CMKM Diamonds Inc. (fka CMKX)

[phxgold]

There are alot of coiincidences that point to John Edwards being a Michael Mitchell alias. If anyone remembers Michael Mitchells LCS golf became conversion services international.
Here is a lil diddy as to who mitchell is involved with.

A G.O.P. Power and His Penny-Stock Boards
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By LESLIE EATON
Published: August 19, 2002
First there was a lottery company that tried to sell socks bearing the likeness of the actor James Dean and that now makes coatings and sealants from recycled tires.

Then came the gambling company with financial problems whose principals were recently indicted on charges of bank fraud and tax evasion.

Next was an electrical-equipment distributor that metamorphosed into a cash-poor operator of Eastern European health clinics.

It was followed by a golf-club maker that became an Internet marketer and, briefly, the distributor of a disease-fighting Korean nasal spray.

Finally, there was the company that claimed to be selling building blocks in India and, after Sept. 11, announced that it had products to thwart terrorists -- until regulators stepped in. And last week, federal prosecutors unsealed a securities fraud indictment of the company's former chairman.

All these businesses share the financial losses, troubled track records and shape-shifting business plans that are the hallmarks of penny stocks, the low-priced shares that flourish on the shady side of Wall Street.

And they share another thing: Charles A. Gargano has served on their boards of directors, while also serving as chairman of the Empire State Development Corporation.

Empire State Development is responsible for doling out millions of dollars in state aid to businesses, a point noted by state legislators who questioned Mr. Gargano's business dealings when he was appointed in 1995. A close adviser to Gov. George E. Pataki and a major fund-raiser for the Republican Party, Mr. Gargano has also become an important force in the rebuilding of Lower Manhattan through his role at Empire State and as vice chairman of the Port Authority of New York and New Jersey.

Through a spokesman, Mr. Gargano declined to comment on his corporate activities. ''We're not going to have much to say,'' said the spokesman, Michael Marr, who works for Empire State Development. Mr. Marr said that Mr. Gargano was no longer on any boards.

While it is not illegal for someone to lend his prestige to a tiny, troubled company, it is unusual for someone with an important government position to do so. And it remains unclear why Mr. Gargano would be willing to risk his reputation by becoming involved in shaky companies, at least one of which has been accused of defrauding the public.

Mr. Gargano appears to have been acquainted with several of the businessmen who ran the companies, two of whom have donated heavily to the Republican Party. He also received stock or other securities for his board membership, though it is unclear how much money these were worth or if he sold them.

He listed all but one of these positions, at a company called Eagle Building Technologies, on the annual disclosure forms he filed with the New York State Ethics Commission. The commission discloses investigations only if it finds ''reasonable cause'' to believe that someone has violated the ethics rules, said Walter C. Ayres, its director of communications. The commission has never issued such a finding in connection with Mr. Gargano, he said.

Asked about Mr. Gargano's corporate affiliations, a spokesman for Mr. Pataki said the governor had confidence in Mr. Gargano. ''Charles Gargano has been an outstanding economic development leader, from Long Island to New York City and throughout upstate,'' said the spokesman, Joseph Conway.

Mr. Marr said Mr. Gargano resigned from Eagle last Oct. 12. (His membership there was first reported by The New York Post in April.) And since he was appointed chairman of Empire State in 1995, Mr. Marr said, Mr. Gargano ''has attended no board meetings for any company.''

In the wake of widespread corporate scandals, Congress, regulators and average Americans have become increasingly critical of figurehead directors who serve on boards. In theory, directors represent a company's owners -- its shareholders -- and keep an eye out for things like accounting irregularities, stock manipulation and executives with their hands in the corporate cookie jar.

Small and shaky companies are often willing to pay well-known people to sit on their boards without doing any work, because their presence helps attract investors, regulators say. ''That's going to change now -- probably about 10 years later than it should have,'' said Joseph P. Borg, director of the Alabama Securities Commission and president of the North American Securities Administrators Association.

Executives at several of the companies in question confirm Mr. Marr's statement that Mr. Gargano did not attend board meetings; indeed, they said, he did not involve himself at all. ''He was an absentee player, basically,'' said Dr. Michael Mitchell, a pediatrician and chairman of LCS Golf, where Mr. Gargano became a director in January 1999.

Meyer A. Berman has served on the board of Eagle since February 2001 and is now chairman (he has bought more than 40 percent of Eagle's stock and says he is turning the company around). Mr. Gargano was not involved in the company, Mr. Berman said, ''Not at all, that I guarantee you.''

Mr. Berman added, ''He never attended a board meeting.''

Other executives said that Mr. Gargano gave them advice and served as a sounding board. ''I relied on his judgment,'' said Salvatore Zizza, a former construction executive and longtime friend of Mr. Gargano's, who ran Lehigh Group, the electrical supplies company. Mr. Gargano was a director from December 1994 through July 1997, when the company merged with the health clinic operator.

Clearly, Mr. Gargano lent cachet to otherwise unprepossessing outfits, like Urecoats, the lottery company turned coatings maker. Richard J. Kurtz, a New Jersey real estate executive and stock investor who became chairman of the company in early 1999, said that previously, ''The only legitimate part of the company was Charles Gargano, to be candid, and the product.'' Mr. Gargano joined the company's board in 1993, when it was called Winners All, and resigned in August 1999.

Mr. Kurtz and Dr. Mitchell are among several people who turn up more than once in the companies linked to Mr. Gargano, as executives or directors or investors.

Another is Anthony M. D'Amato, the former chairman of Eagle Building, who was sued along with the company in March by the Securities and Exchange Commission, which accused him of securities fraud. The company sells masonry building blocks. According to the S.E.C. lawsuit, Mr. D'Amato fabricated millions of dollars of sales in India during 2000 and 2001, while Mr. Gargano was on the board. In fact, the company had no operations in India, the S.E.C. says.

After Sept. 11, the S.E.C. said, Eagle began issuing false press releases, claiming that it had equipment that could detect explosives and illegal drugs in airports, claims that the Federal Aviation Administration says are untrue.

While the company has settled with the S.E.C., Mr. D'Amato, in his recent answer to the complaint, cited his Fifth Amendment privileges against self-incrimination.

Mr. D'Amato, who left Eagle in February, has an unlisted telephone number in Boca Raton, Fla., and could not be reached for comment; his lawyer did not return repeated telephone calls.

On Thursday, federal prosecutors in Miami unsealed an indictment charging Mr. D'Amato with securities fraud, contending that he paid kickbacks to crooked buyers of Eagle stock in December and January, after Mr. Gargano says he left the board. It was unclear Friday if he had hired a criminal lawyer or entered a plea.

In the past, Mr. D'Amato was president of a company called Winner's Edge.Com, now Sealant Solutions. The current president of that company was indicted along with Mr. D'Amato. According to his disclosure statements, Mr. Gargano has held stock in the company (formerly UC'NWIN) since 1995.

Mr. D'Amato has in recent years contributed large sums to the Republican Party, including $25,000 to the 2001 President's Dinner Committee. He is not related to Alfonse M. D'Amato, the former senator.

Mr. Gargano received securities, and does not appear to have received cash, in return for his board services, according to the companies' filings with the S.E.C.

LCS Golf, for example, paid its directors' fees in stock, which while Mr. Gargano was on the board was worth almost $4 a share, though recently it has been going for about 7 cents. Last August, Mr. Gargano owned 500,000 shares, according to company filings.

In his filings to the State Ethics Commission, Mr. Gargano said he owned an undisclosed amount of LCS restricted stock. Restricted stock -- shares that are received directly from a company without a public offering -- must be held for at least a year and can be sold only in limited circumstances.

According to Eagle's annual report for the year 2000, Mr. Gargano owned more than 33,000 shares. Before he resigned, the company's shares climbed to more than $8; earlier this year, they soared to more than $12 before plunging to 25 cents after the fraud allegations surfaced, and recently rose to about $3.

Questions have been raised before about Mr. Gargano's business practices.

An engineer by training, he became a senior executive at J. D. Posillico Inc., a major construction company on Long Island. In 1981, the company was accused of rigging bids on a sewer contract; it eventually paid $315,000 to settle a lawsuit, though it did not admit wrongdoing.

A two-year criminal investigation into whether Mr. Gargano had done favors for political contributors ended in January 2001 when the Manhattan district attorney's office issued an unusual public statement saying that no charges would be pressed.

Then there was Alpha Hospitality, where he became a director in 1993. He resigned in September 1995 and sold his stock after state legislators complained about what they saw as conflicts of interest. Alpha is trying to open a casino with the St. Regis Mohawk tribe in upstate New York.

Even when Mr. Gargano was on Alpha's board, there were signs of trouble at the company, which was heavily in debt and losing money. Its president, Monty D. Hundley, resigned in March 1995 for what the company said were personal reasons -- and after the Indiana Gaming Commission asked to see his tax returns. In fact, Mr. Hundley had not filed federal income tax returns after 1981, according to an indictment prosecutors filed earlier this year in Federal District Court in Manhattan. The 21-count indictment accuses him; Stanley S. Tollman, the company's former chairman; and several associates of engaging in a complex $42 million scheme to defraud banks and avoid taxes.

Lawyers for both men did not return telephone calls. Mr. Hundley has entered a plea of not guilty; Mr. Tollman, a major Republican Party contributor who resigned from Alpha in February, is a fugitive, said a spokesman for the United States attorney's office in Manhattan.

Since March, investors have filed a raft of lawsuits against Eagle, Mr. D'Amato and, in one case, all the directors including Mr. Gargano. Last month, a federal judge in West Palm Beach, Fla., consolidated the suits into one class-action complaint, and the lawyers have a few weeks to figure out how many defendants there will be. It is not yet known if Mr. Gargano will be one.


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