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CMKM Diamonds figure Turino pleads not guilty

2012-09-26 13:42 ET - Street Wire


by Mike Caswell

Jeffrey Turino, one of the 10 defendants in the CMKM Diamonds Inc. criminal fraud case, has pleaded not guilty. He entered the plea in a brief appearance before Magistrate Judge Carl W. Hoffman on Monday, Sept. 24. The judge ordered him detained pending trial.

Nevada prosecutors claim that Mr. Turino was part of the massive CMKM Diamonds fraud that ran from 2002 to 2004, in which the company's promoters dumped billions of unregistered shares, reaping $60-million in profits. (All figures are in U.S. dollars.) Although Mr. Turino was in the "shadows of the conspiracy" because of a penny stock ban, he still shared in a portion of the proceeds, the government says. He also allegedly aided the scheme by routing billions of unregistered CMKM shares through associates and nominees in Florida.

Like some of the other defendants in the case, Mr. Turino could not be found in the United States when he was first charged in March, 2010. Investigators eventually traced him to Europe, and police in the Netherlands arrested him in September, 2010. His appearance on Monday came after the U.S. successfully extradited him.

The CMKM indictment

The allegations against Mr. Turino are contained in a superseding 87-page indictment filed in Nevada on March 24, 2010. Prosecutors charged him and others with violations of the RICO Act and other laws in connection with a number of pump-and-dumps, the largest of which was CMKM. According to the indictment, the men operated as a criminal enterprise, causing publicly traded companies to improperly issue billions of shares. They then dumped those shares on investors, reaping around $70-million.

By far the largest of the pump-and-dumps identified in the indictment was CMKM, which prosecutors say netted $60-million. They identified the masterminds of the CMKM scheme as U.K. citizen John Edwards and Canadian stock promoter Urban Casavant, who are defendants. The indictment also named a number of other players, which included a lawyer (Brian Dvorak), a transfer agent (Helen Bagley) and Mr. Turino.


123 PEOPLE
CMKM promoter Urban Casavant
According to prosecutors, by the time of the CMKM promotion Mr. Turino had been working with Mr. Edwards for some time, serving as the sole officer for one prior pump-and-dump company. With CMKM, his role included helping route billions of shares through accounts controlled by associates and nominees in Florida. The indictment lists him among the "predominant sellers" of the stock.

Prosecutors said that Mr. Turino remained in the "shadows of the conspiracy," mostly because of a penny stock ban he received in 2003. According to the indictment, he and Mr. Edwards had taken part in a fraudulent promotion in 2001 of a company called Pinnacle Business Management Inc. Although much smaller than the later CMKM scheme, it also involved illegal share issuances. The men arranged for the company to improperly issue at least 4.3 billion free-trading shares, which they sold while publishing misleading news releases, the indictment stated.

(The promotion eventually attracted the attention of the U.S. Securities and Exchange Commission, which filed a civil suit against Mr. Turino and others in 2002. The SEC claimed that the company had greatly overstated the value of a proposed spin-off. Mr. Turino settled the case in December, 2003, agreeing to the penny stock ban. He did not admit to any wrongdoing in settling. The SEC has since secured a $9.6-million civil contempt penalty against him for violating the ban.)

The CMKM promotion, as described in the indictment, took place between November, 2002, and August, 2004, at least partly after that ban. Much of the indictment focused on Mr. Casavant and Mr. Edwards, explaining how they caused the company's issued share total to reach an extraordinary 800 billion shares through a string of illegal share issuances. During the scheme the men allegedly dumped billions of shares while the company issued misleading news releases touting the "Casavant diamond brand" and a purported $50-million jade collection, among other things.

Around the same time, Mr. Casavant was actively promoting the company by touring with a drag race team CMKM had sponsored, prosecutors said. The team, called "CMKXtreme," participated in a series of races, sporting vehicles with the company's stock symbol. Attendees wore shirts with slogans such as "Got CMKX?" The promotion reached its height in June, 2004, during the racing season. In total, around 40,000 people bought the stock, the government claimed.

So far there has been no participation from Mr. Casavant or Mr. Edwards in the case. Police have yet to arrest Mr. Casavant and Mr. Edwards awaits extradition from the United Kingdom, where he was arrested on the U.S. charges on Sept. 7, 2009.

Mr. Dvorak and Ms. Bagley both previously pleaded not guilty. The trial is set for Jan. 8, 2013


Read more: http://cmkxdiamond.proboards.com/index.cgi?board=general1&action=display&thread=59502#ixzz2DNGxK0eU