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Post by JoeRockss on Feb 20, 2007 19:03:14 GMT -5
gluggo
Diamond Cutter Level 4
From what I am hearing is that this has not even been filed yet.
Hurd v CMKM Diamonds Inc., Urban Casavant, et al - 1
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Pro se
UNITED STATES DISTRICT COURT
DISTRICT OF NEVADA
G. Gene Hurd,
Plaintiff,
vs.
CMKM Diamonds, Inc., Urban Casavant, Robert
Maheu, David DeSormeau, Rupert Perrin, Carolyn
Casavant, Wesley Casavant, Cindy Casavant,
John Does 1 through 50, each a natural person,
and Roes 51 to 200, each a legal person,
Defendants.
)
Case No.:
COMPLAINT AND DEMAND
FOR JURY TRIAL
Plaintiff’s Original Complaint
To the Honorable District Court Judge
Plaintiff, G. Gene Hurd, appearing pro se, files this Original Complaint against the above named
Defendants and for causes of action would respectfully show the Court as follows:
Jurisdiction and Venue
Hurd v CMKM Diamonds Inc., Urban Casavant, et al - 2
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1. This court has jurisdiction over the subject matter of these claims due to diversity of citizenship
pursuant to 28 USC 1322, Section 27 of the Securities and Exchange Act of 1934 (15 USC
§77aa), and 18 USC 1964. Defendants, directly or indirectly, have made use of the means and
instrumentalities of interstate commerce or of the mails in connection with the acts, transactions,
practices and courses of business alleged in this Complaint.
2. This Court has personal jurisdiction over Defendants Urban Casavant, Robert Maheu, David
DeSormeau, Rupert Perrin, Carolyn Casavant, and perhaps others, by virtue of their presence in
this district.
3. This Court has supplemental jurisdiction over the claims in this action brought under Nevada law
by virtue of the doctrine of pendent jurisdiction pursuant to 28 USC 1367.
4. Venue is proper in this district pursuant to 28 USC 1391(b) because CMKM Diamonds. Inc., the
Defendants identified by name in Paragraph 2, and/or their agents reside in, or may be found in,
this district, and a substantial part of the events or omissions giving rise to the claims occurred in
this district.
Factual Allegations
5. Plaintiff is unaware of the true names of true names and capacities of the Defendants sued herein
as John Doe 1 through John Doe 50, and Roe 51 through Roe 200 inclusive, and therefore sues
such Doe and Roe Defendants by fictitious names. Plaintiff reserves the right to request leave to
amend this complaint to allege the true names and capacities as and when they have been
ascertained. Upon information and belief, each such fictitiously named Defendant is in some way
responsible for the events and occurrences referred to herein.
6. Plaintiff purchased more than two hundred million (200,000,000) shares of CMKM Diamonds, Inc.
common stock between June 4, 2004 and October 29, 2004.
7. On or about November 25, 2002 the Cyber Mark International Corporation, a company engaged
in the entertainment business with securities registered under §12G of the Securities and
Hurd v CMKM Diamonds Inc., Urban Casavant, et al - 3
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Exchange Act of 1934 (hereinafter the “1934 Act” - 15 USC 78l(g)), agreed to acquire certain
mineral claims owned by Urban Casavant (hereinafter “Casavant”) and his family.
8. Prior to his resignation contemporaneous with the acquisition of said claims, Cyber Mark’s sole
director appointed Casavant director, president, and chief executive officer of the corporation.
9. Urban Casavant appointed his wife, Carolyn Casavant, as Vice President of Claims, his son
Wesley Casavant to the position of Corporate Treasurer, and his daughter Cindy Casavant to the
position of Corporate Secretary (collectively the “Officers”).
10. On December 3, 2002, the corporate name was changed to “Casavant Mining Kimberlite
International, Inc.” and on February 5, 2004 the corporate name was changed to “CMKM
Diamonds, Inc.” (hereinafter “CMKM”).
11. On January 15, 2003 DeSormeau and Perrin became directors of CMKM, and on January 31,
2005 Maheu became a director of CMKM.
12. Disclosure of the resignation or termination of certain named officers and all directors is required
by §13 of the 1934 Act (15 USC 78m(l)), but no such disclosures have been filed as of the date of
this petition except with regard to Maheu’s resignation which was disclosed in the Form 8K filed
on October 24, 2005 with the Securities and Exchange Commission (hereinafter “SEC”).
13. Acquisition and divestiture of securities by officers, directors, and holders that beneficially control
five percent or more of a class are required by §13 of the 1934 Act (15 USC 78m §§ (d) and (g)),
but no such disclosures have been filed as of the date of this petition, with the exception of the
Form 3 filed by Maheu on March 8, 2005.
14. Cyber Mark was required to file periodic reports pursuant to §13 of the 1934 Act (15 USC
78m(a)), and it filed its last annual report on Form 10K on April 29, 2002 (amended on May 5,
2002) and its last quarterly report on Form 10Q on November 15, 2002 showing assets of $334 in
cash and liabilities of $1,672.
Hurd v CMKM Diamonds Inc., Urban Casavant, et al - 4
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15. After Casavant was appointed president of CMKM, no periodic reports were filed with the
Securities and Exchange Commission (hereinafter “SEC”) as required by §13 of the 1934 Act (15
USC 78m(a)).
16. On July 22, 2003 CMKM filed a Form 15-12G stating that the corporation was no longer required
to file periodic reports pursuant to Rule 12g-4(a)(1)(i) because it had fewer than 300
shareholders, and on February 17, 2005 CMKM amended Form 15-12G stating that at the time
the original form was filed it actually had 698 shareholders.
17. On the Form DEF 14C filed on February 3, 2003 CMKM stated that there were 7,241,653,404
shares issued and outstanding, with ten billion (10,000,000,000) authorized and that no
shareholder, except Casavant, controlled more than 4.9% of the issued and outstanding shares.
18. No SEC filings were made between February 3, 2003 and March 14, 2005 that disclosed that the
authorized share capital had been increased in three steps from ten billion shares
(10,000,000,000) to two hundred billion shares (200,000,000,000), to five hundred billion shares
(500,000,000,000), and finally to eight hundred billion shares (800,000,000,000).
19. Only on the Form 8K filed on March 14, 2005 did CMKM announce that its authorized shares had
been increased on March 1, 2004 to five hundred billion (500,000,000,000), and increased again
on August 18, 2004 to eight hundred billion (800,000,000,000), and the date of the increase from
ten billion (10,000,000,000) to two hundred billion (200,000,000,000) is not apparent from the
public filings.
20. On the Form DEF 14C filed on February 3, 2003 CMKM stated that it had established a drilling
budget of CDN$8 million (approximately US$ $5,334,000) despite a lack of financing to fund such
activity.
21. On March 4, 2005 CMKM announced in a press release that it had relocated its offices to 5375
Procyon Street, Suite 101, Las Vegas Nevada, while on that date the subject property was in fact
Hurd v CMKM Diamonds Inc., Urban Casavant, et al - 5
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occupied by a “hot rod” shop, and CMKM continued to use the Procyon Street address on its
filings with the SEC at least through it’s Form 8K filing on May 13, 2005.
22. On July 15, 2005 CMKM filed a Form 8K stating that it had engaged the accounting firm of
Beckstead & Watts LLP to audit the corporation’s books and records for the years ending
December 31, 2002 through 2005, and two weeks later on July 29, 2005 CMKM filed a second
Form 8K stating that it had terminated that engagement.
23. Beckstead & Watts LLP issued a letter dated July 28, 2005, which was published as an
attachment to amend the Form 8K dated July 29, 2005, stating, inter alia, that CMKM may have
advanced $4 million for the benefit of CMKXtreme, Inc., a drag racing enterprise owned and
controlled by Casavant, in a transaction not approved by the board of directors, that CMKM may
have made loans to its officers and directors in violation of §402 the Sarbanes-Oxley Act (15 USC
78m(k)), that the books and records of CMKM were unauditable because they were incomplete,
and that the books and records that did exist were not properly maintained.
24. On March 3, 2005 the SEC suspended trading of CMKM securities and on March 16, 2005 the
Commission scheduled a hearing to determine if CMKM was required to comply with the periodic
reporting requirements of the 1934 Act (15 USC 78m(a)), but had failed to do so.
25. On May 10, 2005 the SEC held such a hearing in Los Angeles before the Honorable Brenda
Murray, Chief Administrative Law Judge.
26. Judge Murray’s ruling contained findings of fact and law, including but not limited to, a finding that
that CMKM had neither an independent auditor nor financial statements to be audited, that the
draft ledger for 2003 and 2004 reflected no business operations, that management “deprived
shareholders and investors of material information in official filings, but promoted the
company to investors through informal new releases and public statements that contained
false information.”, that CMKM filed a false Form 15 and that Casavant knew or was reckless in
not knowing that the original Form 15 was false, that the company violated Section 13(a) of the
Hurd v CMKM Diamonds Inc., Urban Casavant, et al - 6
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1934 Act (15 USC 78m(a)) by failing to file periodic reports when required to do so, and that
CMKM had used, and continued to use, a false business address.
27. As a sanction for the violations, Judge Murray ordered that in the public interest the registration of
CMKM be revoked, and on October 28, 2005 that decision became final.
28. Casavant when sworn at the hearing and asked a long series of questions by the SEC asserted
his right under the Fifth Amendment and declined to answer every question asked with the
exception of his name and the spelling thereof.
29. Maheu, when sworn at the hearing, acknowledged that he was a director of CMKM and that he
was paid forty thousand dollars ($40,000) per month, but that he was unaware of any director
other than Casavant.
30. Maheu testified that he “knew there were problems” when he joined the board, that he later
became aware of the SEC investigation, that he was unaware that the accountants were having
trouble requested financial information, he stated that to his knowledge CMKM did not have any
office, and he stated that he had been told by Casavant that CMKM had employees in Canada
but did not know their names, how much they were paid, how many employees there were, or
what kind of work they did.
31. During the hearing Ms. Suzanne Herring of Opus Pointe, an accounting and bookkeeping service
hired by CMKM to reconstruct the financial records of the company, testified that 2.7 billion
shares, valued at $24,687,202, were issued for an “unknown contract”.
32. Financial statements presented at the SEC hearing as Exhibit 58 showed that more than
$1.4 million in deposits and $116 thousand in withdrawals were made to the bank accounts of
CMKM in 2003, and that more than $35 million was deposited and $6 million withdrawn from
three accounts in 2004, all at a time when CMKM had no business operations.
Hurd v CMKM Diamonds Inc., Urban Casavant, et al - 7
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33. Stock ledgers for the years ended December 31, 2003 and 2004 were entered into evidence as
Exhibits 13 and 14 at the SEC hearing, showing transactions by stock certificate number
including certificates owned by, or for entities controlled by, many of the Defendants.
34. On September 21, 2006 the Division of Enforcement of the National Association of Securities
Dealers (hereinafter “NASD”), a self-regulating organization under 15 USC 78s, instituted a
disciplinary complaint involving NevWest Securities Corporation (hereinafter “NevWest”) of Las
Vegas, Nevada and two NevWest employees.
35. The complaint alleges that NevWest engaged in over 500 transactions between March 2003 and
May 2005 for a single customer, identified as “JE”, and that this single customer sold more than
259 billion shares realizing proceeds of more than $53 million which, as of the dates of the
transactions listed in the NASD complaint, represented not less than 42% of the entire authorized
share capital of CMKM, and that in the month of July 2004 alone, “JE” sold approximately
32.9 billion shares out of the then authorized shares of 500 billion, or approximately 6.6% of the
total authorized, and that was one of four months where JE sold more than 5% of the entire then
authorized share capital.
36. On October 24, 2005 CMKM filed a Form 8K stating that it had exchanged certain mining claims
for shares in Entourage Mining Ltd., and it detailed certain defaults on agreements with other
mining companies including United Carina, 101047025 Saskatchewan Ltd., and Nevada Minerals
because “CMKM does not have the necessary capital” and because “CMKM has been
unable to raise the necessary capital”.
37. Every SEC filing made on behalf of registrant CMKM beginning with the Form 8K filed on
December 17, 2002 and continuing until the revocation of the registration on October 28, 2005
bears the signature of Casavant .
38. CMKM has called no annual shareholder meeting subsequent to its merger with Cyber Mark in
2002.
Hurd v CMKM Diamonds Inc., Urban Casavant, et al - 8
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First Cause of Action
(Violations of Section 10(b) of the Exchange Act and Rule 10b-5 Thereunder)
39. Plaintiff repeats and realleges the allegations set forth in paragraphs 1 thru 38 above as if fully set
forth herein.
40. Defendants, through their deliberate actions, and in particular their inactions in failing to file
reports required by the 1934 Act (15 USC 78m §§ (a) and (l)), concealed the absence of any
meaningful business operation, materially understated the true number of shares outstanding,
failed to report on changes in the composition of the board of directors, and withheld other
information causing Plaintiff to rely on outdated, incomplete, and materially false and misleading
information.
41. The falsity of certain of this information has been conclusively established by the findings of fact
set forth in the ruling by Judge Murray, at least with respect to CMKM and Casavant, and which
judgment is final and non-appealable.
42. Defendants have, by engaging in the conduct set forth above, directly or indirectly, by use of
means or instrumentalities of interstate commerce, or of the mails, or of a facility of a national
security exchange, with scienter: (a) employed devices, schemes or artifices to defraud; (b) made
untrue statements of material fact or omitted to state material facts necessary in order to make
the statements made, in light of the circumstances under which they were made, not misleading;
or (c) engaged in acts, practices or courses of business which operated or would operate as a
fraud or deceit upon other persons, in connection with the purchase or sale of securities, in
violation of 15 USC 78j.
Second Cause of Action
(Breach of Fiduciary Duty)
43. Plaintiff repeats and realleges the allegations set forth in paragraphs 1 thru 38 above as if fully set
forth herein.
Hurd v CMKM Diamonds Inc., Urban Casavant, et al - 9
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44. Maheu, DeSormeau and Perrin failed to supervise the Officers and to monitor the personal
transactions between the Officers and CMKM, thereby breaching their fundamental duty to act in
the best interests of shareholders.
45. In the alternative, if DeSormeau and Perrin resigned prior to this action, as suggested by Maheu’s
testimony referenced at Paragraph 29, and therefore might arguably lack responsibility for
supervising the Officers when one or more of the alleged activities occurred, then they breached
their obligation to insure that CMKM disclosed a material fact, to wit their resignation and the
reasons therefore, as required by §13 of the 1934 Act (15 USC 78m(l)).
46. The Officers failed to carry out the duties required of a Nevada Corporation and failed to maintain
the records required by 15 USC 78m(b)(2) and NRS 78.257, thereby causing the SEC to revoke
the registration of CMKM’s securities and causing Plaintiff to lose his investment.
Third Cause of Action
(Gross Negligence)
47. Plaintiff repeats and realleges the allegations set forth in paragraphs 1 thru 38 above as if fully set
forth herein.
48. Maheu testified on May 10, 2005 that he was unaware of the existence of any company office
despite the press release issued by CMKM on March 4, 2005 announcing establishment of an
office, thus demonstrating reckless disregard by allowing materially false and misleading
information to be disseminated.
49. Maheu acknowledged that he “knew of problems” before joining the board and that he
subsequently became aware of the SEC investigation, yet while in possession of such information
he made no independent effort to verify that management was cooperating with the accountants
and professionals engaged to correct the filing deficiencies, or to verify any material fact about
the company, and that not making independent inquiries about the company, its management
processes, and its affairs was, in light of the known circumstances, grossly negligent.
Hurd v CMKM Diamonds Inc., Urban Casavant, et al - 10
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Fourth Cause of Action
(Civil Conspiracy)
50. Plaintiff repeats and realleges the allegations set forth in paragraphs 1 thru 38 above as if fully set
forth herein.
51. Casavant, together with one or more John Does, agreed and performed overt acts in furtherance
of a conspiracy to convert CMKM funds to personal use through illegal loans or advances.
52. Casavant knew, or was reckless in not knowing, that the NevWest Securities customer identified
by the NASD complaint as “JE” (hereinafter John Doe 1) was, in fact, the beneficial owner of
significantly more than 5% of CMKM’s securities, and that Casavant conspired with John Doe 1 to
conceal the fact of this material ownership position, to conceal the eighty-fold (80X) increase in
the authorized shares, and to conceal the subsequent disposal of shares representing more than
42% of the entire authorized share capital of CMKM, all acts which are in violation of the reporting
requirements of §13 of the 1934 Act (15 USC 78m §§ (a), (d), (g), (h), and (l)).
Fifth Cause of Action
(Racketeering)
53. Plaintiff repeats and realleges the allegations set forth in paragraphs 1 thru 38 above as if fully set
forth herein.
54. Casavant did unlawfully, knowingly, and intentionally conduct and participate, directly and
indirectly, in the conduct, management, and operation of the affairs of CMKM which was engaged
in, and the activities of which affected, interstate and foreign commerce, through a pattern of
racketeering activity consisting of numerous acts of racketeering in Las Vegas and elsewhere,
indictable under 18 USC §§ 1341 (mail fraud) and 1343 (wire fraud), and 15 USC §78j (securities
fraud).
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Sixth Cause of Action
(Fraudulent Misrepresentation)
55. Plaintiff repeats and realleges the allegations set forth in paragraphs 1 thru 38 above as if fully set
forth herein.
56. Casavant knowingly or recklessly filed a false Form 15 thereby precipitating an SEC investigation
that ultimately let to revocation of CMKM’s registration and loss of Plaintiff’s investment.
Seventh Cause of Action
(Fraudulent Conveyance)
57. Plaintiff repeats and realleges the allegations set forth in paragraphs 1 thru 38 above as if fully set
forth herein.
58. Defendants caused or allowed CMKM funds to be converted to uses that did not benefit CMKM in
violation of 15 USC 78m(k) and NRS 78.300.
Eighth Cause of Action
(Waste of the Corporate Assets)
59. Plaintiff repeats and realleges the allegations set forth in paragraphs 1 thru 38 above as if fully set
forth herein.
60. Casavant and perhaps others, as detailed in Paragraphs 31 and 33, issued valuable corporate
securities without sufficient justification or a sufficient record thereof, thereby causing a waste of
the corporate assets.
61. CMKM loaned, advanced or transferred $4 million to CMKXtreme, an entity unrelated to the
diamond exploration business, at a time the company had no exploration or other business
activities whatsoever.
62. The general ledger referred to in Paragraph 32 showed more than $30 million on deposit in the
various bank accounts of CMKM at December 31, 2004, yet CMKM announced less than ten
months later that it had defaulted on it obligations to United Carina for want of $500,000.
Hurd v CMKM Diamonds Inc., Urban Casavant, et al - 12
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Ninth Cause of Action
(Mismanagement)
63. Plaintiff repeats and realleges the allegations set forth in paragraphs 1 thru 38 above as if fully set
forth herein.
64. The by-laws of the corporation at Article I specify that such a shareholder meeting shall take
place annually and at Article II specify that the term of each director shall expire on the day of the
succeeding annual shareholder meeting.
65. Casavant has served continuously as a director since his election in 2002 without calling a
shareholder meeting in breach of the by-laws and in violation of NRS 78.310-78.330.
66. Casavant as the sole officer of the corporation at most time relevant to this complaint failed to
keep the records of the corporation required by NRS 78.257.
Tenth Cause of Action
(Corporate Veil)
67. Plaintiff repeats and realleges the allegations set forth in paragraphs 1 thru 38 above as if fully set
forth herein.
68. Casavant through his actions, including the loans, advances, and transfers to himself and
CMKXtreme, maintenance of all records in his home, his appointment as the sole director, officer,
and employee at most times relevant to this action, and appointment of only immediate family
members to corporate officer positions, is for all intents and purposes the alter ego of CMKM and
is thus personally responsible for all debts of the corporation pursuant to NRS 78.747.
Eleventh Cause of Action
(Unjust Enrichment)
69. Plaintiff repeats and realleges the allegations set forth in paragraphs 1 thru 38 above as if fully set
forth herein.
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70. Casavant, from the loans, advances, and transfers to himself and CMKXtreme, has enriched
himself at the expense of CMKM in an amount of at least $4 million, and has thus damaged
CMKM and the value of Plaintiffs investment therein.
71. Casavant, as shown in the stock ledgers referenced in Paragraph 33, John Doe 1, as detailed in
the NASD complaint, and possibly others who are or were officers, directors, 5% shareholders, or
entities under their control, engaged in a series of transactions in furtherance of their conspiracy
and racketeering activities thus receiving proceeds from the sale of securities of at least
$53 million without disclosing such transactions as required by §13 of the 1934 Act (15 USC 78m
§§ (d) and (g)), and were therefore were unjustly enriched at the expense of purchasing
shareholders who acted in ignorance of this material fact.
Jury Demand
Pursuant to Federal Rule of Civil Procedure 38(b), Plaintiff hereby demands a trial by jury as to all issues.
Prayer for Relief
Wherefore the Plaintiff prays that this Court:
A. Issues findings of fact and conclusions of law that the Defendants committed the acts alleged,
B. Award of compensatory damages of an amount to be proven at trial, but in any event at least
$50,650,
C. Award of punitive damages of an amount to be proven at trial, but in any event at least
$101,300,
D. Order disgorgement of all gains by any Defendants who were unjustly enriched in an amount
to be proven at trial, but in any event at least $57,000,000,
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E. Award pre and post-judgment interest at the maximum rate permitted by law,
F. Appoint a receiver or trustee to manage the affairs of CMKM until such time as an annual
meeting of shareholders can be convened to elect new directors in accordance with the
by-laws of the corporation,
G. Order Defendants to pay reasonable attorney’s fees and costs,
H. Retain jurisdiction of this action in accordance with the principles of equity and the Federal
Rules of Civil Procedure in order to implement and carry out the terms of all orders and
decrees that may be entered, or to entertain any suitable application or motion for additional
relief within the jurisdiction of this Court, and
I. Grant other such equitable relief as this honorable Court deems just and proper under the
circumstances.
Dated this 19th day of February, 2007
G. Gene Hurd
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?? Good luck!!!! 
