The thousands of investors who bought penny stock in CMKM Diamonds got some good news when a Clark County district judge issued a $33.7 million judgment against a key defendant.
District Judge Mark Denton on July 1 entered a default judgment against the alleged mastermind of the scheme, John Edwards, 65, no relation to the reporter of this story.
CMKM Diamonds, which has a new chief executive officer and directors, took the action against Edwards. The company now can seek and seize real estate, common stock and other assets belonging to the defendant. The lawsuit remains pending against Henderson resident Dave Desormeau, former treasurer of CMKM, and others.
CEO Urban Casavant, 51, founded and operated the Las Vegas company. CMKM Diamonds issued statements claiming to have diamond and mineral claims on thousands of acres in the Saskatchewan province of Canada. The company promoted itself through ads on billboards and race cars at the Las Vegas Motor Speedway.
The lawsuit accuses Edwards of conspiring with officers and insiders to dilute the shares of CMKM and reap profits at the expense of shareholders in the company. About 700 billion shares in CMKM were issued between January 2003 and August 2004, according to the lawsuit.
Edwards set up 32 trust accounts that benefited from the issuance of 250 billion shares valued at $53 million split between 500 transactions, according to the lawsuit.
Edwards transacted business through NevWest Securities, a Las Vegas firm that has since closed. The Financial Industry Regulatory Authority in 2006 cited NevWest based on allegations that the firm violated anti-money laundering rules in transactions for Edwards. The authority censured the firm and fined it $100,000.
The Securities and Exchange Commission in April filed a lawsuit accusing CMKM, Casavant, Edwards and others of a “massive and complex scheme” to sell stock in the alleged gold and diamond mining company.
The defendants are accused of making at least $64.2 million in profit, “much of which was paid to Casavant to support his extravagant lifestyle.”
The lawsuit seeks a permanent injunction against securities law violations by the defendants and disgorgement of “ill-gotten gains.”
CMKM Diamonds, now led by new CEO and Chairman Kevin West of Tyler, Texas, also is pursuing a separate lawsuit in district court against Casavant and others, said plaintiffs attorney David Koch of Henderson.
Edwards didn’t participate in the lawsuit against him, and plaintiffs have been unable to locate Casavant. “We think Casavant is hiding out and laying low,” as Edwards did, Koch said. But Koch hopes the plaintiffs will be allowed to serve Casavant with notice of the lawsuit through an advertisement in a newspaper.
Contact reporter John G. Edwards at email@example.com or 702-383-0420.