A company that claimed to be in the diamond and gold mining business has risen from the ashes of a court injunction against securities fraud.
CMKM Diamonds cheated 40,000 investors, many of them NASCAR fans, out of $64 million a few years ago, according to the Securities and Exchange Commission.
The commission won an injunction against its operators in 2009, but the federal agency now says that millions of CMKM shares were being traded again as recently as last week through an Internet chat room.
CMKM had no legitimate operations but sold 622 billion shares of stock a few years ago, according to the commission. Fans of NASCAR races were some of the biggest investors in CMKM, and many of them were furious to learn they had bought worthless shares.
U.S. District Judge Larry Hicks in June 2009 awarded the SEC a $55 million judgment in the CMKM Diamond stock fraud case and issued an injunction against four individuals violating similar securities laws in the future.
Hicks explained the scheme: "This involved writing false opinion letters (about the stock), issuing false press releases, populating Internet message boards with false information and operating a promotional motorbike, truck and 'funny car' racing team, which traveled throughout the country promoting the CMKM brand. In reality, the company financed gambling debts, personal real estate investments, lavish lifestyles ... " the judge said.
A 37-page indictment was unsealed by federal court in September 2009, and 10 defendants await criminal trial.
The defendants were charged with multiple counts, including securities fraud, conspiracy to commit money laundering and conspiracy to participate in racketeering.
CMKM Chief Executive Urban Casavant, one of the 10 defendants, is a fugitive, according to the FBI. The criminal case remains pending.
The commission revoked the registration of CMKM shares in October 2005.
In January 2009, the SEC sued Marc Glisson, an unlicensed broker, claiming he continued the scam by selling billions of shares of CMKM stock through Internet chat rooms.
Glisson wasn't a defendant in the criminal case or previous SEC lawsuit. He was accused of hundreds of purchase and sales transactions with residents of the United States and Canada initially between 2005 and 2007.
In court papers, the SEC alleged that documents show that Glisson, a former Las Vegas resident who lives in Florida, sold unregistered CMKM shares through an Internet chat room as recently as Jan. 3. Glisson is a former General Motors assembly worker and Wisconsin restaurant owner, but he was living in Las Vegas in 2009 when the SEC sued him.
Glisson, using the screen name Deli Dog or Deli, offered to sell stock to participants in a chat room, according to the lawsuit filed in January 2009.
After the commission contacted Glisson in 2006, the defendant promised to stop trading shares of CMKM but then resumed buying and selling the stock, according to the SEC.
The SEC accused him of unregistered sale of securities and failure to register as a broker-dealer.
Glisson filed a statement in late 2009, saying he only bought and sold CMKM stock for his own investment purposes.
He said he tried to help people who wanted to buy and sell shares. Also, Glisson said he gave 678 million shares to friends and family, not counting 256 million shares he gave to his wife. The defendant said the SEC never told him that he was violating federal law and said no one who bought CMKM shares from him asked for a refund.
In court papers, however, the SEC said Glisson received $4.2 million in "ill-gotten gains" from stock trading.
U.S. District Judge Lloyd George ruled in September that the federal agency failed to provide enough evidence for a summary judgment against Glisson, but the judge later authorized the SEC to resume discovery.
The agency also served a subpoena on Glisson's wife, Thidarat Tungwongsathong, for testimony and documents.
Glisson's wife was scheduled for surgery on Dec. 6, and Robert Bretz, the couple's attorney, said the depositions must be delayed, according to the SEC. Bretz said neither Glisson nor his wife would be able to attend a deposition for weeks, the federal agency said, but the deadline for completing discovery is Jan. 26.
The SEC hoped to start deposing Glisson and his wife Monday, but it's not clear whether the depositions began, because attorneys involved in the lawsuit couldn't be reached for comment.
Contact reporter John G. Edwards at firstname.lastname@example.org or 702-383-0420.