Saturday, June 27, 2009

Naked Shorting Poster Child Hit With Default Judgment

CMKM shareholders picketing the wrong offices in 2005

In Wall Street Versus America I describe how the naked shorting conspiracy theorists were clustering around a crappy little stock called CMKM Diamonds. I was struck how some CMKM shareholders stuck loyally with management, despite constant SEC actions that showed fairly clearly that the company was a fraud.

Some CMKM partisans made fools of themselves in a mid-2005 demonstration in lower Manhattan, in front of the offices of the hated Depository Trust Clearing Corp. I wondered at the time why they weren't demonstrating at CMKM's offices--if they could find them.

Well, today the Las Vegas Review-Journal reports that a last nail has been driven into the CMKM coffin, with a $55 million default judgment against four defendants in an SEC action. The article is here.

The newspaper's summary of CMKM's sordid history is fairly cogent:

The scheme started when [John] Edwards did a reverse merger between his public company, CMKM, and several private Canadian companies controlled by Urban Casavant, according to the order.

Casavant was chief executive and chairman of CMKM while Edwards, using the alias Ian McIntyre, was director of post-term matters.

CMKM, whose "only activities were illegally issuing and promoting its own stock," increased its outstanding shares to 800 billion from 500 million, the court papers said. CMKM shares were traded over-the-counter for prices ranging from one-tenth to one-hundredth of a cent.

CMKM gave investors "phony maps and fabricated videos" of alleged gold and diamond mines, according to the order.

If indeed CMKM's "only activities were illegally issuing and promoting its own stock," it is odd indeed that no one involved in the company has been criminally prosecuted.

Meanwhile, I wonder whatever happened to all those deluded CMKM shareholders. Picket line, anyone?

© 2009 Gary Weiss. All rights reserved.

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