes defrauded shareholders of over $250 million. Included is a meeting between interim CEO/shareholder Kevin West, company attorney John T. Moran III (who was hired to file an interpleader action on behalf of CMKX), and Chairman of the Board/former CEO Urban Casavant:

The Naked Truth: Investing in the Stock Play of a Lifetime (From Chapter 31 - Revelations)


On March 27, 2006, in what amounted to a warning shot across the bow of the company, Bill Frizzell sent a follow-up letter to his September, 2005 Shareholders’ Derivatives Letter. Addressed to Urban Casavant, Kevin West, and John T. Moran, III, he said that the company had failed to “take legal actions against a securities broker and various individuals for damages caused to the company.” He then got straight to the point of the letter: “A suit will be filed this week on a party or parties named in this letter as a result of the Company’s refusal to act on such shareholders’ request.”

Frizzell went on to state: “In my opinion there still remains huge ‘fails to deliver’ of Company stock in brokerage accounts around the country. I have the benefit of various NOBO and OBO lists that existed before the cert pull. As you know I have a wealth of documentation from several brokers who refuse to issue certs to their customers in CMKX. The documentation that has been sent to this office will be very helpful to the Company and shareholders as we work towards trading status.”
He then presented a summary of the First Derivatives Rights letter, a list that made it seem impossible for any rational person to question the magnitude of the corruption that existed in CMKX. He said that continued investigation had confirmed the facts laid out in the first letter, and recommended that:

“The Company should pursue its remedies against all third parties that have harmed the Company. Shareholders have asked me to pursue these individuals and others. I will do so on their behalf for the benefit of the Company.

Shareholders demanded legal action by the Company in September of 2005 against John Edwards and NevWest Securities. The NASD has now completed its investigation into the Edwards’ trades and filed a complaint against NevWest in September of 2006. The facts set out in the complaint confirm the shareholders’ concerns regarding the acts of Mr. Edwards. The NASD complaint states that 250 billion shares of CMKX stock was sold through the Edwards trading accounts. Shareholders concerns were validated by this complaint.”

He summarized the remainder of the miscreant’s list, which included former accountant Neil Levine, former company treasurer and CFO David DeSormeau, consultant James Kinney, who received almost 100 billion shares of CMKX stock, and former secretary Ginger Gutierrez, who received 23 billion shares of stock.

And then there was Brian Dvorak, whose laundry list of dirty deeds spanned a full page in the first letter, including the issuing of numerous opinion letters that allowed over 200 billion unrestricted shares of CMKX stock to be dumped into the market. He also authorized the forward split that gave certain individuals 100 times the number of shares held prior to the split. It was later revealed that in several of the opinion letters, Dvorak actually miscalculated and issued 1000 shares for every share that was purportedly already owned. In a letter dated December 15, 2003, Dvorak issued 4 billion free-trading shares of CMKX stock to Emerson Koch, who he said had purchased 4 million shares of CMKI stock. To make it even more confusing, the opinion letter first claimed that Koch originally purchased his shares on November 4, 2001, then said that corporate records showed that he purchased them on February 21, 2001. Either way, Koch received his financial windfall based on Dvorak’s “fuzzy math”. Not only did Dvorak authorize the issuance of an extra 3.6 billion shares of stock, neither Koch, Urban, or Helen Bagley from 1st Global Transfer caught the error. Koch received and sold extra shares worth hundreds of thousands, and possibly millions of dollars.

Frizzell reiterated his recommendation that the company should pursue legal action against everyone named in the first shareholders’ rights letter. Then he added Roger Glenn to the list of those who he believed should be sued, a name that for a lot of shareholders formed one of the three points of the Holy Trinity of CMKX.

Frizzell laid out his case against the man who most shareholders had heralded as a savior to the company when he came on board in June of 2004. It was the trumpeted entrance of Glenn that almost single-handedly triggered the massive price run that sucked in thousands of shareholders when the stock rose over a thousand percent in a matter of days…and then dropped back to its original price of one one-hundredth of a cent. He ended his list with the most damning fact of all, that “Mr. Glenn had authored 11 opinion letters in a three-month period resulting in the issuance of 300 billion plus shares”, which were immediately sold to thousands of unsuspecting shareholders by John Edwards, David DeSormeau, James and Jeannie Kinney, and a host of others.

At another meeting with Urban, J.T. Moran and his partner Jeff Bendavid, only the second one where Michael Williams wasn’t present, Kevin realized why Urban really wanted to walk away from CMKX. Moran brought up the idea of putting the company into bankruptcy again, and Kevin immediately protested:

“Moran told us that they had been talking to a securities firm in New York that specialized in bankruptcies and said, ‘They said we should forget about the interpleader and put the company into bankruptcy. That way we can sell off a third of the Entourage shares, we’ll all get paid and you can leave.’ Then he turned to Urban and said ‘You know you’re going to jail, right?’

Urban was shaking so badly that you could see it…his hands were shaking so much you could hear his watch rattling. He told J.T. ‘I talked to Chesnoff and he said he’d get me off.’

Moran told him ‘You might skate on some of the charges, but they’ll get you on a couple. You’ll get a minimum of 13 years in prison.’

Then he turned to me and said ‘Kevin, cover your ears for a minute.’ I said ‘What?’ He said ‘Cover your ears for a minute.’ I told him that if he wanted to speak to Urban in private that I’d leave the room, but I wasn’t going to cover my ears.

So then he turned to Urban, cupped his hands over his mouth and mouthed something to him, but Urban shook his head that he couldn’t understand him Finally, Moran just said it out loud, ‘Urban, I have three words for you: Switzerland, Germany, Austria. Those are countries that don’t extradite back to the U.S.’”