Replies to post #292851 on CMKM Diamonds Inc. (fka CMKX)

[jimmym4]

The Naked Truth: A Blueprint For Corruption

Editorial Commentary -

February 12, 2010 (FinancialWire) (By Mark Faulk) Editors note: This is the first of a series of excerpts from The Naked Truth: Investing in the Stock Play of a Lifetime, by Mark Faulk. Released in 2008, it is a cautionary true story about a financial system rife with corruption, and predicted last years market meltdown. The subject of the book, CMKM Diamonds, Inc. (CMKX), eventually triggered a massive investigation involving the FBI, DOJ, IRS, and SEC, and led to numerous major lawsuits and multiple federal criminal indictments.

Recall when Bear Stearns began to fall apart at the seams in March of 2008, triggering the SECs first emergency weekend meeting in over 30 years. Over the next few months, all of America, in fact, the entire world, watched in trepidation as our financial markets unraveled like a slow motion train wreck, one that the vast majority of Americans had been oblivious to until it was too late. Over the next few months, the train wreck began to pick up speed, prompting SEC chairman Christopher Cox to invoke a one-month ban on July 15, 2008 against naked short selling in 19 battered financial stocks, including Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), Citigroup (NYSE: C), Lehman Brothers (OTC: LEHMQ.PK), Credit Suisse (NYSE: CS), Merrill Lynch (DOA, as in dead on arrival), Bank of America (NYSE: BAC), J.P. Morgan Chase (NYSE: JPM), Fannie Mae (NYSE: FNM), and Freddie Mac (NYSE: FRE). The emergency rule, designed to eliminate the illegal downward manipulation of those companies stock prices, stated that no one could short sell stock in those companies unless they had borrowed or arranged to borrow the security and that they settle the trade on the required settlement date. Of course, as usual, even that rule imposed absolutely no penalties for anyone who violated the rule.
As you can see here, Faulk was warning us of the hazards lying ahead, long before that unraveling began:
Chapter 39 A Blueprint for Corruption

You have to kill the company to hide the crime. Bill Frizzell

This story is about CMKX, but it could just as easily be about any of hundreds, or even thousands of penny stock companies. Shareholders invest their hard-earned money only to watch helplessly as potential turns into disaster, and dreams of wealth and riches become nothing more than so many empty promises. This ongoing scheme has been growing unchecked for decades.

It is a complex and well-oiled machine where every component from the paid shills on the message boards to the highest levels of Wall Street represent an important cog in the scheme. None of this is by accident. Every entity and person involved plays a role in the orchestrated scheme to defraud America. Those who are not involved in the actual act of defrauding the middle class are either helping to facilitate the robbery, or destroying the evidence after the fact.
This conspiracy has no clear beginning, and up to now, no ending; it is both carefully planned and self-perpetuating. This example revolves around CMKM Diamonds simply because it is the largest single fraud ever perpetrated in the world of penny stocks. It is the central flashpoint where 50,000 shareholders were unwittingly led into the epicenter of corruption. CMKX was indeed the Perfect Storm. It was a feeding frenzy of excitement evolving into obsession, hopes lapsing into despair, and dreams turning into nightmares.

Its been said that a person can rob more money with a pen than with a gun. But with the advent of electronic trading, stock message boards, and spam emails, it is the click of a mouse that is the most deadly weapon of all. The details might differ from one scam to another, but the basic strategy is always the same. Stock fraud is a carefully constructed step-by-step strategy designed to rob shareholders, destroy the evidence, and cover the robbers trails: