The biggest fraud that you haven't heard of

Fraud traditionally occurs behind closed doors. The larger the fraud, the more chances of its existence leaking out to the public. Only after the scheme has blown up does the news media report it.
Fraud has a short lifespan once it is subject to the harsh rays of sunlight. It is only a matter of time before the lies on which it is built come crumbling down.

Last week a massive case of fraud was exposed to the light, but because it hasn't imploded yet the mainstream news media isn't reporting it. In fact, the media seems to want to ignore the facts.
Why? Not because they question the facts, but simply because of the subject of the fraud - precious metals.

The normal reaction to the claim that precious metal prices are manipulated is usually an eye-roll and either a dismissive sigh or a guffaw. It's hard to even get someone to hear the facts because the subject is taboo. Just talking about it gets you lumped in with conspiracy theorists such as JFK's second gunman, the 9/11 conspiracy, and the people who claim the Federal Reserve works on behalf of Wall Street banks.
The bias against precious metals is beyond irrational. Even now, after a nine year bull market in gold prices, most people would never dream of owning any. They are still speculating on stocks, despite a 10-year bear market, or real estate, despite a four year bear market. What's wrong with this picture?

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It's strange that so many people think that manipulation of the precious metals market is a cuckoo idea when manipulation of oil prices is accepted by the mainstream. What's more, governments have been openly manipulating precious metal prices since the Roman Empire, and doing it behind closed doors just a few decades ago. Is it really so hard to believe that they are still doing it?

The Whistleblower

Andrew Maguire is a metals trader in London. He had nothing to gain by contacting the Commodity Futures Trading Commission on February 3rd to alert them about a price manipulation event in the silver market by JP Morgan that would happen in two days. He described the scenario of how it was going to play out.

"It is common knowledge here in London among the metals traders that it is JPM's intent to flush out and cover as many shorts as possible prior to any discussion in March about position limits."
- Andrew Maguire

On February 5, as the metals price smackdown happened exactly as he foretold, he emailed the CFTC and explained to them what was happening in real time. His emails can be seen here.

Six weeks later, when the CFTC began holding hearings to tighten regulations, Maguire became angry that he wasn't invited to testify. So he contacted Bill Murphy from the Gold Anti-Trust Action Committee and gave him his information so he could go public with it.

Coincidentally, the very next day after going public, Andrew Maguire and his wife were driving in London when a car sped out of a side street and struck their car. Both Maguire and his wife were injured, but not serious. The car then sped off, nearly running over pedestrians in an attempt to get away.
A few days later, the popular economic website King World News, obtained a half-hour interview with Maguire. Within a day of posting the interview, the web site was brought down with a Denial of Service attack.

If this sounds familiar, its because you've recently heard a story much like it. When whistleblower Harry Markopolos tried to expose Bernie Madoff's ponzi scheme to the SEC, the SEC refused to act. The CFTC also refused to act on Maguire's information. Markopolos ended up carrying a gun because he feared for his life.

How does this work?

On August 16, 2006, the London Metals Exchange (LME), the largest base metals exchange in the world, went into default.

"Those with short positions in nickel falling prompt on Friday 18 August 2006, and on subsequent prompt dates until further notice, who are unable to effect physical delivery an/or unable to borrow metal at a backwardation of no more than $300.00 per tonne per day, shall be able to defer delivery for a day at a penalty of $300.00 per tonne."
...
While Mr. Heale states that the action by the exchange is designed to prevent default, the action taken is nothing but a declaration of default, rendering his statement as absurd. Default is a simple word. Any time you unilaterally violate or negate the terms and conditions of any legal contract, that contract is in default. Period.

What does it mean when contracts on commodities can be unilaterally changed? And more importantly, how is it possible that there were more short positions than there was physical nickel to deliver?
It's called Naked Shorting, and basically means "selling something you don't own".

Obviously, naked shorting can be immensely profitable as long as you don't get caught. Since the SEC and CFTC have basically been asleep at the switch for years, the danger of getting caught is low.
However, that isn't the only way that naked shorting can blow up on you. When you naked short a commodity there better be enough physical inventory of that commodity to satisfy short-term demand. Otherwise someone who wants, say, a few tonnes of nickel might ask you to cover your naked shorts. That's what triggers a default.

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Which brings us back to the silver market.
When JP Morgan Chase took over Bear Stearns in 2008, it also inherited its huge short positions in the silver market. When those short contracts were about to mature in the summer of 2008, something funny happened.

As of July 1, 2008, two U.S. banks were short 6,199 contracts of COMEX silver (30,995,000 ounces). As of August 5, 2008, two U.S. banks were short 33,805 contracts of COMEX silver (169,025,000 ounces), an increase of more than five-fold. This is the largest such position by U.S. banks I can find in the data, ever. Between July 14 and August 15th, the price of COMEX silver declined from a peak high of $19.55 (basis September) to a low of $12.22 for a decline of 38%.

The crash of silver prices caused those Bear Stearns short positions to go from big loser to big winners for JP Morgan Chase. It was also such an obvious manipulation that even the sleepy CFTC took notice and started an investigation that has culminated with the recent March hearings. The hearings were supposed to be a non-event, but the revelations from it are leaking out despite an effective news media blackout.

Would you be surprised to learn that the cameras had a "technical malfunction" during Bill Murphy's statement, which magically righted itself immediately after he finished?
After the hearing, according to Douglas, Murphy was contacted by several major media outlets for more interviews. Within 24 hours, all the interviews were canceled. All of them.

Probably the most startling revelation during the hearings came from Jeffrey Christian, a former Goldman Sachs staffer, who told the regulators that the "LBMA trades over 100 times the amount of gold it actually has to back the trades."

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Christian is no gold bug. In fact he came there to testify against trade limits. Yet he also admitted to the bullion market banks being leveraged at 100-to-1. To put that into perspective, Bear Stearns was only leveraged at 30-to-1 shortly before it failed. Adrian Douglas put this into perspective at the hearings:

A. Douglas: We are talking about the futures market hedging the physical market. But if we look at the physical market, the LBMA, it trades 20 million ozs of gold per day on a net basis which is 22 billion dollars. That’s 5.4 Trillion dollars per year. That is half the size of the US economy. If you take the gross amount it is about one and a half times the US economy; that is not trading 100% backed metal; it’s trading on a fractional reserve basis. And you can tell that from the LBMA’s website because they trade in “unallocated” accounts. And if you look at their definition of an “unallocated account” they say that you are an “unsecured creditor”. Well, if it’s “unallocated” and you buy one hundred tonnes of gold even if you don’t have the serial numbers you should still have one hundred tonnes of gold, so how can you be an unsecured creditor? Well, that’s because its fractional reserve accounting, and you can’t trade that much gold, it doesn’t exist in the world. So the people who are hedging these positions on the LBMA, it’s essentially paper hedging paper. Bart Chilton uses the expression “Stop the Ponzimonium” and this is a Ponzi Scheme.
[...]
J. Christian: If you start putting position limits on bona fide hedgers for example, the bullion banks, and the previous fellow was talking about hedges of paper on paper and that is exactly right. Precious metals are financial assets like currencies, T-Bills and T-bonds they trade in the multiples of a hundred times the underlying physical...

This is a mind-blowing admission. Unlike financial assets like T-Bills, gold is a physical asset, yet it is being treated like a piece of paper by these markets. What's more, the leverage against these physical assets is nothing but paper on top of more paper at levels that no regulator would ever allow at a commercial bank.
It's very similar to the Madoff ponzi scheme.

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In case you think that Mr. Christian misspoke, he later said:

People say, and you heard it today, there is not that much physical metal out there, and there isn't. But in the "physical market," as the market uses that term, there is much more metal than that. There is a hundred times what there is.

I've got news for Mr. Christian - there can only be as much of something as there is, not 100 times of it.
What Christian is doing is saying that there is no difference between the physical metal and the the paper product it represents, no matter how much paper there is. Or to put it another way: "it has been persistently that way for decades" and "there are any number of mechanisms allowing for cash settlements."

A cash settlement is a default. Period. That's fine when you are talking about T-Bills, but not when you are talking about something tangible.

JP Morgan and HSBC control between 85% and 100% of the futures market for gold and silver. That's a monopoly by any definition, and it can smash down the price whenever it wants to as long as a large percentage of the traders don't take physical delivery.

If this sounds too much like conspiracy, consider that JP Morgan was forced to pay its customers millions of dollars in 2007 to settle a lawsuit where was charging 22,000 clients storage fees on silver bullion that didn't exist.
Now imagine that you are a large Asian financial client that is paying the LBMA banks to store your gold and silver. After hearing this news you decide to take delivery of it. Oops! The gold and silver don't exist.
You then have what amounts to a bank run. If the world assumes that there is X amount of a commodity in the world, when there is in fact only a 100th of that amount, what do you think will happen to the price of that commodity?

Now Goldman is warning about "violent price spikes" in commodities. Perhaps they realize that the ponzi scheme is coming to an end.

In Perspective

The net commercial short position on precious metals is beyond suspicious. At various times it has gone from 10% of worldwide silver production, to over 40% of world yearly production.
In comparison, short positions on NYMEX crude oil is generally about a day or two's worth of global production.

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So what is the purpose of the manipulation?
For starters, any price manipulation, whether it goes up or down, is designed to fleece the sheeple. People that put their money into a rigged market without insider knowledge constitute suckers. They are all "marks". It doesn't matter how or why.

As for precious metals, the rigging is only one way - down. Since the days of the Roman Emperors it has always been this way. The smackdown that Maguire warned about was designed to push down the prices. The massive naked shorting is further proof.

While this makes some sense for governments, why would banks be so keen on suppressing the prices of precious metals?
Just see Christian's testimony above. "Precious metals are financial assets like currencies..." That's how Wall Street perceives gold and silver.
Precious metals are a barometer for measuring the strength of financial assets like currencies. By artificially suppressing the price of gold and silver, it gives the false impression of strength for the financial assets that the banks sell to their clients. Sort of like AAA ratings on subprime mortgage-backed securities.

How about the multi-year bull market in gold and silver? Instead of proving that the price suppression is false, it proves that the ponzi scheme is breaking down. It is a fighting retreat. The equivalent of "extend and pretend".

There is no longer a question as to whether the price of gold and silver are being suppressed. Whistleblowers like Maguire, the data collected by GATA, and the testimony at the CFTC hearings has put that question to rest. The only questions now are how and when the ponzi scheme ends.

Meta: 

Comments

huh

Considering the entire CDS and 105 situation, I don't have a hard time believing any commodity is being manipulated but I sure hope it's not proved with a dDoS attack, that's gonna suck!

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And it keeps getting bigger

The Central Fund of Canada (CFC) is one of the few with some credibility in the world of PM's (unlike SLV (the ETF for silver), which is managed by none other than JP Morgan Chase).
However, it turns out that even CFC is holding just a bunch of paper.

Lenny Organ who was the person to enter the vault of ScotiaMocatta, says "What shocked me was how little gold and silver they actually had." Lenny describes exactly how much (or little as the case may be) silver was available - roughly 60,000 ounces. As for gold - 210 400 oz bars, 4,000 maples, 500 eagles, 10 kilo bars, 10 one kilogram pieces of gold nugget form, which Adrian Douglas calculates as being $100 million worth, which is just one tenth of what the Royal Mint of Canada sold in 2008, or over $1 billion worth of gold.

The game is over when people take physical delivery.

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I don't track this enough

but given your past track record, I'll assume all of this is true.

Folks, you might hit the "share" button, this is one of those posts that once the Gold bugs pick it up, it will probably go viral, but they need to see it.

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GATA

I saw something on ZeroHedge awhile ago about GATA asking for an investigation of all these short positions on gold that didn't exist.

These people really have no core morals. They are taught to lie and cheat and to maintain economic control over the lower classes. This type of revelation just reinforces my gut feeling along that line. The Bernanke Paulson 'sky is falling' tap dance at the White House in September 2008 was all about maintaining control and making money for the wealthy while at the same time bilking tax payers. I have no 'proof' of that but there sure is a lot of evidence pointing to my view point.

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Actually.. this is THE BIGGEST fraud you have never heard of...

This "BIGGEST FRAUD" has been a sting operation to clean up exactly what has been posted above, and so much more. What I am about to post doesn't even begin to cover this massive operation.

Below is a story, published by Tim Barello, that summarizes the lawsuit which is part of the sting. I have also included a youtube of a news broadcast of the story. Little more has been covered by the major media network.

Also included below is a letter from Al Hodges(attorney) to the SEC in 2008. Following that letter is a "litigation update" from Hodges and Associates in December of 2009.

Lastly, is a link to the lawsuit.

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"The S.E.C.'s 3.87 trillion dollar lawsuit"

From: TheAlyonaShow | April 05, 2010 | 3,768 views

Its the largest fraud case in world history. It is alledged that between June of 2004 and October of 2005, over 2 trillion dollars worth of fake CMKM Diamonds Inc. shares were sold to the public. The companys shareholders are now suing the S.E.C for 3.87 trillion dollars. Tim Barello from the Manhattan Headlines Examiner joins Alyona from New York to tell you more.

http://www.youtube.com/user/TheAlyonaShow#p/u/1/Xoglm_HcPzs

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CMKM Diamonds and the $3.87 trillion lawsuit you didn't hear about

March 30, 7:10PM Manhattan Headlines Examiner Tim Barello

As the United States continues to fracture in every way imaginable, most citizens are unable to keep up with the never-ending hodgepodge of government corruption. Each day, a new larger-than-life scandal emerges, and in the short mind span of news media, there is always a bigger and better story to chase.

Right now, the hot button issue for mainstream news outlets is healthcare reform, and its myriad implications for our society; this doubtlessly ensures the aforementioned media will continue to overlook unprecedented accusations brought forth in a recent $3.87 trillion lawsuit against U.S. Securities and Exchange Commission Chairman Mary L. Shapiro, as well as several other current and former SEC commissioners, among others.

This Bivens action suit represents the largest fraud case in world history, and was filed in the U.S. District Court, Central District of California, on January 8th by Pasadena attorney Al Hodges; in his complaint, made on behalf of CMKM Diamonds shareholders, Hodges alleges that:

[Complaint paragraph 31] During the period of June 1, 2004 through October 28, 2005 a total of 2.25 Trillion “phantom” shares of CMKM Diamonds Inc, was sold into the public market through legitimate brokers, illegitimate brokers and dealers, market makers, hedge funds, ex-clearing transactions and private transactions. The sales of the majority of such shares were at all times known to the Securities and Exchange Commission, including Defendants herein.

[Complaint paragraph 32] At some date prior to June 1, 2004 the Securities and Exchange Commission in concert with the Department of Justice of the United States, together combined with Robert A. Maheu and others to utilize CMKM Diamonds, Inc. for the purpose of trapping a number of widely disbursed entities and persons who were believed to be engaged in naked short selling of CMKM Diamonds Inc. stock and cellar boxing the company.

The Securities and Exchange Commission and the Department of Justice, with assistance from the Department of Homeland Security, believed and developed evidence that said short sellers were utilizing their activities to illegally launder moneys, wrongfully export moneys, avoid payment of taxes, and to support foreign terrorist operations.

To fulfill the plan to criminally trap such wrongdoers, the Securities and Exchange Commission, with assistance from the Departments of Justice and Homeland Security:

(a) Assisted in and approved the retention of Roger Glenn, an ex-SEC trial attorney and drafter of Sarbanes-Oxley, to join CMKM Diamonds Inc. for the purpose of verifying claims value, increasing authorized shares of stock to 800,000,000,000, and supervising from the inside of the company;

(b) Encouraged the company to expand its promotional activities, assisted in the set up of the “racing activities” of the company, and underwrote a substantial portion of the cost of such activities;

(c) Consented to, facilitated, and supported the sale of certain company claims to several foreign corporations;

(d) Consented to, facilitated, and supported the conferences between Robert A. Maheu and his associates on the one hand, and the wrongdoing short sellers on the other, all for the purpose of settling the potential liability of said wrongdoers with consent of the U. S. Government and a representation of no criminal prosecution for such illegal sales;

(e) Consented to, facilitated, and supported the declaration of dividends payable by the company to each common shareholder of CMKM Diamonds, Inc.

(f) Consented to, facilitated, and supported the distribution of shares of CIM, a private company owned by Urban Casavant, as a stock dividend, including consent and approval of distribution of said shares to holders of more than 1.4 Trillion shares of CMKM Diamonds, Inc. common stock.

Based on these assertions, CMKM was used by the U.S. government as part of a covert sting operation – unbeknownst to shareholders – to apprehend criminals for their offenses. However, instead of prosecuting most of them, restitution deals were apparently cut:

[Complaint paragraph 34] During the period from March, 2004 through August, 2006, on behalf of CMKM Diamonds, Inc. Robert A. Maheu, with assistance from others, negotiated a settlement with the illegitimate brokers, dealers, market makers, hedge funds, and other persons and entities that had engaged in naked short selling of CMKM Diamonds Inc. stock and cellar boxing the company. In exchange for a U. S. Government promise of no prosecution for such sales, the wrongdoers each promised to pay negotiated amounts to a frozen trust for disbursal at a later time.

[Complaint paragraph 35] Plaintiffs herein are informed and believe, and based thereon allege, that other moneys have been collected for the benefit of the shareholders of CMKM Diamonds, Inc. from the Depository Trust & Clearing Corporation, from the United States Government, and from the sale of additional assets including consent to enter into joint venture agreements with other companies holding mineral claims in Saskatchewan, Canada. Plaintiffs herein are further informed and believe, and based thereon allege, that said moneys, collected for the benefit of shareholders have also been placed in a trust or are otherwise now held in trust by the Depository Trust & Clearing Corporation and the United States Treasury.

Therefore, the crux of this complaint – and the massive fraud allegedly committed by the SEC (and Department of Justice) – is as follows:

[Complaint paragraph 36] Plaintiffs herein are informed and believe, and based thereon allege, that at all times mentioned, the Securities and Exchange Commission reserved unto itself the sole and absolute discretion to determine when moneys collected pursuant to the scheme set forth above would and could be released for distribution.

[Complaint paragraph 37] Demand for release of said moneys has been repeatedly presented to the Securities and Exchange Commission without result. Agents and employees of the Securities and Exchange Commission and the Department of Justice have represented repeatedly that the release of moneys for distribution was imminent, and/or would occur within several weeks, and/or would occur within less than a month. Each of said representations have been made knowing them to be false, and at the specific direction of the named Defendants. These actions of withholding distribution of said moneys, without compensation and without due process of law, amount to a taking of the property of the individual Plaintiffs and of all similarly situated.

During the timeframe referenced above, CMKM was registered as a publicly traded diamond and gold mining company. By 2005, concrete evidence detailing fraud within the company emerged; in addition, it became publicly apparent that CMKM also sold, at the very least, hundreds of billions of unregistered shares – a practice often referred to as naked short selling – to third parties. Eventually, the SEC moved to delist CMKM stock, whose value never exceeded one penny per share, in accordance with Section 12(j) of the Securities and Exchange Act of 1934. After several administrative proceedings, CMKM stock was ultimately deregistered in October 2005.

In September 2006, Floyd Norris, chief financial correspondent of The New York Times and The International Herald Tribune, caught wind of the CMKM scandals, and began to report on some elements of the criminal fraud that ravaged CMKM’s estimated 40,000 shareholders. Norris has reported on more than one occasion that at least 259 billion shares of unregistered CMKM stock was sold; however, per the SEC’s 2008 action against CMKM, the agency itself acknowledges that as many as 622 billion shares of “purportedly unregistered stock” was sold by the company over a 20 month period.

So, how did Hodges initially determine that at least 2 trillion unregistered shares were sold?

[Complaint paragraph 25] A frequently asked question (FAQ) page was added to the web site [CMKMTaskForce.com] on the evening of November 4, 2005 and in response to a question about the degree of naked shorting of CMKM stock, the Task Force [consisting of Robert A. Maheu, Donald J. Stoecklein and Bill Frizzell] indicated that “Credible information indicates the number of naked short shares is potentially as high as 2 Trillion shares.”

‘QUITE A CASE’

Several weeks ago, I spoke with Al Hodges, a practicing attorney with four decades of experience, to find out more about this extraordinary case, and moreover, to determine exactly how he calculated his clients’ potential damages to be nearly $4 trillion – a figure many observers have openly scoffed at.

Almost immediately, I could not help but ask why the mainstream media has not fairly reported on this case; frankly, given the scope of accusations, one would assume that, at the very least, Floyd Norris and The New York Times would have some interest in thoroughly examining the merits of this action; instead, Norris has essentially brushed off Hodges' allegations as being baseless.

It’s not that Hodges and his associates haven’t tried to attract the media’s interest; in fact, on this side of the Atlantic, all the major dailies, including The Los Angeles Times, The New York Times, The Wall Street Journal and The Washington Post have all been informed of the suit. Their respective editorial staffs - with the exception of Floyd Norris - have utterly decided to ignore it.

In the United Kingdom, efforts have also been made to attract mainstream media interest. Veteran financial intelligence Editor and Publisher Christopher Story FRSA – an investigative specialist that focuses on covert government operations and scandals – has personally reached out to The Daily Telegraph’s International Business Editor Ambrose Evans-Pritchard, with whom he is acquainted, to notify him about Hodges’ case. To date, Pritchard has failed to respond to Mr. Story, who has authored a number of articles (1) – and other published commentary – in The Daily Telegraph over the course of his near 50-year-career.

Hodges noted that Story, publisher of International Currency Review, and several other serials, is “subscribed to by every intelligence operation in the world.”

If intelligence agencies are reading about CMKM, then why isn’t the mainstream press covering this case? Hodges prudently observed that “they’re not going to touch it.”

MAINSTREAM MEDIA WON’T COVER ISSUES TIED TO COVERT OPERATIONS? (EVIDENTLY NOT)

“They [the government] used the shareholders without their consent to perform this ‘sting operation’ for National Security interests, and it wouldn’t have worked the way it worked if they had disclosed it,” he continued.

“On the other hand, it isn’t right to bury a company and put them out of business for the purpose of trapping people who are using the company to cheat the government, to line their own pockets, and to fund their operations against the United States.”

As noted above in complaint paragraph 34, and per Hodges, a deal was eventually reached with the aforementioned criminals; they paid the government restitution for documented illegal actions, and in turn, were offered immunity from prosecution.

“Rob Maheu had all these people in a big room in Las Vegas, and made [an] offer to them,” he said.

“Every person, organization and representative in that room stepped up, and either transferred money while they were there, or agreed to transfer money upon some further schedule” to avoid indictment.

Hodges also said, “I have a witness who was there, who saw it, and part of the 2.25 trillion phantom shares is documented by that person’s observations of how many shares were represented in that room.”

HOW MUCH MONEY DID THE FEDS REALLY COLLECT FOR RESTITUTION?

“People are going to laugh and titter about the amount of money that is being claimed, but understand the context of the lawsuit,” he said, before concluding, “we are not asking the government to pay us $3.87 trillion, what we’re asking is for them to release the funds that have been collected for us.” Thus, the implication is that this sum also incorporates substantial punitive damages.

In the end, Hodges believes the U.S. government is going to settle the case before it actually moves to trial. On this possibility, he said, “I think its in the process of happening as we speak.”

Based on these explanations – and the recent scandals and assertions that have surfaced about the SEC – I believe the mainstream media is doing the public a great disservice by not properly examining Hodges’ CMKM case.

The same conclusion must also be drawn about Christopher Story’s reports on the criminality that is undermining international efforts to refund the U.S. dollar, which is dangerously close to losing its status as the world’s global reserve currency...but that’s touching on a whole other can of worms…or is it?

(1) In Paul Johnson’s article “Unions, Pensions, and Financial Responsibility: The British Experience” published in the Journal of Labor Research, Volume 2, Issue 2 (1981) pp. 292, 294, 295, 296, he highlights Christopher Story’s authoritative research, as published in The Daily Telegraph on 30 April, 31 August and 1 September 1976, as well as on 4 September 1978.

http://www.youtube.com/user/TheAlyonaShow#p/u/1/Xoglm_HcPzs

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The following is a letter from Hodges to the SEC:

March 27, 2008

To The SEC Commission and Financial Industry at Large:

Naked shorts in the United States = "counterfeit shares." The case of CMKX represents the greatest "counterfeit shares" fraud in the UNITED STATES. CMKM DIAMONDS, INC. suffered THE LARGEST NAKED SHORT IN HISTORY. Trillions of stock shares traded and changed hands UNTIL CMKX revoked itself and had every stock holder pull physical stock certificates out of brokerages, and out of street name, to trap those whom had committed fraud. CMKX is also the LARGEST STOCK CERTIFICATE PULL IN THE HISTORY OF THE UNITED STATES"

Naked short selling is a case of short selling the shares without first arranging a borrow. The Securities Exchange Act of 1934 stipulates a settlement period up to three business days before a stock needs to be delivered, generally referred to as "T+3 delivery". The SECs public position as of the Spring of 2005 was that naked shorting did not exist. With enactment of Regulation SHO, the subsequent elimination of the SHO grandfather exemption, and now the promulgation of this rule, the SEC has finally admitted the error of its ways.

The Depository Trust and Clearing Corporation has also been criticized for its approach to naked short selling. DTCC has been sued with regard to its alleged participation in naked short selling, and the issue of DTCC's possible involvement has been taken up by Senator Robert Bennett and discussed by the NASAA and in articles -- disagreed with by DTCC -- in the Wall Street Journal and Euromoney Magazine. Robert J. Shapiro, former undersecretary of commerce for economic affairs, has, however, found that naked short selling has cost investors $100 billion and driven 1,000 companies into the ground.

Naked shorting is illegal because it allows manipulators a chance to force stock prices down without regard for normal stock supply/demand patterns. It is in fact, institutional fraud further, counterfeiting of securities is a crime of U.S. Constitutional magnitude.

This criminal conduct, once asserted by the SEC not to exist, has destroyed many, many companies, lives and opportunities. But now the word is out on naked shorting it must be stopped, and all whom conspired put in jail. This naked shorting fraud rule must be passed - NOW.

Sincerely,

A. Clifton Hodges
HODGES AND ASSOCIATES

http://www.sec.gov/comments/s7-08-08/s70808-151.htm

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The following was an update of the litigation by Al Hodges in December 2009:

CMKX Litigation Update

This office represents seven of CMKX’s larger shareholders who collectively hold more than 3.5 Billion shares. We have prepared a Bivens based class action lawsuit seeking release of all the funds that have been collected for the benefit of CMKX shareholders, or for damages in an amount in excess of $3,780,000,000,000. This suit alleges that the SEC commissioners have violated the Fifth Amendment Constitutional property rights of the shareholders by withholding consent to the release of such funds, for years, which amounts to a taking without due process of law. Some of the specific allegations made in the complaint include:

From March 17, 2005 through April 29, 2005 CMKM traded publicly, in the US under the trading symbol “CMKX,” a total of 551,756,751,833 shares, an average share volume of more than 17 billion shares per day, reaching a maximum on April 21, 2005 of 94,654,588,201 shares. These figures do not include foreign trades nor trades made on an ex-clearing basis such as those disclosed by Jefferies & Company , Inc. on May 6, 2005: between March 25, 2004 and September 21, 2004 Jefferies traded 111,780,681,204 shares of CMKX stock on an ex-clearing basis.

During the period of June 1, 2004 through October 28, 2005 a total of 2.25 Trillion “phantom” shares of CMKM Diamonds Inc, was sold into the public market through legitimate brokers, illegitimate brokers and dealers, market makers, hedge funds, ex-clearing transactions and private transactions. The sales of the majority of such shares were at all times known to the Securities and Exchange Commission, including Defendants herein.

At some date prior to June 1, 2004 the Securities and Exchange Commission in concert with the Department of Justice of the United States, together combined with Robert A. Maheu and others to utilize CMKM Diamonds, Inc. for the purpose of trapping a number of widely disbursed entities and persons who were believed to be engaged in naked short selling of CMKM Diamonds Inc. stock and cellar boxing the company. The Securities and Exchange Commission and the Department of Justice, with assistance from the Department of Homeland Security, believed and developed evidence that said short sellers were utilizing their activities to illegally launder moneys, wrongfully export moneys, avoid payment of taxes, and to support foreign terrorist operations. To fulfill the plan to criminally trap such wrongdoers, the Securities and Exchange Commission, with assistance from the Departments of Justice and Homeland Security:

a) Assisted in and approved the retention of Roger Glenn, an ex-SEC trial attorney and drafter of Sarbanes-Oxley, to join CMKM Diamonds Inc. for the purpose of verifying claims value, increasing authorized shares of stock to 800,000,000,000, and supervising from the inside of the company;

b) Encouraged the company to expand its promotional activities, assisted in the set up of the “racing activities” of the company, and underwrote a substantial portion of the cost of such activities;

c) Consented to, facilitated, and supported the sale of certain company claims to several foreign corporations;

d) Consented to, facilitated, and supported the conferences between Robert A. Maheu and his associate/assistant Royal Canadian Mounted Police Inspector William Majcher on the one hand, and the wrongdoing short sellers on the other, all for the purpose of settling the potential liability of said wrongdoers with consent of the U. S. Government and a representation of no criminal prosecution for such illegal sales;

e) Consented to, facilitated, and supported the declaration of dividends payable by the company to each common shareholder of CMKM Diamonds, Inc.

f) Consented to, facilitated, and supported the distribution of shares of CIM, a private company owned by Urban Casavant, as a stock dividend, including consent and approval of distribution of said shares to holders of more than 1.4 Trillion shares of CMKM Diamonds, Inc. common stock.

g) During the period from November, 2004 through April, 2005, CMKM Diamonds, Inc. negotiated the sale of some of its Saskatchewan, Canada mineral claims to three Chinese domiciled corporations with the advice and consent, inter alia, of the Securities and Exchange Commission. Proceeds from the consummation of such sales were placed into a frozen trust for disbursal at a later time.

During the period from March, 2004 through August, 2006, on behalf of CMKM Diamonds, Inc. Robert A.. Maheu, with assistance from Royal Canadian Mounted Police Inspector William Majcher, negotiated a settlement with the illegitimate brokers, dealers, market makers, hedge funds, and other persons and entities that had engaged in naked short selling of CMKM Diamonds Inc. stock and cellar boxing the company. In exchange for a U. S. Government promise of no prosecution for such sales, the wrongdoers each promised to pay negotiated amounts to a frozen trust for disbursal at a later time.

Plaintiffs herein are informed and believe, and based thereon allege, that other moneys have been collected for the benefit of the shareholders of CMKM Diamonds, Inc. from the Depository Trust & Clearing Corporation, from the United States Government, and from the sale of additional assets including consent to enter into joint venture agreements with other companies holding mineral claims in Saskatchewan, Canada. Plaintiffs herein are further informed and believe, and based thereon allege, that said moneys, collected for the benefit of shareholders have also been placed in a trust or are otherwise now held in trust by the Depository Trust & Clearing Corporation and the United States Treasury.

Plaintiffs herein are informed and believe, and based thereon allege, that at all times mentioned, the Securities and Exchange Commission reserved unto itself the sole and absolute discretion to determine when moneys collected pursuant to the scheme set forth above would and could be released for distribution.

Demand for release of said moneys has been repeatedly presented to the Securities and Exchange Commission without result. Agents and employees of the Securities and Exchange Commission and the Department of Justice have represented repeatedly that the release of moneys for distribution was imminent, and/or would occur within several weeks, and/or would occur within less than a month. Each of said representations have been made knowing them to be false, and at the specific direction of the named Defendants. These actions of withholding distribution of said moneys, without compensation and without due process of law, amount to a taking of the property of the individual Plaintiffs and of all similarly situated.

In an attempt to avoid protracted litigation we have seen to it that several attorneys at the SEC Office of General Counsel have a copy of the draft; we are further advised that the current SEC Commissioners are also aware [at least] of the pending filing. Our expectation was [and still partially remains] that the individually named Commissioners will not want to answer our lawsuit, thus leaving themselves open to the discovery process. The draft has been in SEC hands for approximately two weeks, and so far we have not received any response, meaningful or otherwise. They could well continue to stonewall, and force us to initiate the litigation. If nothing of significance occurs in the next two weeks the complaint will be filed on January 4, 2010.

HODGES AND ASSOCIATES

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The actual lawsuit filing:

http://viewer.zoho.com/docs/paKdda

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THIS STORY IS NOT OVER BY A LONG SHOT. Stayed tuned. There will be more.. so much more. The final curtain has not yet risen.

PJ

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Gold moving up

The price of gold has hit new all-time highs in Pounds and Euros.

In dollar terms the gold price is about 5pc below its record, but the weakness of the pound and the euro against the American currency means that for investors in Britain and the eurozone the precious metal has never been so valuable.
The price of an ounce of gold has reached record levels of £754 and €865 in recent trading, and the dollar price has reached a three-month high of $1,157.
In August last year the gold price in sterling terms was £562, so British gold investors have made a profit of 34pc, compared with a rise in the dollar price of 23pc over the same period.

Even in dollars, gold (and silver) has been moving up for over a week now.
Right around the time the story of the CFTC manipulation went viral on the web, the bottom in price was formed. There may be a connection, or not. But all these coincidences are hard to ignore.

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keep it up

I'm just not paying attention enough on precious metals commodities (although I am periodically looking at oil), but I can tell you as your friendly neighborhood site admin, these posts are getting picked up on.

And you probably saw the comment I let through on how the "biggest fraud" with a case probably larger than the entire silver market (assuredly larger than the U.S. yearly economy), which explains where the "CT" reaction comes from. A lot of noise in this topic, but that said, at least on EP is absolutely is not taboo, more one needs to make sure all of their sources, info is solid, simply to make sure they didn't get hoodwinked. Same as swimming through the la la feel good corporate public relations teams media headline manipulations.

But awhile ago, someone over-reacted on this and the topic itself is not taboo at all as least by my view.

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Poor Man's Gold

Gold sales are down a little, but silver sales are taking off.

The Mint sold more Silver Eagles in March and in the first quarter of the year than ever before. A total of 9,023,500 American Silver Eagles were purchased in Q110, the highest amount since the coin debuted in 1986...
Like gold, the U.S. Mint only manufactures Eagles from domestic production. And U.S. mine production for silver is about 40 million ounces. In other words, we just reached the point where virtually all U.S. silver production is going toward the manufacturing of Silver Eagles.
Yikes.
This is especially explosive when you consider that roughly 40% of all silver is used for industrial applications, 30% for jewelry, 20% for photography and other uses, and only 5% or so for coins and medals.

Of course we recover huge amounts of silver from scrap, and import even more. But like it says above, only 5% of silver production is supposed to go to coins.

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JP Morgan backstopped by the Fed?

That's what whistle-blower Andrew Maguire has just said.

"JPMorgan acts as an agent for the Federal Reserve; they act to halt the rise of gold and silver against the US dollar. JPMorgan is insulated from potential losses [on their short positions] by the Fed and/or the US taxpayer," Maguire said.

It's an interesting charge. Once again, the Fed is accused of being in the middle of massive fraud.

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I'm reading Hank Paulson's book

and it's just hilarious if it wasn't so tragic. I mean oh we must bail out AIG, Fannie/Freddie "for the American people" and frankly it should read "for Goldman Sachs" and my pals. Seriously, I've yet to find proof that the entire bail out was for the "American people" and it's like this guys world was the Zombie financial institutions so I guess to him it would seem like the end of the world if their ponzi scheme, gambling casino imploded....but the end of the world for the American people and the U.S. economy?

To this day I have never been convinced and believe me, I'm fact oriented, open minded and I've yet to see any reason that makes me say "OK" that has to happen...

the only thing was the guarantee of the money market funds.

Did you see the Sunday Morning Comics? Watch the first clip, it's really well done and Ron Paul Fans esp. will LOVE IT!

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