Anyone recall CMKX? I am sure some here do. I posted so much about that fraud as it was unfolding. It became the biggest pumped POS in its day, had the biggest Cult following I have EVER SEEN for a pinkie, the fools kept claiming only 10BILLION shares out and it traded almost that much on some days. I made great profit on the move from .0001 to .0012 all the while clearly stating it was a total scam, the only reason I put bids at .0001 before it moved was because so many well followed fools started pumping it, it was sure to move at some point.
Well the bag holders still had hope even when it was delisted and the main man charged but did not show in court. Then the bag holders formed a group and hired lawyers to check what was going on to PROTECT thier investment, all the while claiming they would get huge gains in the end. Man did I ever get bashed and banned on the boards for proving it was a total scam. And now court records show everything I stated was true. The biggest was the bogus sale of 5% rights, all smoke and mirrors, one shell creating PAPER wealth for another shell. Oh so many people pumped CMKX
Well I found this, well worth the read as this is what can happen with what I call stinkie pinkies.
CMKM promoters indicted in Nevada
2009-09-21 18:11 PT - Street Wire
by Mike Caswell
The U.S. Department of Justice has unsealed a criminal case against Saskatchewan resident Urban Casavant and five others for the alleged CMKM Diamonds Inc. fraud. The indictment, unsealed on Thursday, Sept. 17, 2009, in the District of Nevada, claims that the men arranged for CMKM to illegally issue 800 billion shares. They then sold many of those shares on the market, for total proceeds of $60-million, prosecutors claim. (All figures are in U.S. dollars.)
Nevada indictment
In addition to Mr. Casavant, the 40-page indictment names as defendants John Edwards, 65, of Britain; Ginger Gutierrez, 37, of Las Vegas; James Kinney, 37, of Las Vegas; Brian Dvorak, 52, of Las Vegas; and Helen Bagley, 61, also of Las Vegas.
The alleged scheme began in September, 2001, when Mr. Edwards and Mr. Casavant gained control of CMKM's predecessor, a company called Cyber Mark International Corp. The company had been a developer of virtual reality systems and games, but it was defunct by 2001 and its only purpose was to serve as a shell for the CMKM fraud, prosecutors say. It had no active business and only $344 in cash.
Prosecutors say that Mr. Edwards, using the alias Ian MacIntyre, acquired control of Cyber Mark and changed its address to a post office box in Las Vegas. Notwithstanding that it had no assets or value, the company then offered to acquire mining claims from Mr. Casavant, the indictment states. It agreed to pay $2-million in cash and to issue three billion shares to private companies he controlled. In this manner, Mr. Casavant gained control of Cyber Mark's shares, the indictment claims. He changed its name to Casavant Mining Kimberlite International in December, 2002, and later shortened it to CMKM Diamonds Inc. in February, 2004.
Improperly issued shares
The indictment describes how Mr. Casavant and Mr. Edwards arranged for the company to fraudulently issue 800 billion shares. Prior to Nov. 25, 2002, CMKM was authorized to issue just 500 million shares. With the stock trading at less than a penny, those shares did not have much value. Prosecutors say this was of little significance to Mr. Edwards and Mr. Casavant though, because they "controlled the printing presses and issued themselves and their nominees a seemingly endless stream of stock certificates."
Through a series of amendments to the company's articles of incorporation, Mr. Edwards and Mr. Casavant increased the company's authorized shares from 500 million to 800 billion, prosecutors claim. The company was able to do this without reporting the actual outstanding figure, because it claimed that it was relying on a Form 15 exemption from reporting. A Form 15 exemption is normally only available to companies with fewer than 300 shareholders. Prosecutors say that the exemption did not apply to CMKM though, because the company had 600 shareholders at the time, and about 40,000 by the end of the scheme.
Next, Mr. Casavant and Mr. Edwards engaged the services of Mr. Dvorak and Ms. Bagley to help them issue the shares, the indictment states. Mr. Dvorak, a securities lawyer, allegedly authored at least 460 opinion letters stating that the stock could be issued without restrictive legend, meaning that it could be traded right away. According to the indictment, the letters claimed that shareholders had earned the stock two years earlier, but it had not been issued then. Prosecutors say that Mr. Dvorak received $495,000 for authoring the letters.
Ms. Bagley then took the letters and, ignoring many red flags, issued share certificates to Mr. Edwards, prosecutors claim. According to the indictment, simple arithmetic should have shown that the company could not have belatedly issued hundreds of billions of shares. Two years earlier, CMKM had only been authorized to issue 500 million shares, and it had already issued 352 million of those shares.
After receiving the stock certificates, Mr. Edwards deposited them at several brokerage accounts in Las Vegas and Nevada, usually arriving with a physical bundle of certificates, the indictment states. To control the nominee accounts, he had to fraudulently complete scores of irrevocable stock power forms, prosecutors say. To do this, he would generally sign the forms in bulk before employees of Wells Fargo, who then stamped the documents to verify that the signature was genuine. Prosecutors say he then modified the forms to obscure his signature, and attributed it to that of the nominee or straw purchaser.
Promotion of CMKM
Notwithstanding the issue of 800 billion shares, CMKM remained a hollow shell, the indictment states. Although it purported to be an international mining company, it actually had few assets and did not commercially produce or sell any diamonds, prosecutors allege. They say it did not even have an office or any comprehensible books or records.
To fuel interest in the shares, the company allegedly issued a series of misleading news releases. One of the company's claims was that it was sponsoring an office in Antwerp, Belgium, to sell the "Casavant diamond brand." Prosecutors say that this claim was entirely unsubstantiated, as the company had not yet found or produced any diamonds.
In another allegedly misleading news release, the company represented to investors in July, 2004, that it had an agreement to sell 5 per cent of its mining claims for $7.5-million. This claim, if true, would have valued CMKM's claims at $150-million, prosecutors note. They say the offer had no basis though. It was made by U.S. Canadian Minerals Inc., a corporate shell that CMKM's promoters allegedly controlled.
To pay for the interest, U.S. Canadian represented that it had received $15-million in financing, but this money actually came from Mr. Casavant in secret, the indictment states. The purported financing was allegedly "recycled proceeds" from the fraudulent sale of CMKM shares. Furthermore, the money that U.S. Canadian ostensibly paid to CMKM was promptly returned to Mr. Casavant, according to the indictment.
Prosecutors say that CMKM announced a similar arrangement with another company, St. George Metals Inc. in July, 2004. While St. George purported to be an independent purchaser, it was actually a shell controlled by Mr. Edwards, prosecutors allege. It purported to buy a 5-per-cent interest in CMKM's claims for $10-million, but the money came from Mr. Edwards, the indictment states.
According to the indictment, the CMKM promoters generated further interest in the company by backing racing teams. CMKM sponsored "CMKXtreme," which was a team of motorcycle, truck and drag racers. Travelling across the country, the vehicles bore the company's stock symbol as well as promotional messages, such as "Got CMKX?" In addition, the company maintained a promotional website, through which it distributed promotional items containing slogans such as "I'm a CMKX.net Boardaholic" and "To DA Moon! CMKX.net." Further, at least eight Internet message boards focused on the company, the indictment notes.
Through these promotional activities, the defendants were able to sustain a market for the company until mid-2005, the indictment alleges.
Share sales
Prosecutors claim that approximately 40,000 investors bought CMKM shares throughout the course of the scheme (January, 2003, to April, 2005). The stock traded between 0.013 cent per share and 1.35 cents per share.
During this time, Mr. Edwards was a substantial seller of the stock, allegedly unloading 259.8 billion shares in hundreds of transactions. He sold at an average price of 0.021 cent per share, generating proceeds of $53-million. He sent the money to multiple bank accounts he controlled, and shared an unspecified portion of it with Mr. Casavant, prosecutors say. He also sent 77 billion shares to five entities based in Florida controlled by his associates. These entities allegedly sold the shares for proceeds of $6.5-million, and sent $344,000 of the money to Ms. Bagley, $2.2-million to Mr. Edwards and the remainder to others not named in the indictment.
Prosecutors say the other sellers were Mr. Casavant's nominees, Ms. Gutierrez and Mr. Kinney. They allegedly sold 88 billion shares, grossing $11.7-million. They gave $5.7-million of this money to Mr. Casavant, and kept the remainder for themselves, the indictment states.
Casavant not yet arrested
Prosecutors initially filed the indictment on May 27, 2009, but it remained sealed as none of the defendants had been arrested. It remained that way until Sept. 17, by which time police had located and arrested all but Mr. Casavant and Mr. Edwards, who remain wanted.
The actual charges in the indictment are securities fraud, conspiracy to commit securities fraud and money laundering. There is also an additional charge of tax evasion against Mr. Casavant, who allegedly made a willful attempt to evade paying tax on his sales of CMKM shares.
The criminal case comes less than one month after the U.S. Securities and Exchange Commission won a civil suit against Mr. Edwards and Mr. Casavant. The regulator filed the case on April 7, 2008, claiming that the men defrauded investors of $64.2-million. On Sept. 2, 2009, the SEC won judgments of $65.6-million against Mr. Casavant and $54.9-million against Mr. Edwards.
(Further information regarding CMKM and associated companies can be found in Stockwatch articles by Lee Webb dated Oct. 21, 2003; June 22; Sept. 16 and 24; Oct. 1, 15 and 20, 2004; Feb. 11, 14, 18, 22 and 23; March 1, 3, 4, 7, 14, 15, 16 and 21; June 6, 8, 9, 10, 13, 14, 15, 16, 17, 20, 21, 22, 29 and 30; July 1, 4, 6, 12 and 13; Aug. 2, 5 and 9; Sept. 7, 12, 27 and 30; Oct. 24, 26 and 31; Nov. 7, 11, 22 and 25; Dec. 1, 6, 9, 15 and 22, 2005; Jan. 3; Sept. 29; Oct. 4, 2006; Aug
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