Why Did George Bush's Justice Department Pass on CMKM?
Reading through the CMKM Diamonds indictment, a rather obvious question arises: why did federal prosecutors in Nevada wait until now to make a case against the management of the company?
Gathering evidence for white collar crime prosecutions is an onerous process, but it looks suspiciously likely that George Bush's Justice Department just sat on its hands. It's not a coincidence, I think that this indictment, not to mention the renewed SEC investigation of Overstock.com, comes after the change in administration. It's certainly no secret that the old administration did not put much of a priority on prosecuting corporate crime, and that it was prone to pressure from "naked shorting" activists and their pals in Congress, such as Utah's Orrin Hatch and Robert Bennett.
The feds have also failed to prosecute the principals of Universal Express, another outright fraud whose management has been shrilly defended by a small but vocal core of "NSS" crackpots writing letters to Congress.
This comment letter to the SEC from last year shows how hard Mark Faulk, a leading NSS lobbyist and later "CEO" of CMKM, pushed to have the SEC to divert them from going after the crooks who raped CMKM shareholders.
See the latter portion of the letter, quoting Falk's account of a meeting with the SEC, and a strenuous effort to push the hapless SEC lawyer assigned to the case, Leslie Hakala, to waste her time chasing naked shorting phantoms. Note the outrage, and ignorance of the securities laws, greeting an SEC official's warning that the SEC would oppose a "cert pull" aimed at squeezing shorts and manipulating share prices.
Now Faulk is singing a different tune, and in a letter to President Obama posted on the CMKM website, he claims that "an FBI spokesperson said that they were weeks away from issuing indictments in September of 2006."
This is a good example of the gift from the heavens that the "naked shorting" campaign has been to stock crooks. No matter how foul the transgressor, from operators of pump-and-dump stock schemes like CMKM's Urban Casavant to Dick Fuld of Lehman Brothers and Alan Schwartz of Bear Stearns, "naked shorting" is now used as an all-purpose counterattack in the face of gross irresponsibility that practically toppled the financial system (Fuld and Schwartz), to more routine cases of cooking the books (Overstock.com's Patrick Byrne) to outright stealing, as happened at CMKM.
© 2009 Gary Weiss. All rights reserved.