CMKM Diamonds Inc. (fka CMKX)

[granny2shoes]

Quote:The scheme began when several private Canadian companies controlled by
Urban Casavant entered into a reverse merger with a public shell that was owned
by Edwards. (SF No. 12.) Over a twenty-month period, CMKM improperly
issued up to 622 billion shares of purportedly unrestricted stock based on both
written authorizations and attorney opinion letters. (SF No. 13.) These
authorizations and opinions were often facially inadequate, suspect, and
inconsistent. (SF No. 13.) CMKM’s transfer agent nevertheless issued sheaves of
unlegended stock certificates. (See SF No. 14.) Edwards and others then
deposited the certificates with various broker-dealers, including NevWest
Case 2:08-cv-00437-LRH-RJJ Document 99-2 Filed 12/16/2008



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Securities, and sold the shares into the market. (See SF No. 15.) Promptly after
selling CMKM stock, Edwards and others wired the proceeds to a series of bank
accounts, provided large sums to Casavant, and used the money for various
purposes, including paying gambling debts, investing in real estate, and generating
more shareholder interest. (SF No. 16.) By engaging in this conduct, Edwards
violated the registration provisions of the federal securities laws. (See SF No. 25.)

Casavant generated investor interest in CMKM by using false press releases,
Internet chat boards, and “funny car” race events across the country. (SF No. 17.)
To divert attention from their own dumping of CMKM shares, Casavant persuaded
CMKM’s investors that the reported high trading volume in CMKM stock reflected
extensive “naked short selling” rather than ordinary stock dilution. (SF No. 18.)
This promotion was extremely successful, and about 40,000 investors purchased
CMKM stock during the period of the fraud. (SF No. 19.) In reality, Casavant ran
the company from his house in Las Vegas, and CMKM had no meaningful
operations other than issuing and promoting its own stock. (SF No. 20.)




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