Investing 101 - Jul 10, 2008 - Printable Version
- From the ashes: CMKM Diamonds refuses to "just go away"
by Mark Faulk (Mark Faulk is the author of a just-released book detailing the incredible story of CMKX. The Naked Truth: Investing in the Stock Play of a Lifetime is available at www.thenakedtruthbook.com )
While CMKM Diamonds, Inc. (former trading symbol CMKX) might not yet qualify as the proverbial phoenix rising from the ashes, the company has shown that it’s far from exhaling its dying breath. Originally hyped as a diamond and gold mining company (with promises and/or rumors of uranium, zinc, platinum, and an ancient Chinese collection thrown in for effect), the approximately 50,000 shareholders were instead defrauded of over $250 million by company insiders and their cohorts.
But CMKX shareholders are nothing if not determined and resilient. As information was slowly uncovered by a handful of diligent shareholders and an unlikely group of advocates from Tyler, Texas, most investors came to the realization that they had been wronged both by the crooks and a financial and regulatory system that appeared to be complicit in the scam. While many shareholders believe that the SEC “just wanted us to go away,” they have instead continued to push for justice in what could be the largest penny stock fraud in history.
Tyler, Texas attorney Bill Frizzell, who represented thousands of CMKX shareholders during SEC delisting hearings in May of 2005, was retained by current CEO Kevin West to represent CMKM Diamonds in a series of lawsuits filed against former company insiders. Last week, CMKX won a key decision in their legal efforts to recoup money that was stolen from the company and its shareholders when they were awarded a $33,675,365 judgment in a Nevada District Court against company insider John Edwards.
According to company CEO Kevin West, “If there are any congratulations to be shared, then by all means it goes to the shareholders of this Company. It has been a long time since the shareholders of CMKM Diamonds, Inc. have had anything that even showed a hint of vindication for what has happened to them. It has been and continues to be a long journey, but this should be a landmark for everyone involved.”
West also announced the formation of a seven member shareholder-based advisory committee to assist in seeking out a new company chairman. West said “It is time to begin the search for someone with the business experience that is needed to move the company forward.”
Attorney Bill Frizzell spent little time dwelling on the victory, instead looking ahead to the next phase in the company’s continued efforts to unravel an incredibly complex scheme that was masterminded by Edwards and former CEO Urban Casavant, along with an Ocean’s Eleven cast of characters that included former company attorneys, accounts, and brokerage houses:
“Kevin West (and the company attorneys) will continue to do what corporate management is required to do. The company will continue to file suit against people or companies that obtained stock illegally or committed fraud against the company. It is clear from our investigation that many people (and often through specially created shell companies) conspired together to carry out the enormous dilution of the company. Numerous companies and individuals have profited immensely from illegal transactions conducted with the company. The company will continue its efforts to obtain judgments from those we have named in our pending suits. We plan to file suit against other companies and individuals not yet named and if we obtain a judgment, we plan to seek satisfaction of those judgments. Collecting on judgments is admittedly difficult in many cases, but we will expend all available resources to attempt to recover the damages caused to the company.”
The SEC has filed their own charges against 11 individuals and 3 companies they claim were behind the massive fraud. Although they are also seeking “disgorgement of ill-gotten gains, prejudgment interest thereon, and a civil penalty” against Edwards, Casavant, and others, Frizzell doesn’t see a serious conflict between company and federal efforts to recover money:
"The case law is very clear. Civil remedies and disgorgement actions are separate and distinct matters. There are many disgorgement cases in which the federal courts not only recognize the rights of corporations to seek civil remedies, they encourage such suits. Can there be conflicting claims as to certain assets sought by regulators? Yes, there could be. There are no disputes nor conflicts at this time and we do not expect any. Kevin has cooperated fully with the SEC since he took office and the company will continue to cooperate and assist law enforcement and any regulatory bodies.”
A multi-year ongoing investigation by the FBI, DOJ, and IRS has yet to produce criminal charges against anyone involved in the scheme.
To read excerpts from The Naked Truth: Investing in the Stock Play of a Lifetime go to:
www.faulkingtruth.com/Articles/Investing101/1080.html
www.faulkingtruth.com/Articles/Commentary/1078.htm
To learn more about SEC charges and lawsuits filed by the company, go to:
http://www.faulkingtruth.com/Articles/Investing101/1081.html
The Naked Truth: Investing in the Stock Play of a Lifetime is available at www.thenakedtruthbook.com
Contact Mark Faulk at faulkingtruth@gmail.com
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