– From “The Faulking Truth Blog“, by Mark Faulk –

(Part One is posted at http://www.investrendweblogs.net/faulkingtruth/2010/02/22/the-naked-truth-a-blueprint-for-corruption-part-one/)

Chapter 39 – A Blueprint for Corruption (continued)

The Pump:

The key to a successful pump is simple – raise the excitement level until emotion supplants rational thinking in the investment decision-making process. The perpetrators often use message boards, misleading or bogus press releases, and a rumor mill that is tightly controlled and fed behind the scenes to set up one glorious run on the stock. The price goes to astronomical heights, pulling in more buyers as it increases to several times its original value. The perpetrators, however, are selling into the pump, dumping shares both on the way up, and later, on the way back down as well. Often they can dump shares at a huge profit on the way up, then overwhelm the buying pressure by shorting the stock at or near the peak and all the way back down to below its original price. Then, they create another buying frenzy by buying back the shares that they shorted at a fraction of the cost.

In the case of CMKX, the pump was taken to new heights. It began with the usual posters planted to promote the company’s stock on other message boards, in particular PCBM. At the same time, Urban Casavant began to put out press releases that were filled with vague promises that were easily spun by the planted posters. It’s no coincidence that many of the most avid CMKX pumpers, including Wodan from the later infamous “Belgian connection,” had also pumped PCBM. They were the foot soldiers in this con, turned loose to spread rumors that always seemed to emanate from a secret source inside the company, a broker or banker, or someone else in the know. They appeared to possess inside information that gave them credibility on the boards and in the chatrooms.  Some, like Accadacca, ultimately achieved guru status, with hundreds of followers who obediently spread their predictions and words of wisdom even further. Unfortunately, this was all orchestrated as well. The foot soldiers were purposely fed their information by those at the top. For example, Urban would put out a press release saying that the company was looking at merging with another company…but didn’t name the company in question. He didn’t have to name names. That was the job of the foot soldiers, who quickly let it leak that the company in question was none other than…PCBM. It was a process that was repeated for as long as there were shareholders gullible enough to believe it.

CMKX and its shareholders alike coined hyperbolic catchphrases such as Urban’s legendary “Million Millionaires” pledge, and the subsequent “Stock Play of a Lifetime” and “Perfect Storm” catchphrases. The races were the ultimate promotional events, complete with photo ops featuring big names and celebrities like rock icon Sammy Hagar, who had no idea that he was being used to add glamour and luster to a scam. Nevada Secretary of State Dean Heller’s involvement with CMKXtreme, however minimal, sent a clear but misguided message to shareholders that the company had to be clean.

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