posted
Still, boils down to the hearing itself. Frizzle did a lot better job of blowing smoke then Stoeckleim did but it was still smoke. How can you not read the transcripts and say CMKX isn't cooked. SEC even won the cross of CMKX's witnesses. The judge's comment on not receiving records and poking fun at Maheu about UC just using him to give a sense of legitamacy say volumes IMO. The cults wants you to believe that a missing witness or a missing document means you can't prove your case. Just ask Scott Peterson is you need absolute proof to be convicted in the US. It usely does boil down on who you believe and who do you think the Judge will believe. I will just take the fifth on that one.
-------------------- Invest with your brain not with your heart.
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Joined: Aug 2004 Gender: Male Posts: 1,034 Location: Kentucky Karma: 2 [ Exalt | Smite ] Short comments after the briefs: « Thread Started on Today at 2:21pm »
-------------------------------------------------------------------------------- Short comments after the briefs:
I hope everyone is well. Actually I have spent the last 3 to 4 weeks working with our legislators and attempting to answer their questions pertaining to the issues of what the process would be and how the criminal activity of "counterfeiting securities electronically" has been taking place.
I did take the last 5 days off with my family and journeyed to the Smokey Mountains for a short get away, but I am back.
I believe the company's Brief presented a very good case for the company's position and depending on the Judges current thoughts it could or could not have the desired affects. I thought that the company’s brief could have mentioned the shareholder needs and concerns a little more than it did. Too, I believe if the brief were to be followed up by some filings from 2002, 2003, and/or 2004 then the results would be greatly enhanced. It appears that 3 quarters of 2002 and a draft of 2002-2003-2004 is available and can be submitted “to establish progress” and not as an official filing. We will discuss this more later in the Dr. Diamond Meeting Room.
I very much enjoyed the Owners Group presentation by Mr. Frizzell as it definitely took a more "shareholder concerned" flavor than the Company's Brief and especially more than the SEC's Brief. I agree that the $25 I sent to the Owners Group for Mr. Frizzell's assistance and intervention is by far the best $25 I have ever spent in the market place. The proof presented by the Owners Group cannot be easily overlooked by this Judge and cannot be ignored or side stepped by the SEC any longer.
We will be discussing these briefs later so I won't spend a lot of time typing about them.
On another note, I believe we are at a juncture with CMKM Diamonds where the Company needs to take a more active roll as you have suggested in the pursuit of establishing the naked short position. I do not understand Urban's current silence about this vital issue especially since the shareholders have been so vocal and successful in "proving" that a huge nss position does exist.
I usually would never intentionally post anything to do with a rumor, but if my information is correct (and I believe it is), then I believe the SEC has participated in attempting to manipulate the market on CMKM Diamonds. How? By using language that could be interpretively intimidating to the company's attorney, Mr. Stoeckline, and to the Owners Group attorney, Mr. Frizzell, in warning them to not take action or give advice to their clients (i.e. the company and/or the CMKX shareholders group) to take actions that were well within their "legal rights" to take.
If the "believed to be confirmed rumor" is true, then the SEC warned the attorney's that any action, such as a cert pull, that would try and "squeeze" the market into covering would be interpreted by the SEC as market manipulation on the part of the attorney/company/owners group and enforcement action would immediately be taken by the SEC.
If this "believed to be confirmed rumor" is true, and I believe it is, then the SEC has over stepped their bounds and should be investigated as they have manipulated the company and shareholders legal rights from being exercised for fear of unlawful prosecution by the regulators. This type of action by the SEC could only be interpretted as being designed to protect the "criminals" that have improperly "counterfeited" CMKM Diamond securities and this action aligns the SEC with the "criminals" and identifies them as co-conspirators after the fact, at the very least.
Too, this would mean that the SEC committed perjury in the Administrative Hearing before Judge Murray, when she asked "if the SEC believed that CMKM Diamonds securities had been naked short sold" and the SEC replied, "NO"! The question has to be asked,
Why would the SEC warn the company and shareholder group attorneys not to take actions that might force a squeeze if the SEC didn’t believe the company is naked short sold? The obvious answer is that if the SEC actually believed that CMKM Diamonds was not naked short sold then there would be no reason to give such an unwarranted warning to the attorneys. Seeing that they did give the warning to the attorneys then this means, IMHO, that the SEC would have known for some time that CMKM Diamonds is being naked shorted, they committed perjury in the hearing and has continued its efforts to “cover up” for their manipulating coconspirators. Whatever the truth is, I believe we need to get to the bottom of it at least once and for all. A few more thoughts, continuing in my humble opinion of course, is that with the "proof" that has been presented by Frizzell unveiling a severe naked short position on CMKM Diamonds, I believe the company could have some excellent responses (if they had not been rendered inactive by the threats of market manipulation being claimed by the SEC) : 1. I believe a "self imposed halt by the company would be excellent so no more manipulation of the shares could be done by the market system and the counterfeiting conspirators. This would allow for the actual share count to begin without any other changes taking place in ownership and positions. 2. I believe a company requested certificate pull with a waiver of fees should take place in conjunction with the "self imposed halt" as this would evacuate all certificates from CEDE & Co. and leave the borrowing pool completely empty and the remaining electronic positions would be exposed as being "completely naked". With the certificate pull taking place during the “self imposed halt” there would be no concerns that the market might try and cover forcing the PPS up and the certificate holders miss out on the run. Once the identification of the NSS is complete, action can be taken to resolve the crisis by an order to cover the failures to deliver. The certificates could then be returned to the market place and all shares converted into electronic again before the “self imposed halt” is lifted. Hopefully this would kind of force the hand of the SEC to enforce the rules and call for a cover or settlement of the remaining "failure to delivers". 3. An option that could be added or amended into #2 above is that when the certificates are pulled, the company could then do a certificate exchange with a new CUSIP number that could be tracked separately from the other shares. 4. The certificates going back into the market could start a feeding frenzy by broker/dealers that have been caught holding large positions of naked shorts on CMKX. 5. Lift the "self imposed halt" and let's see what happens!
A closing thought: I find it difficult to believe at this time that CMKM Diamonds will make the current deadline for submitting the completed filings to the Judge. I believe completed quarterly filings would be very helpful in getting an extension (more time) to complete the filings. If they are not submitted in time for the Judges initial ruling, then certainly they will be finished by the time the Appeals process is followed.
I have to run. I have typed this rather quickly so please be kind in your criticism. It is my goal to be around more often until this process is completed. Too, I hope everyone knows that these are just my opinions and that they are to be treated as such.
posted
Frizzy is supposed to be representing shareholders. Exactly which shareholders? It's rather obvious he is representing only those few who are members of the OG. Did he say he would or did they tell him to go after the NSS problem? Did he say he would or did they tell him to support the position(s) of CMKX, UC et al? It would seem to me that if he is truly representing shareholders' interests, he would not be demonstrating a one-sided (CMKX, UC, etc.) approach. If he IS truly representing shareholders' interests, he would be writing a very different story in his briefs. It would not be a one-sided venue.
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quote:Originally posted by Wallace#1: Frizzy is supposed to be representing shareholders. Exactly which shareholders?
The shareholders of the Owner's Group, i.e. the ones that paid him $25 to represent them are the shareholders Frizzel is representing. Obviously these shareholders believe that there is a significant naked short problem and that it is having a negative impact on the stock. I think they want to prove this to the SEC to force them to do their job and bring the naked shorters to task. Furthermore, I think many of them (and here is where I diverge from the OG's view) also feel the naked short problem is the cause of the problems with CMKM. It's not (IMO). The number of shares of stock, valid or invalid, outstanding can arguably only affect one small portion of the filings, namely the "outstanding shares". It's my contention that even here the company knows how many THEY have issued and are outstanding and this number is what should be used, not the number including the counterfeit shares. So bottom line is there is no reason short of gross incompetence, sloppy bookkeeping, lack of funds to do a proper audit, or a cover up of any of these, or a cover-up of outright criminal activity (i.e., scam). Take your pick. Personally I think it's a little of each.
-------------------- The opinions expressed here by myself and others should be taken for what they are: opinions. Beware, many express opinion as fact. Do your own research from reputable sources and never invest more than you can afford to loose. ~,-,-< GatorMan
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quote:Originally posted by Wallace#1: Frizzy is supposed to be representing shareholders. Exactly which shareholders? It's rather obvious he is representing only those few who are members of the OG. Did he say he would or did they tell him to go after the NSS problem? Did he say he would or did they tell him to support the position(s) of CMKX, UC et al? It would seem to me that if he is truly representing shareholders' interests, he would not be demonstrating a one-sided (CMKX, UC, etc.) approach. If he IS truly representing shareholders' interests, he would be writing a very different story in his briefs. It would not be a one-sided venue.
He represents the 5585 shareholder members who retained him, and he is doing an excellent job of it. If you want someone to represent your negative views, hire someone, the same way we did.
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quote:Originally posted by legaleagle: Dr. D's Thoughts
2. I believe a company requested certificate pull with a waiver of fees should take place in conjunction with the "self imposed halt" as this would evacuate all certificates from CEDE & Co. and leave the borrowing pool completely empty and the remaining electronic positions would be exposed as being "completely naked".
One big problem with this. Many of us have this stock in an IRA and CANNOT get the certificates without doing a withdrawal from the IRA and paying the penalty for early withdrawal. So, how would the "borrowing pool" be emptied?
-------------------- The opinions expressed here by myself and others should be taken for what they are: opinions. Beware, many express opinion as fact. Do your own research from reputable sources and never invest more than you can afford to loose. ~,-,-< GatorMan
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quote:Originally posted by legaleagle: Dr. D's Thoughts
2. I believe a company requested certificate pull with a waiver of fees should take place in conjunction with the "self imposed halt" as this would evacuate all certificates from CEDE & Co. and leave the borrowing pool completely empty and the remaining electronic positions would be exposed as being "completely naked".
One big problem with this. Many of us have this stock in an IRA and CANNOT get the certificates without doing a withdrawal from the IRA and paying the penalty for early withdrawal. So, how would the "borrowing pool" be emptied?
You have touched on a problem that has been presented to Frizzell and several congresspersons. Your IRA is threatened by a cert pull since you cannot pull them without penalty. If all certs are pulled on CMKX then all of the retirement accounts are nothing but naked shares. Same thing on other stocks that are NS. Bush will have a hard time getting people to "buy" that their SS investments would be safe.
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posted
bill, I'm surprised that you really haven't caught on yet what has been occuring, since you have been hanging around PB32.
IMO, our filings have been ready since RG ordered them.
========================================== legal all i've caught from PB32 is a headache & a few good laughs. what your saying is that everyone lied in court including stocklein. they all perjured themselves over a .00005 stock that might be NS'ed. legal, that wouldn't make sense to me if i was coming off a week long drug & booze binge. ya think maybe UC will wait till after cmkx is revoked & then file everything??? maybe just to catch the shorts he will give it a few months after being revoked. legal...take a deep breath & calm down. the excitement has caused the blood to rush out your brain. your smarter then that....i think...lol
-------------------- "keep your stick on the ice & your cup firmly in place"
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posted
FINALLY the first thing i can remember coming out of dr d's posts that makes sense...lol. if UC really gave a chit about the shareholders this would work. it would be cheaper, faster & give real results.
from dr. d....
2. I believe a company requested certificate pull with a waiver of fees should take place in conjunction with the "self imposed halt" as this would evacuate all certificates from CEDE & Co. and leave the borrowing pool completely empty and the remaining electronic positions would be exposed as being "completely naked". With the certificate pull taking place during the “self imposed halt” there would be no concerns that the market might try and cover forcing the PPS up and the certificate holders miss out on the run. Once the identification of the NSS is complete, action can be taken to resolve the crisis by an order to cover the failures to deliver. The certificates could then be returned to the market place and all shares converted into electronic again before the “self imposed halt” is lifted. Hopefully this would kind of force the hand of the SEC to enforce the rules and call for a cover or settlement of the remaining "failure to delivers".
-------------------- "keep your stick on the ice & your cup firmly in place"
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posted
bill, who lied? Maheu didn't know about the filings. He is there for political clout. Urban took the 5th. Didn't hear any lying from anyone who should have known.
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posted
every person that said cmkx wouyld not turn over needed documents legal. every accountant, auditor called said just that. stoclein said the past lawyer from new york, implying RG, answered his request with...we do not have any files. if all filings are done then they all lied.
-------------------- "keep your stick on the ice & your cup firmly in place"
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« Thread Started on Today at 3:50pm » [Quote] About 4:00 PM (EST) Monday I called Ameritrade
I have my Ameritrade acct in a Limited Partnership and have tried to get certs for 2 weeks but have been put off 2-3 times saying they needed more info. (They even put cash into my acct for the inconvenience)...Well, today I had it and called to speak with the reoganiization dept...The Customer Service guy, said the reason I was having so much trouble was that the TA is out of certificates...and can't get them from the company...from CMKX...He said they sold more shares than they had and that there were no more paper certificates. I said, so I don't have any shares and he said, no, you do have shares but they're held electronically. I said, so there have been to many shares sold and he said yes, there's to many shares on the market. He said something to the effect that it was CMKX's fault which raised the hair on my neck and I said, "So you're blaming CMKX." and he said, "It looks that way." I said, So I can't get certificates and He said "There are no more Certs at this time." I tried to get him to send me this in writing but he kept saying we don't have anything to send you in writing and wanted me to call the TA....
Has anyone else had this experience?
I'm not a basher or a pumper, although I do strongly believe in CMKX. I didn't record this conversation and I've written this only to the best of my recollection.
He said something to the effect that it was CMKX's fault which raised the hair on my neck and I said, "So you're blaming CMKX." and he said, "It looks that way."
-------------------- Be Careful Of The Toes We Step On Today, They Could Be Attached To The Butt We Have To Kiss Tomorrow
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posted
1 problem with that story legal & i'm not saying it isn't NS'ed. frizzy put a number on the certs it was in the 300 billions. that leaves 500 billion possible shares if UC had dumped all 800 billion. what that guy is saying is that since frizzy last checked ppl have asked for & recieved the rest of the o/s in certs. either that or UC didn't have certs printed to equal o/s. i'm not saying ameritrade is right, that UC sold more then the a/s i'm just saying the differance between frizzys numbers & what ameritrade is to have said doesn't fit.
-------------------- "keep your stick on the ice & your cup firmly in place"
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posted
There has been a grass roots effort to pull certs ever since Frizzell got working on the naked short. So I wouldn't be surprised that they are all gone. When I asked Jeff, the TA about cert shortages a couple of months ago, he said we have millions of certificates to send.
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Faulking Around - Jun 20, 2005 - Dateline Stockgate Expose': "Could Air Any Time" by Mark Faulk Yeah, I know what you're all thinking. "Where have we heard that before?" I'll answer that one: you've heard it from Dateline, you've heard it from The Faulking Truth, you've heard it from Financial Wire, hell, you've probably heard it from the guy down at the barber shop.
Let's recap: From a variety of sources, some of them inside the show, some of them participants in the interviews, some of them friends of friends of someone inside the show (and of course, the guy down at the barbershop), we've heard, and dutifully reported to our readers, that the Dateline Stockgate story would air:
"Sometime in August" (that was June, 2004)
"the Dateline story is imminent" and "in the next two to three weeks" (from October, 2004)
"There is a "90% chance that it will air before the Presidential election on November 2nd."
"There is a chance we'll air before the election, but also a chance that we won't. I'll let you know when I know." (Dateline producer Sharon Hoffman....in early October, 2004. Obviously, it didn't air before the election.....at least not THAT election.)
"The story is definitely still ongoing, and your readers will be among the first to know the airdate." (Hoffman again, always the diplomat.)
"Sometime in the next few weeks" (that one was in early January)
"Sunday, April 10." (Sharon Hoffman's reply to an email from Dave Patch that asked simply, "Any confirmed date yet?" That was on March 28th)
Lo and behold, there it was.....the news we had all been waiting for: "FINALLY! Dateline to Air Stockgate Segment April 10th"
But wait, not so fast (okay, granted, there's nothing fast about this story): Dateline Stockgate Update: POSTPONED YET AGAIN!
"Special segments that aired at the time of the Pope's death have caused a major reshuffling of the entire Dateline schedule." (From a Dateline representative, April 6th)
"It has been a very busy news cycle, and Dateline is always subject to change." (Hoffman again, April 6th)
Then, instead of the Stockgate segment, on April 10th, they aired (are you ready for this one?) an interview with "American Idol" Ruben Studdard. Busy news cycle, indeed.
"All of Dateline's programming is subject to changing airdates, and things move on our schedule all the time. Our piece on short selling -- which we have not ever given an official airdate -- is currently in the works as we continue our reporting, and we will make an announcement about its airdate when we have one." (Email from Sharon Hoffman, April 8th)
After that, we decided to try a different approach: Dateline, NBC, and GE: LET THE BOYCOTT BEGIN!
"THE STOCKGATE SEGMENT WAS CONFIRMED, and your implication that it was all a big mix-up is both condescending and misleading. And your decision to blame it on "a very busy news cycle" (because of the death of the Pope, Prince Ranier, and Terry Schiavo), and then replace it with an interview with "American Idol" Ruben Studdard? Well, even you must realize how ludicrous that it."
Let's see: sometime in August (2004), imminent, before the election (or maybe not), sometime in the next few weeks, April 10th, NOT April 10th (busy news cycle, Pope died, Terry Schiavo won't die, yada, yada), and finally......"We will make an announcement about its airdate when we have one". Yup. That pretty much brings us up to date.
Now, for the update on the update about the update of the news that Dateline is planning to air an expose' that could "blow the roof off this scandal" (drumroll please):
YET ANOTHER DATELINE UPDATE:
By Mark Faulk June 20, 2005
It's still on! In an interview with The Faulking Truth this morning, Sharon Hoffman dispelled rumors that their Stockgate expose' has been permanently shelved. "We are still definitely planning to air the segment", said Hoffman, who also told us that it "could air any time." So, there you have it. I know it's not much, but at least she refuted the rumors that have run rampant that the story had been killed altogether (We even mentioned it once or twice ourselves.....hey, this is the internet, we don't have Dan Rather's crack team of investigative researchers to confirm every single thing we hear).
According to Hoffman, "There's a lot of speculation about reasons that it hasn't aired, and most of it is not accurate." She wouldn't comment on the socalled "political pressure" that had supposedly been exerted on Dateline, but she did reiterate her earlier statment that "there are no nefarious reasons for it not airing."
In response to my question as to whether or not the segment is completed, she told me that "It's complete up to the present, but we'll continue to update it until it airs."
I called her back in an attempt to get her to tell me that once it airs, "it would be worth the wait", but she wouldn't bite. Instead, she told me, "No comment on that, but nice try." (Thanks, Sharon)
As far as our reader's concerns, she had this to say: "I don't begrudge anyone their frustration, and I understand that everyone is very passionate about this, and they have a right to be."
I also couldn't get her to admit that she was as frustrated as we all are about the delays (I told you she's a diplomat), but she did tell me that she had no control over scheduling. Oh what the hell, I'll say if for her.....Hoffman has spent thousands of hours putting this show together, and has obviously poured her heart and soul into it, she has to be frustrated.
On that note, and because I'm really beginning to like Hoffman (or "Sharon", as I like to call her), I'm asking our readers to go easy on her.....I truly believe that she's on our side (I hope I'm right about that). Instead, email and bug the guys above her, and tell them to get off of their collective executive asses and TELL THE STORY!
And that (until the next update, anyway) is the Faulking Truth.....
posted
i'm not saying its impossible legal. just that frizzy seems to keep up to date on things. you would think if the cert number grew to match the o/s or a/s he would know. ameritrade & other brokers have a habit of running their mouths without knowing just what they are talking about.
-------------------- "keep your stick on the ice & your cup firmly in place"
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Joined: Nov 2004 Gender: Male Posts: 1,048 Location: British Columbia Karma: 1 [ Exalt | Smite ] after every bit of evidence is in to this moment « Thread Started on Today at 4:42pm »
-------------------------------------------------------------------------------- I would spend every cent that I have into this stock on it again no problem. Dam, we proved the short we all knew we had, we still have some of the best land anywhere on Earth. What the hell else do you want in a penny stock. We either hid our filings or were completely incompetent at getting them done, or this is a total scam. Well with Iron Bob saying we are getting the filings done, and there is now evidence they are coming together, I think the doubt whether we were ever going to file is over. There is almost no chance we will get revoked in my opinion as it is crystal clear the SEC's motives for trying to revoke us. Bob also has the CIA for a client and I don't think he could ever get scammed on something like this and no one is going to push us around anymore, I think that is evident.
It is very clear who is trying to cover their azzes right now and it isn't CMKX. There will be a settlement most likely and if they make them run this all the better that is the only fair way to deal with this any way. Don't let anyone pull you down, the pressure building on this issue is astounding to say the least, and yes Bob still can condition an atmosphere at any age, you are seeing it right now.
We have kick azz lawyers, lots of money, the best connections a company can have, a proven short (thanks John and Frizz you guys rock), and the SEC and DTC staggering against the ropes and lots of ammunition left.
You have had the pain and the privilage of going through something that will never happen on this scale again in the market, and watched the greatest stock market story of all times unfold infront of your eyes. And if you think I am premature in calling this a victory I don't really care. I called this way back when we filed to become reporting again and stick by that, you do not file to become reporting if you are not ready for what is coming.
This is all in my opinion and should be taken with a grain of salt like every other post you read on the internet. Cheers to all that have hung in there you just deserts are right around the corner.
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posted
legaleagle. Just to correct you about the CERTS are gone when that guy called Ameritrade, he called them back and someone messed up, he was able to get certs. Soon, I hope soon, we will all know lots more of what will happen. I get sick of lurking here and seeing the same crap as always. Some people here make really good points, and I take it all in from both sides and try to understand and learn from all. But I must say why do many here post all negative stuff all the time when they don't have a single share in this. Go to another thread and get a life, why waste your time.
posted
because its entertaining chiman. because i'm trying to get some value out of the $1000 i lost on cmkx. because i love to debate & pull apart the cult posts. because i'm interested in the NSS problem & this is as good as it gets right now in the matter of trying to prove 1. mostly because telling legal he is wrong is fun...lol
-------------------- "keep your stick on the ice & your cup firmly in place"
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posted
GatorMan wrote: "It's my contention that even here the company knows how many THEY have issued and are outstanding and this number is what should be used, not the number including the counterfeit shares. So bottom line is there is no reason short of gross incompetence, sloppy bookkeeping, lack of funds to do a proper audit, or a cover up of any of these, or a cover-up of outright criminal activity (i.e., scam). Take your pick. Personally I think it's a little of each." ----------------------
I agree with you 100% on both of the above sentences.
A further reminder though, is that all they needed was the issued and outstanding on both their books and the TA's books (and they always should agree) in order to report the figures either separately or as part of a financial statement. NSS is a separate matter entirely.
NSS or not, I just think Frizzy got involved for other reasons including future litigation. In those matters, I believe he saw an opportunity for both himself and his law firm. Furthermore, if it was just the NSS problem, he would have had no reason to get involved in his brief with such things as egregious, scienter and other pertinent facts associated with the testimony which have nothing to do with NSS. NSS is NOT the issue at this point in time in dealing with the hearing, so why keep defending CMKX, UC et al?
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posted
because I have been on Allstock for almost 2 years, because of first amendment rights, because this is a scam, because of the paid pumpers
But most important is because of the friends and fun we have on this thread. Gotta love everyone here even legal. Who else could I have such an opposing view with and it not get personal.
-------------------- Invest with your brain not with your heart.
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posted
legal wrote: "He represents the 5585 shareholder members who retained him, and he is doing an excellent job of it. If you want someone to represent your negative views, hire someone, the same way we did." -----------------------
5585 shareholders is less than 10% of the shareholders you and others claim are out there in the public. Then, there are probably another 10-30 thousand who sold their CMKX shares already who do (no matter what you may think) have a say in what was done because it affected their profits and losses. Therefore, your 5K+ is really an insignificant number.
Furthermore, you faithful are so wrapped up in believing so much in UC and others (including asscoiated) people such as DeSormeau, Dhonau, Williams and Glenn), few can see the reality of thier natures. That is where you and Frizzy should be looking for responsible parties.
PS: legal, and I sold all my CMKX shares so why should I waste more money on a bummer stock. The mere fact that I once owned CMKX stock does leave me in the position of being an interested party. If I were to be involved in hiring any attorney, it would be to go after UC, Melvin, DeSormeau, Dhonau, Mrs.C, the son(s) and other people involved with CMKX and various questionable activities as well as the lack of proper activities.
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quote:Originally posted by CHIMAN34: legaleagle. Just to correct you about the CERTS are gone when that guy called Ameritrade, he called them back and someone messed up, he was able to get certs. Soon, I hope soon, we will all know lots more of what will happen. I get sick of lurking here and seeing the same crap as always. Some people here make really good points, and I take it all in from both sides and try to understand and learn from all. But I must say why do many here post all negative stuff all the time when they don't have a single share in this. Go to another thread and get a life, why waste your time.
Dave
I still own shares in this fiasco (poor, stupid, me). So I reserve the right to call all this cult posting bull****. The company hasnt shown me a thing in 3 years (I got into it as CMKI). I wont give up my shares, mainly because I want to prove I have them if and when there is a class-action suit against CMKX/UC.
-------------------- If I give you bad information, please feel free to sue me. I have nothing left anyway. Ed
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quote:Originally posted by legaleagle: bill, who lied? Maheu didn't know about the filings. He is there for political clout. Urban took the 5th. Didn't hear any lying from anyone who should have known.
-------------------- And, believe it or not, both Maheu and Urban Casavant represent the ONLY Directors and Urban Casavant the ONLY CMKX officer. LMFAO!!!!
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posted
"There has been a grass roots effort to pull certs ever since Frizzell got working on the naked short." ---- as per legal's post. ---------------------
legal, I remember telling all you cult members to do that very same thing long before Frizzy did and you folks responded in all kinds of negative ways....including that it was not necessary. Now, if you do have NS shares, what dividends do you think you may be entitled to? Bet it is NONE if your shares are among the NSS group.
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posted
CMKM says SEC used tainted evidence, case still failed
2005-06-20 20:27 ET - Street Wire
Also Street Wire (U-*SEC) U.S. Securities and Exchange Commission
by Lee M. Webb
CMKM Diamonds Inc., a massively diluted pink sheet company headed by Saskatchewan native Urban Casavant, filed a Jun. 17 posthearing brief claiming that the U.S. Securities and Exchange Commission used tainted evidence in a May 10 hearing, but still failed to make its case for revocation of the company's stock registration.
Rather than suspending or revoking the company's stock registration, CMKM lawyer Donald Stoecklein is asking Chief Administrative Law Judge Brenda P. Murray to issue an order allowing the company time to compile auditable financial statements and prepare annual and quarterly reports.
According to the SEC, CMKM filed a fraudulent Form 15 on July 22, 2003, claiming that it had less than 300 shareholders of record and was suspending its reporting obligations. In fact, CMKM had 698 shareholders of record as of that date.
In a June 2 posthearing brief, SEC lawyers Leslie Hakala and Gregory Glynn claim that CMKM used the fraudulent Form 15 to duck its reporting obligations and "operate in shadows and in secret."
Considering the relevant Steadman factors, a guide to determine the appropriate sanction, the U.S. regulator argues that CMKM's stock registration should be revoked.
According to the SEC, CMKM's actions were egregious; the company's breaches of securities regulations were recurring; its misconduct was knowing or reckless; assurances against future violations cannot be trusted; the company either does not appreciate the magnitude and potential consequences of its misconduct or is misrepresenting them; and the company's reporting violations are highly likely to continue.
Mr. Stoecklein argues otherwise.
Tainted
According to CMKM's lawyer, there were not any violations for failing to file periodic reports between July of 2003 and April of 2005 because, pursuant to the July 22, 2003, Form 15, the company was not required to file such reports.
Mr. Stoecklein argues that an amended Form 15 filed on Feb. 17 of this year reinstated CMKM's reporting obligations, but "within 60 days" of that filing. Therefore, says Mr. Stoecklein, the company's obligations did not start until April 17, so CMKM could not have been in violation of its reporting obligations when the SEC instituted proceedings on March 16.
CMKM's lawyer argues that the original Form 15 incorrectly claiming the company had less than 300 shareholders of record "was filed in good faith and the SEC has not demonstrated any facts to the contrary."
Mr. Stoecklein goes on to claim that he is appalled that the SEC used some correspondence between the regulator and CMKM's former counsel as support for its allegation that the company was aware of its reporting obligations in December of 2004 and that the original Form 15 filing was made in "bad faith."
According to Mr. Stoecklein, that correspondence is tainted evidence because, contrary to the doctrine of Brady v. Maryland and Judge Murray's prehearing instructions, that exculpatory material from an investigative file involving associated company U.S. Canadian Minerals Inc. was not provided to CMKM until "a couple of days prior to the hearing."
Moreover, the lawyer argues, that correspondence does not support the SEC's claim that the original Form 15 was fraudulent. Rather, says Mr. Stoecklein, the correspondence asserts the position "that the then counsel for CMKM believed that the filing of the Form 15 was made in good faith."
"The Division leans heavily on this correspondence to assert the position that CMKM has continued to act in bad faith," Mr. Stoecklein argues. "Even if we allow the argument based upon this Brady tainted evidence to reflect that CMKM knew in December of 2004 that there was an issue over the Form 15, the statements in the exhibits reflect that CMKM did nothing about the filing because it believed the original Form 15 was filed in good faith and the Division produced no evidence at the hearing to the contrary."
According to Mr. Stoecklein, Judge Murray clearly indicated in the prehearing conference that unless she had some evidence that the Form 15 was "a bad faith filing," she was "going to have to take it was a good faith failing."
"The Division has failed to produce such evidence of a bad faith filing," Mr. Stoecklein claims.
Turning to his review of the relevant Steadman factors, Mr. Stoecklein argues that the SEC has not shown specific facts to warrant "such a harsh punishment of revocation."
"More specifically, the facts argued by the Division and presented by CMKM Diamonds suggest a concerted effort made on the behalf of the respondent to regain compliance and provide public information to its investing stockholders," Mr. Stoecklein claims.
Not egregious
Contrary to the SEC's claim, Mr. Stoecklein argues that CMKM's conduct was not egregious.
According to Mr. Stoecklein, the SEC "continually relies on the argument that CMKM filed a fraudulent Form 15 merely because the party filing the document typed in the number 300" as the approximate number of holders of record.
"No testimony has been presented that either supports or confirms fraudulent or bad faith filing other than the Division's own evidence," Mr. Stoecklein states. "The Division had the burden of proof in establishing such fraudulent filing and did not meet the burden."
CMKM's lawyer goes on to say that the only evidence submitted in reference to whether the Form 15 was filed in good faith or fraudulently was a statement made in the correspondence introduced by the SEC by the company's former securities counsel Roger Glenn to lawyer David Liston "that he believed 'the company believed in good faith that it had too few shareholders to require the filing of periodic reports.'"
According to Mr. Stoecklein, there is no testimony that supports the SEC's position that the only reason CMKM wanted to bring its reports current was that it knew it was violating securities laws.
CMKM's lawyer claims that the testimony of the company's auditor Neil Levine, who quit effective the end of the hearing, was that CMKM wanted to file periodic reports so that it could move from the pink sheets to the OTC Bulletin Board or higher.
"Furthermore, the inferences made by the Division of CMKM's knowing or should have known the filing to be false are purely circumstantial and not based on logical inferences," Mr. Stoecklein claims.
The lawyer says that the SEC "alludes to CMKM's knowledge of more than 300 shareholders" by reference to a Jan. 12, 2003, board resolution authorizing the issuance of 994 million shares to 360 individuals, a press release that same month regarding an audit of the shareholders and the company's failure to contact the transfer agent.
Mr. Stoecklein claims that no evidence was produced that those 360 people received the shares, did not transfer the shares following receipt, still held the shares as of July 22, 2003, or that the shareholder list had not changed between January of 2003 and July of 2003.
CMKM's lawyer goes on to argue that the transfer agent could not recall anyone from the company contacting the firm regarding the shareholders list for July of 2003 "and therefore should not impart any such knowledge that CMKM knew or should have known that they had more than 300 shareholders."
"The conclusion made by the Commission is simply an inference that is not substantiated by any direct evidence," Mr. Stoecklein states. "The conduct of CMKM is clearly not the egregious conduct referenced in Steadman."
Not recurring
Turning to the second Steadman factor, Mr. Stoecklein claims that CMKM's conduct cannot be considered recurring because the company was not obligated to file periodic reports until April 17, 2005, 60 days after it filed an amended Form 15 correcting the inaccurate original filing.
"Since there was no duty to file, there was no recurring failure to file," the lawyer argues.
Not knowing or reckless
Mr. Stoecklein claims that CMKM did not have "scienter," nor is there any direct evidence that the company acted in bad faith.
Scienter is defined as "a mental state embracing intent to deceive, manipulate or defraud" established by knowing or reckless conduct. It can also be established by "willful blindness," a deliberate refusal to acquire information.
According to Mr. Stoecklein, the SEC would like the court to believe that Mr. Casavant asserting his Fifth Amendment privilege, the correspondence produced in violation of Brady and the testimony of the company's transfer agent Helen Bagley "provide sufficient scienter to generate fraudulent conduct."
Not so, says Mr. Stoecklein. CMKM's lawyer again refers to the "Brady tainted" correspondence as evidence that the Form 15 was filed in good faith because Mr. Glenn reportedly made that statement to Mr. Liston.
"We take issue at the implied accusation that either present counsel for CMKM or present management for CMKM had knowledge of the Division's correspondence with CMKM's prior counsel two month's earlier, when the evidence obtained on cross-examination at the hearing clearly indicated that the new counsel was unaware of the correspondence until the 'last couple of days' prior to the hearing," Mr. Stoecklein adds.
Sincerity
According to Mr. Stoecklein, the sincerity of CMKM's assurances against future violations is established by the retention of professionals to "complete the initial updated filings" and "incur the substantial costs associated with the filings."
"The testimony at the hearing is inconsistent with the view by the Division that CMKM is somehow not sincere in its assurances against future violations," Mr. Stoecklein states. "In fact, CMKM has expended significant resources in an effort to produce the appropriate legal documentation, accounting and audit functions."
Mr. Stoecklein goes on to argue that the SEC "continuously utilizes statements of CMKM as to its intentions of reinstating it reporting obligations in an attempt to persuade us that CMKM knew that it in fact had an obligation to be reporting with the Commission."
"We cannot be persuaded by this approach, since there is a lack of clarity as to why CMKM was making the statements," Mr. Stoecklein suggests.
As an example of the lack of clarity, Mr. Stoecklein points to testimony from Rendal Williams, chief executive officer of U.S. Canadian Minerals, who testified that Mr. Casavant said "he needed to be reporting" and "indicated that he was close to reporting a number of times."
The lawyer offered Mr. Levine's testimony that CMKM "wanted to get compliant and move up to the Bulletin Board or higher" as another example of lack of clarity.
"Until the filing of the Form 15/A, CMKM felt no rush to commence its reporting obligations, since it did not know it had such an obligation," Mr. Stoecklein says. "Therefore, any statements relating to CMKM's movement toward reporting have been taken out of context by the Division.
"We do not find any significant evidence that CMKM was under the belief that it was violating the federal securities laws; therefore, we do not believe the statements made by CMKM can infer a lack of assurance that it intends to maintain a reporting status once it is current in its reports."
Wrongful recognition
"CMKM recognizes the wrongful nature of the failure to confirm its outstanding stockholders in July of 2003, and its failure to maintain accurate accounting records allowing for its paid professionals to complete the preparation of annual and quarterly reports," Mr. Stoecklein claims.
CMKM's lawyer takes issue with the SEC's claim that statements made by the company in February and March lead to the conclusion that the company does not recognize the wrongfulness of its conduct.
In particular, Mr. Stoecklein addresses a February press release in which the company claimed that it was currently working toward completing an audit of its financial statements. In fact, an audit had not even started as of the date of the press release, nor had it begun by the time the May 10 hearing rolled around.
"There is no indication that CMKM believed differently than what was stated in the press release," Mr. Stoecklein says. "In fact at the time of the release, CMKM believed it was working toward producing an audit of its financial statements, in that it believed David DeSormeau, CMKM's accountant was working with Neil Levine of the firm of Bagell Josephs LLC, which firm acknowledged that it had been paid $100,000 toward the audit work after being engaged on January 10, 2005." (All amounts are in U.S. dollars.)
Mr. Stoecklein finishes his discussion of the matter with a rather awkward statement.
"We do not believe this statement in any way demonstrates a lack of wrongfulness of conduct," Mr. Stoecklein fumbles.
No more violations
"Reporting violations are not likely to occur again, once the financials are compiled and audits are completed," Mr. Stoecklein says. "CMKM is willing and able to spend the capital required to regain compliance."
According to Mr. Stoecklein, who offers no indication of when the financial statements or audits might be completed, the company is "expending significant amounts of money" to compile the financial statements, engage an auditor and prepare annual and quarterly reports.
"There is no evidence from the testimony presented that once CMKM is able to generate the reports that it will fall out of compliance," Mr. Stoecklein says.
No revocation
Wrapping up his assessment of the Steadman factors, Mr. Stoecklein argues that the SEC did not provide enough facts to support the revocation of CMKM's stock.
"The Division has not met its burden of particularity and revocation should not be granted for a company that wants to become fully compliant and has shown this desire through various testimony and tremendous resources spent on achieving this goal," Mr. Stoecklein argues.
According to CMKM's lawyer, the public interest is best served by allowing CMKM to become fully reporting again.
More time
In his concluding remarks, Mr. Stoecklein again says that the SEC did not meet its burden of proof in establishing that CMKM acted in bad faith in filing the original Form 15.
The lawyer claims that no evidence was introduced that the Form 15 was not valid, denied or withdrawn prior to Feb. 15, 2004.
According to Mr. Stoecklein, then, the proceeding cannot reach the egregiousness, recurrent nature of the infraction, obtain the scienter or determine that CMKM's conduct was wrongful as required by Steadman.
"We find no evidence to support a position that CMKM, once reporting, will succumb to future violations," Mr. Stoecklein argues.
"To the contrary, actions do speak louder than words," Mr. Stoecklein remarks before posing a rhetorical question. "Why is CMKM spending so many resources on generating compliancy with the reporting requirements of the Exchange Act?"
CMKM's lawyer goes on to say that the company has revenues, has spent significant money to once again be reporting and in good faith believed that its reporting obligations were terminated when it filed its original Form 15.
"CMKM does not believe it in the best interest of either its existing stockholder base, approximately 59,000 stockholders, or the public in general," Mr. Stoecklein says in yet another awkward statement.
"The public is well aware that CMKM trades on the Pink Sheets, and it is not required to supply audited financial statements, but for its large number of stockholders," the lawyer adds.
Mr. Stoecklein goes on to note that, in addition to suspension or revocation of registration to address reporting violations, securities laws allow the SEC to issue an order requiring the issuer to comply with reporting requirements, upon specified terms and conditions and within a specified time.
"For the reasons stated above, CMKM respectfully requests that this Court not revoke the registration of the common stock of CMKM Diamonds pursuant to Section 12(J) of the Exchange Act, however fashion an order that allows for CMKM to complete the process of compiling financial statements upon which an auditor can issue an audit report, and allow for the concurrent preparation of the annual and quarterly reports," Mr. Stoecklein says in concluding his brief.
The SEC has until June 29 to file a rebuttal brief.
Meanwhile, Bill Frizzell, a Texas lawyer representing a number of CMKM shareholders known as the Owners Group, filed something in the nature of a posthearing amicus curae brief on June 20.
Stockwatch will review Mr. Frizzell's brief in a following article.
The saga continues.
-------------------- Invest with your brain not with your heart.
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The Judge’s comments and questions during the hearing
Judge Murray interrupted in order to get a better understanding of exactly what reports had not been filed. "So the public has no information about the finances or the status for those years of this company," the judge remarked after getting a handle on the number of missing reports. "People buying the stock have no information as to those facts; is that right?" "Yes, Your Honor," Ms. Hakala replied
Judge Murray intervened to flesh out the significance of the Form 15. "So that's a special thing," the judge remarked. "On the Form 15, if you have less than 300 shareholders, you don't have to file reports." "That's basically correct, Your Honor," Ms. Hakala said, adding that CMKM filed a registration statement during the year and that another section of the regulations requires periodic reports to be filed in the same year that a registration statement is filed.
Judge Murray interrupted to ask about CMKM's trading volume and price. Ms. Hakala informed the judge that CMKM traded at one-100th of a penny and the volume typically exceeded one billion shares per day. "And the company currently -- the Division will introduce evidence suggesting that the company has over 700 billion shares outstanding," Ms. Hakala said. "Isn't that extraordinary?" Judge Murray queried. "The Division believes so, Your Honor," came the reply. "Well, let me just ask you this, from my perspective," the judge said. "Who benefits from all of this? Why are people keeping this going? Who benefits from all this trading, one one-hundredth of a cent?" "The Division believes, Your Honor -- and the Division doesn't anticipate introducing evidence on this because it's not particularly part of the required reporting, but the Division believes that certain individuals are liquidating substantial quantities of stock and pulling out the proceeds," Ms. Hakala replied. "Perhaps people related to the company."
Judge Murray posed another question. "My understanding is that the whole gist of securities regulation in this country is disclosure; right?" the judge asked. "Yes, Your Honor," Ms. Hakala replied. "So the Commission doesn't tell people, as I understand it, what they can buy and what they can't buy," Judge Murray went on. "If they want to buy something that you might consider nutty or that I might consider nutty, that's perfectly all right. That's legitimate in this country. "But what the security statutes say is that people have to have the facts, and so disclosure is the whole thing about securities law. That people have to disclose certain relevant information about the company. "And if people look at that and decide they want to buy it, you know, well and good, but there has to be disclosure. "And isn't that the gist of this case?" "Yes, Your Honor," said Ms. Hakala. "That this company has not made disclosure?" the judge further asked. "The Division agrees," Ms. Hakala replied. "Okay," Judge Murray said. "All right."
Listen, you hire a good accountant," Judge Murray said. "He can take -- or she can take care of you." "Your Honor, we have, and I agree with you," Mr. Stoecklein said. "You get what you pay for sometimes, but, I mean, I know what you're saying," the judge remarked. "But where there's a will, there's a way." "Your Honor, obviously, we are here because there's an allegation by the Commission that this company hasn't complied with 13(a) of the Exchange Act," Mr. Stoecklein subsequently picked up his opening.
Judge Murray intervened with some questions, drawing from Mr. Stoecklein that CMKM was arguing that it did not have to file reports between the time it filed the inaccurate Form 15 in July of 2003 and when it discovered the error and filed an amended report on Feb. 15, 2005. "Our belief is, irregardless (sic) of the accuracy of the statement in that filing, it was -- that filing was not denied and it was not revoked by the Commission," Mr. Stoecklein went on. "I have to check on the case law," Judge Murray said to that suggestion. "But I believe the case law is if somebody files something that's wrong with the Commission, it's not the Commission's obligation to correct it. The Commission can't keep track that everything's accurate that anybody files with it. "The case law is the parties are bound to file accurate reports with the Commission. The Commission -- it doesn't fall on the Commission to correct those inaccurate reports, but that's neither here nor there." The judge pursued the suggestion that CMKM should have had 60 days to file its required reports from the time it filed its amended Form 15 on Feb. 15. According to Mr. Stoecklein, April 17 would have marked the 60th day. "So under your theory, you still haven't filed the reports," Judge Murray remarked. "Well, under our theory -- under anybody's theory, you're correct, Your Honor," Mr. Stoecklein replied. "The reports are not filed. That's clear." "So whether you didn't have to file them when -- because the Form 15 was wrong and said you had less than 300 shareholders, when you corrected it in April and said, whoops, we've got over 600 shareholders, the responsibility to file the reports came again, and you had 60 days to do it and you still can't do it," Judge Murray said. "Right?" "That's correct, Your Honor," Mr. Stoecklein answered. "Well, that's where I'm stuck," said the judge. "Now -- well, let me explain, Your Honor," Mr. Stoecklein said. "Because we hear from the Commission, we hear from Your Honor, 60 days, short period of time, no problem.
"Wait a second," Judge Murray interjected. "You mean you spent $1.5-million and you didn't get what you paid for? You didn't get --" "No, Your Honor, we didn't come close to what we paid for," Mr. Stoecklein said. "I mean if you can't -- I mean -- that's not the SEC's problem if you wasted $1.5-million, is it?" the judge queried. "I understand, Your Honor," Mr. Stoecklein acknowledged, moving on to another topic.
"There was $250,000 spent by the prior counsel to bring reports current. And you know what I get, Your Honor, when I asked for those files? "I get a one-sheet letter that says, 'Dear Donald, we don't have any files.'" "I'm sorry," said Judge Murray, perhaps in commiseration. Mr. Stoecklein went on to sketch some more woes involving Neil Levine, an auditor hired by the company earlier this year and given a retainer of $100,000. CMKM had planned to have Mr. Levine as a witness, but he ended up as a witness for the SEC. "What happens on Friday last week, the company gets a letter from Mr. Levine saying he's terminating his position as the auditor," Mr. Stoecklein continued. "And I assume he's going to send back the $29,000 out of the hundred that he received, because his billing shows he spent $70,000. "Now, I don't know -- I don't know why this company has such bad luck.
"Are people buying stock in this company knowing that the company's under investigation, that it hasn't filed, it's in violation of the securities laws?" Judge Murray asked. "Well, I think it's pretty clear that there's investigations going on, and if you're buying it now, they are buying it aware of that, yes, Your Honor," Mr. Frizzell replied. "But I'm just -- I'm saying there's some victims out here, too."
"So it ties into the validity of the fallen 15," Judge Murray remarked, a reference to an inaccurate Form 15 filed by CMKM on July 22, 2003. Judge Murray had a few questions of her own regarding something she had noticed in the draft report of stock issuances. "Isn't it very unusual that a company would issue almost three billion shares and not list a reason?" Judge Murray queried, subsequently asking whether that struck Mr. Levine as being high. "It strikes me as being high," Mr. Levine replied. "I should think it would really strike -- I mean it's almost three billion shares," Judge Murray said. "Isn't that really high? Or do you see a lot of companies that issue three billion shares?" "I don't, but if there was a reason for the shares to be issued that I could audit, I could given an opinion on it," Mr. Levine replied. "Right now, it looked -- yes it looks high to me, but I haven't audited it, so I don't know if it's accurate or not." Judge Murray went on to ask whether a lot of companies that Mr. Levine audited issued three billion shares. "No, they haven't," the witness replied. "Have any of the companies that you've worked on ever issued 300 billion shares?" Ms. Hakala joined in with another question. "No, they haven't," said Mr. Levine.
"I think the witness's testimony, as I understand it, is you can't have something outstanding that hasn't been issued," Judge Murray remarked.
Judge Murray posed a question of her own. "Could I just ask the witness, do you transfer stock for any other company that has over 778 billion outstanding shares," the judge asked. "No, we don't," Ms. Bagley replied. With that, Judge Murray excused the witness.
Judge Murray intervened with a question, asking Ms. Herring when she had requested the documents from Mr. Casavant. "I believe it was about the beginning of April," Ms. Herring replied. "I don't recall the exact date."
A short time later Judge Murray had a few more questions for the accountant. "Isn't your company located in Las Vegas, Nevada?" Judge Murray asked. "Yes, it is," Ms. Herring replied. "And isn't this CMKM Diamonds located in Las Vegas, Nevada?" the judge asked. "Yes, it is," said Ms. Herring. "Well, why didn't you get in your car and go where they are and go into the office and get the stuff?" Judge Murray asked. "It is my understanding that the office is in Mr. Casavant's house, and I have not felt comfortable going to his house," Ms. Herring said. "No other reason." "So they don't have an office?" Judge Murray queried. "To the best of my knowledge, no," Ms. Herring replied. "Where does this lady, Ms. Gutierrez, work?" Judge Murray asked. "She's the office administrator?" "She was," Ms. Herring replied. "I do not believe she currently is." Ms. Herring testified that she did not know where Ms. Gutierrez performed her office management when she was employed by CMKM. CMKM's new accountant told the court that she had also requested documents from Brian Dvorak, a lawyer who had done some work for the company, but had yet to receive anything.
Once again, Judge Murray had some questions for the witness. "Does it seem possible to you to do that from the documents you have?" the judge asked. "From the documents that are in my possession at this point in time, no," Ms. Herring replied. "Assuming that I'm provided with the balance of the documents that I need, yes. And I've been assured by Mr. Casavant that I will get those documents." "And what exactly has he told you that he's going to give you?" Judge Murray asked. "But evidently he told you that at least a month ago? What is this? This is the 9th of May. So he told you about the 7th of April he was going to give you this stuff?" "Yes," Ms. Herring replied. "What is he going to give you that he hasn't given you that you need?" Judge Murray asked. "Cancelled checks," Ms. Herring said. "I am missing several bank statements, so I will have the copies of the bank statements. Supporting invoices. Accounts payable invoices. Contracts for stock issuances and service contracts for stock issuances." The accountant went on to say that CMKM was not her only client and that she had been doing other work over the past month. "Okay," Judge Murray remarked. "But the materials that you're missing seem to me to be pretty substantial. Or am I wrong?" "No," Ms. Herring replied. "I would have to concur with that." "Okay," the judge said. "And you've had a request pending for these documents for a month from this gentleman?" "Yes," said Ms. Herring.
Judge Murray again had some questions. "And when you say 'jade collection' -- evidently this company had mining rights," Judge Murray began. "Do they mine jade in Canada?" "I'm not clear on this whole transaction," Ms. Herring replied. "No, they do not. It was a revenue source, from my understanding, and what I obtained through reading the agreement, it was to be able to show this collection throughout the world and generate revenue." "How would generate rev -- oh, you were going to stage a show?" asked the judge. "People were going to pay to see the collection of jade?" "I was not involved at the time, so I can't really comment," Ms. Herring said. "I -- I don't know." "Does it make sense?" Judge Murray queried. "I'm sorry." "I didn't concern myself with it too much because I knew the contract reversed itself," Ms. Herring said. "But you have no proof that the contract reversed itself," Judge Murray commented. "Somebody told you that the contract reversed itself; right?" "Correct," Ms. Herring said. "Correct." "You don't know whether those shares of stock ever come back, do you?" asked the judge. "I do not," Ms. Herring replied.
Judge Murray intervened with some further questions. "When you say, 'Mr. Casavant or the company,' it sounds like he is the company," Judge Murray commented. "He has all the files for the company in his home?" "I'm not sure," Ms. Herring answered. "I'm not clear on that." "Well, when you ask people, where do they tell you that the files are?" the judge asked. "'We have that somewhere,'" Ms. Herring replied. "'We have it.' That's what I've been told is, 'We have those documents.'" "And who tells you this?" Judge Murray queried. "I've been told that by Mr. Casavant, by Ginger, by James, that these documents are available," Ms. Herring said. "But Ginger doesn't work there any more; right?" asked Judge Murray. "That's correct," Ms. Herring replied. "And James, does he work there?" Judge Murray asked. "Not to the best of my knowledge, but I believe there's a continued relationship," said Ms. Herring. "Well who works there?" the judge wanted to know. "I'm not familiar with who all works at CMKM," Ms. Herring said. "My dealings have been with Mr. Casavant, primarily."
She was about to pose a question regarding the 2004 general ledger when Judge Murray stepped in again. "Well, excuse me," said the judge. "She said there's no revenues, but there's some deposit figures there; right?" "Correct," Ms. Herring replied. "Well, isn't that revenue?" the judge asked. "No," said Ms. Herring. "What is that?" Judge Murray asked. "Those, I believe, are all loans to the company from Mr. Casavant," Ms. Herring replied. Ms. Hakala joined in with a question about why Mr. Casavant loaned substantial amounts to the company, drawing an objection from Mr. Stoecklein about how the accountant would know that. "I mean, we're speculating here, we're dealing with detailed financial statements," Mr. Stoecklein argued. "I mean, the issue here is, is this company going to get this stuff in order and get it reporting. It isn't the Commission's position to be able to go into this kind of detail." "Well, I think I disagree," Judge Murray informed Mr. Stoecklein. "If the witness prepared the document, you can ask the witness questions about the document." The judge went on to ask Ms. Herring whether the deposits under discussion represented loans from Mr. Casavant. "That is my understanding," Ms. Herring began. "Whether that is -- when I am looking at the bank statements provided by Mr. Casavant, I have money coming in. I have a bank deposit. "I know from Mr. Casavant that they are not doing anything to generate revenue. I know it's not revenue. "I know that on occasion Mr. Casavant has lent the company money. "I do not have loan agreements to support the money coming in. "Most of that money is -- has been either treated as donated capital to the company without a loan document to support a loan, or it is sitting in a suspense account because I don't know what to do with it at this point." "Okay," Judge Murray said. "You have an indication there's money, but you haven't got a source or a way to characterize it or sort of put it -- " "Correct," Ms. Herring replied. "Okay," Judge Murray said. "All right. Counsel, do you have any objection to those questions?" "I'll save it for redirect -- or cross, Your Honor," Mr. Stoecklein replied.
Judge Murray asked for some more information regarding the $36.5-million that the accountant had now identified as an accumulated deficit. Ms. Herring said that the figure represented $26-million paid for consulting, $1.4-million for mining supplies, $2-million in financing fees and $468,000 in loan costs. "And then in 2004, there are no expenses, so the bulk of it is made up in the transactions that were recorded as of December 31st, 2003," Ms. Herring testified, later adding that the beginning accumulated deficit balance from 2002 was $3.4-million. "Okay," Judge Murray said a short time later. "I think I've got it. I always thought of retained earnings, though, as a positive figure. I don't think I've ever heard of retained earnings as a negative. Am I wrong? It's often a negative?" Ms. Herring nodded her head affirmatively. "It is often?" Judge Murray queried. "Very often a negative," Ms. Herring said. "I would say 90 per cent of my clients have negative retained earnings." "So that essentially means that, as of the end of 2004, CMKM Diamonds had a deficit of $36-million and change?" Ms. Hakala asked. "Correct," said Ms. Herring.
Judge Murray intervened with a final question for Ms. Herring. "And the reason that that's the only effort is because you're lacking documents from the company; is that right?" Judge Murray asked. "That's correct," Ms. Herring replied.
Judge Murray intervened to suggest that Mr. Williams's answer seemed to conflict with the testimony of CMKM's accountant, Suzanne Herring, who had testified that CMKM did not have any revenue. Mr. Williams testified that he could not remember the exact dates when the ore delivery began, but he guessed that $90,000 or $120,000 worth of gold had been processed in 2004. "And if CMKM were to receive 50 per cent of that, would that money come back, flow into the United States?" Mr. Stoecklein asked. "What happens to that revenue stream?" "The first revenues have been put back into the mine to develop it," Mr. Williams said. "I am -- I'm not sure. Nevada Minerals is the operator of the mine and it's our responsibility to give the money to them. What relationship they have with CMKM, I'm not sure what that would be." Mr. Stoecklein followed up with some further questions regarding the Ecuador operation before Judge Murray intervened seeking some clarification. "And what kind of a plant is this?" the judge asked. "What is this plant?" "It's a processing facility for gold and silver," Mr. Williams replied. "And your company owns it?" Judge Murray asked. "Yes, we do," said Mr. Williams. "And CMKM Diamonds owns one shaft?" asked the judge. "They own a shaft that actually gets the ore out of the ground," Mr. Williams replied. "So when you say Nevada Minerals operates the mine, does CMKM Diamonds operate a shaft?" Judge Murray queried. "No," said Mr. Williams. "They're the owners of it." "They own one of the shafts that Nevada Minerals operates?" asked the judge. "Is the operator of down there, yes," Mr. Williams said. "But they're the owners of it, I believe." "And who owns Nevada Minerals?" the judge wanted to know. "Is that a public company?" "No," said Mr. Williams. "It's a private Nevada corporation." "And who owns this private Nevada corporation?" Judge Murray asked. "Do you own part of it?" "No, I don't," said Mr. Williams. "Does Mr. Casavant, if you know?" the judge asked. "Not that I'm aware of," Mr. Williams answered. "Who owns it, if you know?" Judge Murray still wanted to know. "John -- John Dhonau," Mr. Williams replied. "Okay," said Judge Murray. "I don't understand your relationship -- your company's relationship to CMKM Diamonds." "Right now we just process the ore that comes from their mine," Mr. Williams offered. "That's all you do with them?" asked the judge. "In Ecuador, yes," Mr. Williams replied. Mr. Stoecklein delved briefly into the historical significance of the Ecuador mine known as the American mine before Judge Murray intervened with some more questions. "What were your total revenues in 2003, 2004 and 2005?" Judge Murray asked. "You being U.S. Canadian Minerals, total revenues." Mr. Williams testified that he would "have to check with the auditor for that," but it was approximately between $90,000 and $120,000 for 2004. "Is that gross revenue or net revenue?" Judge Murray asked. "Gross," said Mr. Williams. He went on to testify that he did not have the numbers with him for 2005. "Did you make anything?" Judge Murray asked. "Yes, we did," said Mr. Williams. "Gross revenues," Judge Murray remarked. "You realized some revenues in 2005." "Yes, we did," said Mr. Williams. The judge went on to ask how much money the company made in 2003. "We weren't in operation then," said Mr. Williams. "You weren't," said the judge. "So you've been in operation one year." "Fourteen months, fifteen," Mr. Williams offered. "Fourteen months," Judge Murray said. "What were your net revenues in 2004?" "I don't have the numbers with me," Mr. Williams said. "Were they positive or negative?" Judge Murray queried. "It was positive," said Mr. Williams. "Positive," said the judge. "Thank you." Mr. Stoecklein picked up his cross-examination, asking Mr. Williams how much money U.S. Canadian Minerals had put into the Ecuador processing facility. "I don't have an exact number yet on what we've put into that plant," Mr. Williams replied. "But you've made an investment -- " Mr. Stoecklein began. "A large investment, yes," said Mr. Williams. "Would you make that large investment if you were not anticipating making revenues from that large investment?" asked CMKM's lawyer. "No, I wouldn't," said Mr. Williams. Judge Murray had some further questions at that point, asking Mr. Williams about the $90,000 or $120,000 generated by the Ecuador operation. "Are these figures divided in half?" Judge Murray asked. "You only have half of it?" "No," said Mr. Williams. "That's the total amount of gold and silver that we got out." "So where does their half come in?" Judge Murray queried. "CMKM Diamonds -- " "They come out of that," Mr. Williams said. "Their half came out of that." "Their half came out of that," Judge Murray repeated. "Yes," said Mr. Williams. "So from this Ecuadorial, whatever it is, they -- CMKM Diamonds grossed between $45- and $60,000," Judge Murray remarked. "That's gross, that's not net. Okay."
According to the SEC, an adverse inference could be drawn as to the company in that situation. Evidently that was Judge Murray's preliminary understanding, too. Mr. Stoecklein suggested that he should be given "a little leeway." "I don't see why we can't get a little testimony in as to the viability of this company and in terms of its reporting capabilities," Mr. Stoecklein argued. "I mean, is it viable? I would think Your Honor would want to know that information." "We just had the president, the chief executive officer of the company on the stand," Judge Murray said. "He refused to answer a question. The best source of information refused to answer a question." CMKM's lawyer suggested that Mr. Dhonau was a more capable witness, "irrespective of the Fifth." "No," Judge Murray decided. "I've tried to give you a lot of leeway. You're asking one gentleman to value the assets of another company and that's pushing it. I'll sustain the objection."
Judge Murray had some questions about the $2-million note. "Did you cash it?" Judge Murray queried. "Did you cash it? You actually got $2.2-million?" "A note," Mr. Dhonau explained. "A note," said Judge Murray. "Have you foreclosed on the note?" "No, ma'am," said Mr. Dhonau. "It's not due until December."
Mr. Maheu went on to testify that he was being paid $40,000 per month as a board member. "A month?" Judge Murray queried. "A week," Mr. Maheu replied, then corrected himself. "A month. Month. I'm sorry. I'm -- I was trying to get a raise." "You did," Judge Murray quipped. "You did." Following that exchange, Mr. Stoecklein picked up his direct examination. "You mentioned a moment ago of the reasons why you joined the board," Mr. Stoecklein said. "What has been accomplished, in your mind, in terms of compliance?" "I think that we have put together a team that has complied with my request and I hope that the work product that we're producing now will be evidence that we have tried," Mr. Maheu replied. Judge Murray had some questions regarding that testimony. "Could I just ask, have you been in the courtroom and heard the testimony of some of the prior witnesses?" the judge asked. "I have not, Your Honor," Mr. Maheu replied. "Well, would it surprise you that -- and counsel correct me if I'm wrong -- that some of the prior witnesses have said in the period since you joined after February of 2005, that they requested data, books and records from the company and were not able to get them as of yesterday or today?" Judge Murray asked. "I'm not familiar with that testimony," said Mr. Maheu. "How can they have -- if I'm correct that they did so testify, and the record will say whether they did or they didn't, how can they have given that testimony if you're sitting here and telling me that since February your team has made all these great forward progress towards fulfilling the reporting requirements?" Judge Murray queried. "To my knowledge, they have furnished the information that we have requested," Mr. Maheu said. "I'm not aware of the testimony to which you refer." "Who's 'we have requested?'" asked Judge Murray. "That I have requested," Mr. Maheu said. "It was my duty to request it and I have requested it." As Judge Murray continued, Mr. Stoecklein attempted to intervene, suggesting, among other things that people do not generally go to a board member who had just joined the company a short time ago in order to obtain documents from several years ago. "But he says he's been on the board since February and he's shaping the company up," Judge Murray said. "That's correct," Mr. Stoecklein said. "And, yet, the accountants have been looking for information since February and this is May and they haven't been getting the information and he doesn't know anything about it," Judge Murray said. "Are you suggesting that Mr. Maheu would have that information from three years before he joined the company?" Mr. Stoecklein asked the judge. "Well, he should know that the accountants were looking for it and haven't been able to get it," Judge Murray said. "Am I correct that you were unaware that accountants have been asking for information since February, March, and April and haven't been able to get it from the company?" Judge Murray asked the witness. "I was unaware -- I was not unaware that they were asking for the information," Mr. Maheu said. "But I was unaware that the information was not progressing."
Mr. Stoecklein said he had no further questions, but Judge Murray had some closing questions of her own. "Okay," Judge Murray said to Mr. Maheu. "I want you to understand that sometimes I have to be blunt. Okay? "Could you explain to me why I might think that they hired you and paid you $480,000 to give some color of legitimacy to this operation? In other words, you evidently have an esteemed reputation. "So did that thought ever cross your mind, that this company brought you in just to make it look like there was some legitimacy to it and paid you this amount of money?" "First of all, Your Honor, I've only been paid, so far, $80,000," Mr. Maheu began, receiving an acknowledgement from the judge. "And I would like to believe that, yes, that my background -- and I repeat. "I can stand any, any full background investigation that any entity can do based on I already have. "And I think that having spent a lifetime trying to be in that position -- and I do have a great record in business -- that, yes, I would like to believe that they would have hired me for my past experience." "Has it ever crossed your mind that you're being used?" Judge Murray asked. "I don't think so, Your Honor," Mr. Maheu said. "No." With that, Mr. Maheu was excused.
That drew some questions from Judge Murray. "Could I just have a little bit more information on that because I've seen the pleadings with this Securities Law Institute," Judge Murray remarked. "And I don't know. I thought it was a school, but you're affiliated with the law firm?" "We act as an outsource for the law firm," Ms. Buck said. "An outsource for the law firm," Judge Murray repeated. "What does that mean, 'an outsource for the law firm?'" "Basically it's -- we receive some of the clients that, if they need extra -- some work that needs to be done, we'll oversee some of that work that needs to be done by the Stoecklein Law Group," Ms. Buck replied. "Okay," said Judge Murray. "So your boss is Mr. Stoecklein?" "Well, he has his own law firm," said Ms. Buck. "But he's not affiliated -- I mean that's his entity and then Anthony DeMint is the president of Securities Law Institute." "Okay," Judge Murray said, going on to address Mr. Stoecklein. "Anthony DeMint, who's the gentleman that's been sitting beside you?" "That's correct, Your Honor," Mr. Stoecklein answered. "And he is an attorney?" the judge queried. "Your Honor, for the record, the law firm owns the Securities Law Institute," Mr. Stoecklein said, not answering the question. "So it is an outsource group that we utilize in Las Vegas for work when we don't do it in the San Diego -- perform the obligations in the San Diego office." "And does it do -- does it do work for other law firms?" Judge Murray asked. "No," said Mr. Stoecklein. "It primarily does work -- well, in some cases but not normally, Your Honor. It generally speaking, it handles the reporting for approximately 42 different companies."
That testimony drew another intervention from Judge Murray. "We should just say -- I think I've got this right -- that EDGAR is an electronic data gathering and retrieval system that the SEC operates where all public companies make their filings electronically," Judge Murray commented. "And my belief is that it's open to the general public. "I mean, people can get on a computer at any public library and go into EDGAR and get a report that a public company has filed. "If I'm incorrect, somebody can correct me on that." "No, that's correct," said Mr. Stoecklein. "But just generally available information of all the reports like the ones that are at issue in this proceeding would be available on the EDGAR system to the general public," said Judge Murray. "So what she's doing is just drawing down public documents." "Yes," Ms. Buck chimed in.
"And who was this financial person?" Judge Murray interjected. "I believe it was David DeSormeau," Ms. Buck answered. "And can I ask what David DeSormeau said about the ability to generate financial reports?" Mr. Stoecklein continued. "It was my understanding that we hadn't received much information from him, so it became -- the decision, I believe, was to retain somebody else that could prepare financial statements for the company," Ms. Buck replied.
Judge Murray subsequently intervened with a few more questions. "But isn't Opus Point also affiliated with this law institute?" the judge asked. "It -- I mean we are -- we share -- she is in our office, yes," Ms. Buck replied, stumbling a bit. "Do you own Opus Pointe, too?" Judge Murray asked, directing her question to Mr. Stoecklein. "Yes, I do, Your Honor," CMKM's lawyer replied. "After we saw how much Mr. DeSormeau was making."
"Objection, Your Honor," Ms. Hakala called out. "Leading." "It is leading," Judge Murray agreed. "I know, Your Honor," Mr. Stoecklein said. "Pardon?" Judge Murray queried. "I know, Your Honor," Mr. Stoecklein repeated. "I've been lucky so far." "Don't push it," Judge Murray cautioned.
Evidently Judge Murray had heard enough about the boxes. "I think it's around two boxes," Judge Murray remarked. "But let me ask you, is that all the material now for, like, three years of business?" "That's what has been provided, yes," Ms. Buck said.
"I don't have it in front of me," Ms. Buck said. "It's information -- I don't memorize everyone's agreement." That response brought a rather terse admonishment from Judge Murray. "Hold on just a second," said Judge Murray. "The witness has to remember you're under oath, so I want you to think before you fire back an answer. All right? "If you think, you pause, you remember you're under oath, you have to tell the truth."
-------------------- Invest with your brain not with your heart.
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