docs.google.com/document/d/1Fpkzael_in0dC2rkQd1y1Sk3HnUD4NY3/editHere is the article:REPORT OF INVESTIGATION
TGGATES & ASSOCIATES, LLC
Investigation by TGGates & Associates, LLC
To Uncover and Locate Assets Relative to The Fraudulent
Penny Stock Scheme Referred Herein as CMKM aka CMK Diamonds
Executive Summary
This case was pending well over 15 years without resolving the asset forfeiture conclusion. TGGates & Associates, LLC investigation (hereafter referred to as “TGA”) was hired in January 2014. TGA has the position to close our case upon receipt of information that the US Department of Justice closes its asset forfeiture case. This Executive Summary is being written as a brief and not closure to this matter. Information contained herein will reflect those two offshore leads are still outstanding.
The following information is an excerpt from the US Attorney for the District of Nevada. It will provide an overview of the violations and accused in the criminal scheme. Some of the information therein provided leads all of which were investigated. Unfortunately, none of the leads led to assets that were recoverable.
“Five persons, including three Las Vegan’s and a lawyer licensed to practice in Nevada, have been arrested and charged with federal conspiracy and securities fraud crimes for issuing and selling hundreds of billions of shares of unregistered stock, announced Greg Brower, United States Attorney for the District of Nevada.
Helen Bagley, 62; Ginger Gutierrez, 37; and James Kinney, 39, all of Las Vegas; and Brian Dvorak, 54, of Boulder City, Colorado, were arrested on September 16 and September 17 in their respective cities of residence. Another defendant was arrested in England earlier this month and the U.S. Department of Justice has requested his extradition. A sixth defendant remains at large. Defendants Bagley, Gutierrez, and Kinney made initial appearances on Thursday, September 17, 2009, before U.S. Magistrate Judge George W. Foley, Jr. and were released pending trial. Defendant Dvorak appeared on September 17, 2009, before a U.S. Magistrate Judge in Denver, Colorado, and was released pending trial.
The defendants are charged in a Superseding Indictment, which was returned by the Federal Grand Jury in Las Vegas on May 27, 2009, but remained sealed until Thursday, September 17, 2009. All of the defendants are charged with one count of Conspiracy to Sell Unregistered Securities, to Make False Statements to the Security and Exchange Commission (SEC), to Desist From Filing Periodic Reports, and to Commit Securities Fraud; two counts of Securities Fraud; and one count of Conspiracy to Commit Securities Fraud. Defendants Gutierrez, Kinney, and two others are also charged with Conspiracy to Commit Money Laundering.
The Superseding Indictment alleges that from about September 2001 to March 2009, the defendants conspired to sell unregistered stock and stock certificates of CMKM Diamonds, Inc.(CMKM) by using the mails, wire services, over the counter stock exchanges, and other means of interstate commerce. The defendants also are alleged to have used manipulative and deceptive devices to sell CMKM stock and stock certificates.
The scheme allegedly began in September 2001 when one of the conspirators gained control of a publicly traded corporate shell, then known as Cyber Mark. Incorporated in Delaware, Cyber Mark had at one time been a software company. However, by 2001 the business was defunct and had no appreciable assets or revenue. This corporate shell nonetheless remained registered with the U.S. Securities and Exchange Commission (“SEC”) and eligible to publicly trade its stock. In April 2002, Cyber Mark reorganized as a Nevada corporation and filed Articles of Conversion with the Secretary of State of Nevada absorbing the earlier Delaware corporation. At the time of its incorporation in Nevada, this corporate shell was authorized to issue up to five hundred million shares of common stock of which over three hundred million had been issued and were outstanding.
In November 2002, Cyber Mark entered into an agreement to purchase mining claims or interests held by five companies owned or controlled by Casavant and his family, ostensibly in exchange for two million dollars and approximately three billion shares of Cyber Mark restricted common stock notwithstanding that this corporate shell had no appreciable assets, revenue or value. Cyber Mark contemporaneously filed an Amendment to its Articles of Incorporation increasing its authorized common shares to ten billion four hundred ninety-seven million. Although Cyber Mark did not merge with Casavant’ s companies, Casavant became director, president and chief executive officer of Cyber Mark. On December 3, 2002, Cyber Mark changed its corporate name to Casavant Mining Kimberlite International. In February 2004, the company took the name CMKM Diamonds, Inc.
As a publicly traded corporation, CMKM was required to file quarterly and annual reports with the SEC. These reporting requirements are intended to provide the investing public with current and accurate information to enable investors to make informed decisions. However, CMKM did not file quarterly reports between October 2002 and June 2005, nor did it file annual reports for calendar years 2002, 2003 and 2004. By evading statutory and regulatory reporting requirements in this manner, the conspirators concealed information regarding CMKM's assets, liabilities, operations, revenues, and shares from both government regulators and the investing public. Having effectively cast a cloak of secrecy over the corporation, the conspirators increased CMKM's authorized shares from ten billion four hundred ninety-seven million to an estimated eight hundred billion shares through a series of amendments to CMKM’s Articles of Incorporation between December 2002 and August 2004.
Bagley, doing business as 1st Global Stock Transfer LLC, thereafter, issued hundreds of billions of shares of CMKM stock to the conspirators’ nominees, alter-ego associates and straw-purchasers. Most of these shares of CMKM stock were not registered with the SEC and the share certificates should have borne restrictive legends declaring that the shares were unregistered and could not be sold to the public. However, as part of the conspiracy, Dvorak issued opinion letters falsely and fraudulently invoking invoke an exemption from the rules and regulations that restricted the sale of unregistered stock. Specifically, the conspirators invoked SEC Rule 144(k) by falsely representing that the nominees and straw-purchasers had purchased or earned billions of shares of CMKM stock more than two years earlier and that those shares had mistakenly not been issued at that time. In this manner, the conspirators fraudulently issued hundreds of billions of unregistered shares of CMKM stock without restrictive legends. Bagley issued sheaves of unliganded stock certificates representing hundreds of billions of shares of CMKM stock to nominees, alter-egos, associates and straw-purchasers.
Despite issuing approximately eight hundred billion (800,000,000,000) shares of stock, CMKM remained a hollow shell. Although purporting to be an international diamond exploration and mining company, CMKM did not conduct substantive mining operations and did not produce any diamonds. Although CMKM was not engaged in any productive mining activities or business of any kind (other than issuing its own stock), the conspirators created a market and stoked demand for CMKM stock. To create the appearance of an active and established market for CMKM stock, and to disguise the fact that they were the primary sellers of CMKM stock, the conspirators surreptitiously traded in CMKM stock through multiple nominees, alter-egos, associates and straw-purchasers. The volume of the trading activity generated by the conspirators sparked investor interest in CMKM. The conspirators spurred interest in CMKM's stock by sponsoring motor sports racing teams and Internet promotions. Further, in the void created by CMKM's failure to file periodic reports, the conspirators sowed misinformation regarding CMKM's activities and spurred speculation regarding the company’s prospects and value through false and misleading press releases and market manipulation.
Fueled by the fraudulent promotions and a seemingly endless supply of CMKM stock, the conspirators sold hundreds of billions of CMKM stock to the investing public. Although CMKM shares usually traded at less than a penny per share, the sub-penny price was offset by the astounding volume of shares traded. Indeed, records reflect that during the course of the fraudulent scheme approximately 40,000 investors purchased CMKM stock in market transactions and that trading volume frequently exceeded one billion shares—and sometimes two billion shares—per day. In March 2005, the SEC suspended CMKM's trading status, and in October 2005, the SEC ordered CMKM deregistered. The indictment alleges that before the scheme was brought to an end, the defendants realized more than sixty million dollars through the fraudulent sale of CMKM stock. Kinney, Gutierrez and two others are charged with conspiracy to launder the proceeds of the criminal scheme.
During a second superseding Indictment on this matter, the following were indicted by the Las Vegas US Attorney’s Office:
1. Jeffrey Turino
2. John Edwards
3. Urban Casavant
4. Nickolaj Vissokovsky
5. Melissa Spooner
6. Helen Bagley
7. Jeffrey Mitchell
8. Brian Dvorak
9. Ginger Gutierrez
10. James Kinney
Charges included: Conspiracy to Sell Unregistered Securities, and to commit Securities Fraud; Fraudulent Interstate Securities Transactions; Securities Fraud and Insider Trading; Securities Fraud; Conspiracy to Commit Securities Fraud; Conspiracy to Commit Money Laundering Conspiracy to Conduct or Participate in an Enterprise Engaged in a Pattern of Racketeering Activity, and Tax Evasion. Some of the indicted have since passed away. (Edwards; Casavant; and Bagley) TGA was retained in August 2013 to solely locate assets including but not limited to funds, corporate ownership with assets, or physical articles related to moneys/stock obtained through fraudulent means of which none were found. TGA did not close this case following exhaustion of funds from the initial retainer. TGA held out hopes of being of assistance to the thousands of victims in being able to find “something”.
TGA believes that John Edwards and Urban Casavant were the primary principles of the fraud. Both are decedents. TGA was unable to find items liable to forfeiture law were hidden or “in plain sight”. One such lead reflected Dvorak either arranged for the sale or had knowledge of the sale of a company from Edwards to Casavant. He said the money did not go into a company. Allegedly Casavant put the money into a separate company which he described as an “asset protection company” (holding company). Where the funds went from there is not known.
TGA has worked very closely with Mr. Steve Walker, responsible for the retainer throughout the period of investigation. Donations were collected from certain victims of the CMKM fraudulent stock scheme. These funds were exhausted within the first 4 months of the investigation and no additional funds were received by TGA following the initial retainer. However, from the exhaustion of the retainer to present, more than 340 investigative hours have been conducted “pro bono” in the hopes of finding any assets for the victims. TGA diligently followed the federal prosecutive efforts regarding this scheme. Prosecution was delayed several times due to many reasons: change of lawyers; illness; witness’ being unavailable, etc. All the while TGA continued with its effort to find assets.
TGA reviewed and spoke with investigators/lawyers with the SEC who were familiar with their investigation of this matter. A multimillion-dollar judgement as well as fines were issued at the completion of their civil investigation. To date, neither fines nor any portion of the judgement have been recovered. It is not known if the FBI has had any success through their asset forfeiture case. During this investigation TGA learned of several “conspiracy” theories being circulated throughout the victim group regarding “trusts” “payouts” and “distributions” of funds. TGA determined that not one was credible. The SEC confirmed the strong possibility of a “Naked Short” but TGA was not hired to look into this matter. An investigative look at the Naked Short could amount to several hundred thousand dollars before it comes to a logical conclusion.
TGA and its partners reviewed the entire SEC report. One of the areas of interest by certain victims was exploring the “Naked Short” admission by the SEC. TGA only used the SEC report for background information and did not, nor will not, explore the “Naked Short” issues associated with CMKM as there are no funds to support this very lengthy investigation. One of the SEC Investigators was interviewed re their ability to collect fines and restitution from known perpetrators of the fraud. The SEC has not been able to collect either.
Numerous allegations were received of a trust being “secretly” held initially by Wells Fargo and then by the US Department of Justice. TGA confirmed in the early stages of the investigation that a trust was not held by the Wells Fargo bank and no information has been obtained to confirm a trust is being held by the US Government. Shell corporations were bought and sold for years using CMKM funds. Millions of dollars were laundered through shell corporation and the purchase of properties. Investigative resources believe the majority of the funds were squandered and used for personal gain all of which eventually were lost.
TGA conducted leads in several states, some of which are: New York (SEC) Texas; California; Nevada; Utah; Florida and Colorado. International leads included in Canada (RCMP); United Kingdom (New Scotland Yard), Switzerland; Lichtenstein, Bahamas, Belize, the Netherlands and the Grand Cayman Islands.
TGA was not able to determine the total number of purchase/sales of legal and dummy corporations or “shells” over the period of the fraud. In some cases, cash and CMKM stock was used to promote fraudulent schemes which also included money laundering.
Robert Maheu was alleged to be a perpetrator of money laundering and cash payouts from his association with CMKM. Robert Maheu was personally known to the President of TGA for several years prior to the CMKM Fraud. In his later years, he suffered from Alzheimer’s. No evidence was collected regarding the allegations by certain members of the victims group. Peter Maheu, Robert’s son, was reluctant to be interviewed but gave enough information to assume that there was no graft by his father. Peter Maheu’s assets were analyzed and found to be not out of the ordinary. A visit to his home reflected the same. Peter Maheu passed away during the investigation.
Multiple offshore and Canadian leads were followed up on. Only two were found possibly credible. One being in Switzerland and the other in the Grand Cayman Islands. Information was exchanged with members of law enforcement in the Grand Caymans. Results could not confirm nor deny any existence of accounts or banking by any of the coconspirators of the CMKM matter. Due to Swiss banking laws and lack of funds to pursue both credible offshore leads, the information was relayed to the FBI in Las Vegas, Nevada.
Alvin Hodges: Attorney at Law, passed away March 24,2021. TGA had received information on several occasions from anonymous sources that Mr. Hodges advised he was aware of trusts holding assets for CMKM victims. One of which was held at a San Francisco Wells Fargo Bank TGA investigation revealed that $200,000 was laundered through a Wells Fargo bank in San Francisco and “lost” at a Las Vegas Casino. Mr. Hodges continually advised significant cash assets would be disseminated in due time which to date has not occurred. During January 2010 Hodges filed a lawsuit in Federal Court alleging the government had “created a trust as part of a settlement between the United States Government and certain entities engaged the illegal naked short selling of CMKM stock. Prior to any written discovery, the action was dismissed pursuant to Federal Rules of Civil Procedure. Hodges had “failed to contain sufficient factual allegations to plausibly suggest that a CMKM trust exists.” TGA was unable to confirm any allegation about a trust being formed by the Government, overtly or covertly. Again, the SEC advised that no funds were available to establish a trust. Hodges continued his efforts through an appeal with the 9th Circuit which again did not produce a trust of any kind. He continued to assure CMKM victims that “a payout of the alleged trust funds is rapidly approaching and that the whole matter will be settled very soon”. “On August 15, 2010 Hodges sent an email to CMKM shareholders that “we are literally on the threshold of a payout without providing any evidence about the where abouts of the trust. On November 22, 2010, Hodges promises that “we are finally in the endgame” without divulging why the parties are nearing a settlement or what the substance of the settlement would be.” TGA has received source information that Hodges maintained this stance until his demise.
In 2016, the US Department of Justice issued a statement addressing rumors of a settlement fund saying it has no evidence of a fund to pay claims of defrauded CVMKM shareholders.” To TGA’s knowledge this statement still stands to this day.
In conclusion, TGA’s investigation did not find evidence of remaining assets related to the more than $60 Million CMKM Securities Stock Fraud Scheme. However, two outstanding offshore leads remain, both of which were turned over to the FBI. Therefore, this case remains open until such time as the Federal Government notifies all victims of a logical conclusion.
RESPECTIVELY SUBMITTED ON: August 6, 2021
THOMAS G. GATES
PRESIDENT
TGGATES & ASSOCIATES, LLC
Land O Lakes, FL 34638
Email: tgga86@gmail.com
Tel: 813-948-9630
Fax: 813-949-9571
