Commentary Too - Aug 1, 2008 - Printable Version
- Silver State Bank: Like Rats From a Sinking Ship
by Mark Faulk (Editor's note: Mark Faulk’s first book, entitled The Naked Truth: Investing in the Stock Play of a Lifetime, detailing the sordid story of CMKM Diamonds (CMKX)is now available at www.thenakedtruthbook.com Seriously, just go buy the damn book. You won't regret it. Join Mark and Paul Faulk from 1-2 PM CST on The Faulking Truth X2 Show at www.TogiNet.com Mark Faulk will be on Gnosis with host Chuck Aubrey this Saturday from 3-4 PM PST on AM 1330, KJLL in Tucson, AZ, which streams live on the web at www.tucsonsjolt.com )
The fallout from the Silver State Bank fiasco continued on Friday as the company announced a wider-than-expected quarterly loss and CEO Corey Johnson resigned. Johnson’s resignation follows the resignation of Board of Directors’ member Andrew McCain, who was on the bank’s Auditing Committee. McCain is the son of presumptive Republican presidential candidate John McCain. McCain and Johnson's departures came on the heels of resignation of one of the bank’s executive vice-presidents, who left just two months ago.
Silver State Bancorp (SSXB.O), the bank’s holding company, announced a net loss for the second quarter $62.7 million, or $4.15 a share, compared with a profit of $6.2 million, or 44 cents a share, a year earlier. Analysts had expected a loss of 65 cents a share. The company also said that it was suspending its share repurchase program, not a huge surprise since they announced that they need to raise another $40 million in capital just to survive. Since the share price has dropped over 95% in the past year (almost 90% since McCain joined the bank), and is down another 15% just today (trading at just over one dollar), raising capital through the sale of shares could be disastrous for shareholders who have already been hit hard by the bank’s financial problems.
Although the bank today blamed most of their financial woes on loan losses, which ballooned from $1.9 million a year ago to $58.6 million during the last quarter, it was their involvement with one of the largest financial frauds in history that has raised serious questions about the bank’s business practices. An article on The Faulking Truth, entitled Silver State Bank: What's Deposited in Vegas Doesn't Stay in Vegas details the bank’s shady involvement in the defrauding of over 50,000 shareholders in the CMKM Diamonds scam. The story has since been widely circulated on the internet, including news sites such as What Really Happened and the Huffington Post.
That article detailed an ugly trail of apparent money laundering that was facilitated by Silver State Bank, who never filed a single Suspicious Activity Report (SARs) while hundreds of millions of dollars was pilfered from CMKX shareholders. The article says, in part:
“Insiders with CMKX defrauded over 50,000 shareholders of in excess of $250 million. A large portion of that money was run through a single Silver State Bank branch in Las Vegas. In all, former CMKX CEO Urban Casavant and reputed mastermind John Edwards (no, not that John Edwards) opened over 100 bank accounts at Silver State, and ran tens of millions of dollars through the bank.”
Silver State Bank will hold a conference call at 12 PM EST next Monday to discuss their quarterly results. Let’s hope that by then, the CMKX connection will have (finally) made its way into the mainstream press, and reporters will question the company about their role in the defrauding of 50,000 innocent shareholders and the suspicious departure of Andrew McCain, CEO Corey Johnson, and others associated with the bank.
And that, as always, is the Faulking Truth.
(Mark Faulk’s first book, entitled The Naked Truth: Investing in the Stock Play of a Lifetime, is now available at www.thenakedtruthbook.com. Buy it now while you still have a few dollars in the bank. Tune in with Mark Faulk and DeWayne Reeves every Friday from 9-10 AM CST on The Faulking Truth Show, and join Mark and Paul Faulk every Saturday from 1-2 PM CST on The Faulking Truth X2 Show at www.toginet.com)
Contact Mark Faulk at faulkingtruth@gmail.com
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