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Commentary - Feb 20, 2008 - Printable Version
- The Naked Truth: Investing in the Stock Play of a Lifetime (From Chapter 33 - The Maheu Factor)
by Mark Faulk
The Naked Truth: Investing in the Stock Play of a Lifetime © 2008 Mark Faulk. All rights reserved.
No part of this book may be reproduced, stored in a retrieval system, or transmitted by any means without the written permission of the author. This excerpt may be reposted with a link back to http://www.faulkingtruth.com/Articles/Commentary/1078.html on public internet websites, and may be forwarded or mailed to public officials or the press.
This is an excerpt from the soon-to-be-released book “The Naked Truth: Investing in the Stock Play of a Lifetime”, which is currently at the printers and scheduled to ship in the next few weeks. This excerpt is from Chapter 33, entitled “The Maheu Factor”, concerning the legendary Robert Maheu's involvement with CMKM Diamonds (commonly known as CMKX):
In a series of interviews conducted in March and June of 2007, a year and a half after he resigned, and after two years of complete silence about CMKM Diamonds, eighty-nine year old Bob Maheu told his side of the story.
An early morning phone call prompted Maheu to comment, “I’ve always said that if you go to bed with a clear conscience you don’t need much sleep”. After first giving his word, twice, that he wouldn’t lie or in any way deceive the shareholders to cover up some covert plan, he began, as he often did, by relating his past experiences. He detailed his involvement in the attempt to overthrow Fidel Castro, his years as the alter ego of Howard Hughes, and his role in aborting a contract between Aristotle Onassis and the King of Saudi Arabia that would have given control of the world’s oil to Onassis.
He then told the now-famous story about how he met his wife Evette, leading into his lifelong reputation of taking “impossible assignments”:
“At age eleven, I came home and told my Mom that I had just met the little girl that I was going to marry. And after she said it was impossible for the third time, I said “Mom, I love you very dearly, but I’m going to prove you wrong.” And I married that little girl not once, but four times. We were remarried on our 25th, on our 50th, and on our 60th without telling the kids we eloped to Seattle, just the two of us, and we were remarried in the same little church where we had first been married sixty years earlier. And all through my life… when I was in school, if someone said we have to drop this program, I’d say “Why?” In college it was the same thing.”
Then, he dropped a bombshell about his involvement in the CMKX saga, “But this one…this one was a mistake. It was an impossible deal”.
After talking about his early FBI career, and how he had received a meritorious raise for his first assignment, Maheu said “I took this one (CMKX) on with the same enthusiasm, I should’ve checked it out a hell of a lot more carefully before I did.”
According to Maheu, his involvement with CMKX began with Mike Williams. Maheu described Williams as someone who “kept popping up now and then with ideas, and we never ended up doing anything of the business sort, nothing ever came to fruition that I can think of except this one”. He also said he couldn’t recall how he met Williams and that “I get so damn many of those, people come up with ideas and very seldom are they worth following”.
Williams called Maheu in late 2004 and asked to bring over an associate, Urban Casavant, for a meeting at Maheu’s home office. Maheu said that he had never met Urban Casavant before that first meeting. After meeting once, Williams contacted Maheu again at a later date, and again brought Casavant over to discuss a business proposal. The offer Williams and Casavant made to Maheu was to become Chairman of the Board of Directors for CMKM Diamonds, and to deal specifically with straightening out CMKX’s compliance and regulatory issues.
After the second meeting, Maheu agreed to help CMKX, with the stipulation he could bring in his own attorney. After accepting a salary of $40,000 per month for his involvement, Maheu brought in Donald Stoecklein to oversee the job. Maheu said “I made it very clear that I couldn’t guarantee what I could do about the past. But I would insist that from hence forward that they would be in compliance”.
The company announced Maheu’s hiring amidst considerable fanfare on January 31, 2005, giving an overview of his qualifications and then saying “to list all of Maheu’s accomplishments would turn this brief announcement into a novel”.
Although Bob Maheu didn’t know Casavant before the meetings in late 2004, Kevin Ryan did. Unknown to Maheu, filings with the SEC showed that in September of 2004, CMKXtreme loaned $2 million to Crystalix, a publicly-traded company whose CEO was Kevin Ryan. The deal called for the loan to be converted to Crystalix stock at a later date. Shortly afterwards, Urban Casavant and Michael Williams talked Bob Maheu into joining the CMKX Board of Directors. Then, on April 11, 2005, CMKXtreme loaned another $1 million to Crystalix. Urban Casavant personally signed both checks.
Over the next couple of months, Stoecklein worked closely with Urban Casavant and CMKX, reporting to Maheu about what progress was, or wasn’t, being made. When the SEC issued the temporary trading halt of the company’s stock on March 3, 2005, the focus shifted to the hearing itself. When Bob Maheu made his way to the witness stand he already knew that Urban Casavant hadn’t answered a single question in defense of the company or its shareholders:
“When that hearing took place in Los Angeles I was so damned embarrassed because they ended up asking me the same questions that I’d been asking without getting any answers for about two plus months. Frankly, like Urban I was tempted to take the Fifth Amendment but that’s not my style. And for the sake of the stockholders I didn’t want to allow the only two directors to both take the Fifth Amendment.
I didn’t have the information; I realized that there were decisions made, or non-decisions made, with which I was not contacted or appraised. Anyway, then I really started putting the heat on the law firm. And you know ‘crunch out the numbers that I need here.’ I kept getting reports that they could not crunch the numbers. Finally I told Don, ‘Don, when and if you are absolutely convinced that we cannot crunch the numbers enabling us to be compliant, I want you to tell me.’ And when he did is when I submitted my resignation.
They kept trying to get the numbers; that I know. They’d get the accounting group, and then their own people, and they’d asked for numbers, and there was always some kind of delay. When Don said to me categorically, he said ‘Bob, there’s no doubt about it, we’re not going to be able to get the numbers together enabling us to comply.’ That’s the day I submitted my resignation.”
In the March 2007 interviews, Maheu gave his reasons for serving on the Task Force:
“I stayed on the Task Force until we came up with the recommendation that they get an attorney, a trial attorney, and go to court… and I’ve not had anything else to do with it, and as I’ve told you, when I resigned about a year and a half ago, I forfeited all my back salary and everything.
Unfortunately…or fortunately, I started handling impossible assignments when I was eleven years old, and I’ve always been challenged. And as you know… you can’t make them all. When I tell you that I resigned and forfeited all the back pay that they owed me, frankly, I just wanted the hell out.”
After numerous delays, "The Naked Truth: Investing in the Stock Play of a Lifetime" by Mark Faulk is due to be released in mid-March, 2008. It is currently available for pre-purchase at all major online retailers and at http://toginet.net/main.asp?pID=86>Toginet.com
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