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

(Part One is posted at http://www.investrendweblogs.net/faulkingtruth/2009/09/11/the-goldman-gang-rides-again-part-one/)

The civil charges filed by the SEC against Goldman Sachs (NYSE: GS) last Friday were a good start, but it was only a first step. There should be criminal charges as well, with those responsible from Goldman, Paulson and Co., and the ratings firms who gave the rotten mortgages a AAA rating being led away in handcuffs.

I’d like to begin this article with a disclaimer: In every walk of life, there are good people. People who just want to work hard, do the right thing, and maybe make a decent living and squeeze a little happiness out of life while they’re at it. Some of those people even work on Wall Street, and to them, I apologize in advance for using broad brushstrokes in this commentary. But here goes…

For the past six years, I’ve been condemning the culture of greed on Wall Street, and along with a handful of other unlikely advocates, have been calling for a complete overhaul of our financial system. The complete collapse of our economy didn’t wake up those on Capitol Hill, who instead bailed out the very institutions who destroyed our country, and by extension the entire world, in the first place. [entire post]

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

(Part Two is posted at http://www.investrendweblogs.net/faulkingtruth/2010/03/16/the-naked-truth-a-blueprint-for-corruption-part-two/)

Epilogue:  The Naked Truth

“The primary mission of the U.S. Securities and Exchange Commission (SEC) is to protect investors and maintain the integrity of the securities market.”  –  SEC Mission Statement, 2003, www.sec.gov

“In 2005, Chairman Cox requested that the mission statement be changed to better reflect the current goals of the SEC.”  –  SEC Senior Counsel Chris Wilson

“The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.”  –  SEC Mission Statement, December 23, 2005, www.sec.gov

Unfortunately, the story of CMKM Diamonds, like most stories in real life, doesn’t end up as a package held together by a ribbon tied neatly in a bow. For many Americans, there is no pot of gold (or, in this case, wheelbarrow full of diamonds) at the end of the investing rainbow. As of November 30, 2007, not a single indictment has been issued against those who robbed over 50,000 shareholders…correction; make that “50,000 people”…of their hard earned money, and more importantly, their belief in the American Dream. Tens of thousands of lives have been changed, for better or worse. As Proboards70 moderator Kranker put it, “Shareholders quit their jobs, ran up their credit cards, got divorced, and even died while all the rumors were circulated that we would be rich tomorrow at 9:27am, everyday… No amount of money in the world can bring back what they lost along the way.”

Are the thousands of companies that dot the landscape of the penny stock market legitimate enterprises trying to realize their own version of the American Dream? Or are they part of the scam, set up from the start to bleed shareholders dry? What about the thousands that have already been destroyed? [entire post]

– 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. [entire post]

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

Chapter 39 – A Blueprint for Corruption

“You have to kill the company to hide the crime.”– Bill Frizzell

This story is about CMKX, but it could just as easily be about any of hundreds, or even thousands of penny stock companies. Shareholders invest their hard-earned money only to watch helplessly as potential turns into disaster, and dreams of wealth and riches become nothing more than so many empty promises. This ongoing scheme has been growing unchecked for decades.

It is a complex and well-oiled machine where every component from the paid shills on the message boards to the highest levels of Wall Street represent an important cog in the scheme. None of this is by accident. Every entity and person involved plays a role in the orchestrated scheme to defraud America. Those who are not involved in the actual act of defrauding the middle class are either helping to facilitate the robbery, or destroying the evidence after the fact.

This conspiracy has no clear beginning, and up to now, no ending; it is both carefully planned and self-perpetuating. This example revolves around CMKM Diamonds simply because it is the largest single fraud ever perpetrated in the world of penny stocks. It is the central flashpoint where 50,000 shareholders were unwittingly led into the epicenter of corruption. CMKX was indeed the Perfect Storm. It was a feeding frenzy of excitement evolving into obsession, hopes lapsing into despair, and dreams turning into nightmares. 

It’s been said that a person can rob more money with a pen than with a gun. But with the advent of electronic trading, stock message boards, and spam emails, it is the click of a mouse that is the most deadly weapon of all. The details might differ from one scam to another, but the basic strategy is always the same. Stock fraud is a carefully constructed step-by-step strategy designed to rob shareholders, destroy the evidence, and cover the robbers’ trails: [entire post]

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

There will be a lot written and said about Houston attorney John O’Quinn over the next few days, as family, friends, and colleagues eulogize the famed attorney who died Thursday in a car accident, along with a longtime employee of his law firm. He was famous for his multi-billion dollar victory against the tobacco industry in Texas, and achieved notoriety in his cases involving asbestos, silicone implants, and fen-phen.

But over the past few years, O’Quinn had become well known for what may have been the most challenging legal crusade of his life. When fellow Houston attorney Wes Christian brought O’Quinn a number of financial fraud cases involving naked short selling, both attorneys opened themselves up to personal attacks that neither of them probably expected. By taking on the biggest brokerage firms and hedge funds on Wall Street, O’Quinn and Christian were going after powerful money interests whose influence extends all the way to the halls of Congress. Along with a number of smaller companies that were victimized by financial fraud, O’Quinn also represented Overstock.com (NASDAQ: OSTK) in their lawsuits claiming that that company’s stock was manipulated by unscrupulous hedge funds. [entire post]

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

In a much anticipated and long overdue SEC sponsored debate last week about naked short selling, proxy voting issues, and other problems involving short selling, it was the head of a small Midwestern bank who provided the only real fireworks. The six panels, which discussed issues ranging from naked short selling, voting proxies, and public disclosure of short sales, were populated by the usual suspects, including executives from (who else) Goldman Sachs (NYSE: GS), Citigroup (NYSE: C), Credit Suisse (NYSE: CS), State Street Corp. (NYSE: STT), and Citadel Investment Group, L.L.C. But it was Dennis Nixon, Chairman of International Bancshares Corporation (NASDAQ: IBOC), who repeatedly raised issues about naked short selling and even questioned the fairness of what he considered to be manipulative legal short selling against his company.

The first day’s events at the SEC’s Securities Lending and Short Sale Roundtable were, to put it mildly, uneventful. With the exception of a representative of the New Orleans Municipal Employees’ Retirement Fund and Christianna Wood of the International Corporate Governance Network, nearly every participant seemed to be hand-picked by Wall Street. [entire post]

From “The Faulking Truth Blog”, by Mark Faulk

– I’m on a plane. Oklahoma City is below me, out one side, sunrise looms, all oranges, reds, and yellows. Out the other, it’s still dark, with lights dotted everywhere, and tiny cars driving lord knows where at 6:45 in the morning. Oklahoma City almost looks like a real city from up here.

If this had been one year ago, I would have written “I’m on a plane!!!” with multiple exclamation points to emphasize my excitement, the beginnings of a journey into the unknown. But now, some ten flights later, I guess I’m a little jaded, so it’s just…”I’m on a plane (yawn)”.

In the past year, I’ve worked on a major documentary about financial fraud, first as an interviewee, then as a writer, then as an associate producer/writer. Numerous flights back and forth from the almost city I live in to the hyper-surreal city of New York City, months living in a hotel while I pretended to be an experienced screen writer, only to discover that in the film industry, as in most walks of life, almost everyone is pretending to be qualified. Nonetheless, I made new friends in New York, and my middle-aged passion seems to have compensated for my lack of real qualifications. Such is life. [entire post]