SEC Response to My Question

[Franko10 ™]

From: Frank [mailto:[e-mail]]
Sent: Friday, May 02, 2008 4:16 AM
To: White, Molly

Subject: Hello Mollie

Hello, I am a shareholder of CMKM Diamonds and I was told you would be the person to contact in regards to the current issues surrounding the stock and the players involved,.. my question is,.. How many Shares in that stock should there be legally.

Thanks In Advance Frank Bruhm Nova Scotia,Canada


And then their response:


Sent:May 7, 2008 1:06:05 PM
Reply-to:SEC Help ([e-mail])


To: Bruhm, Frank ([e-mail])





Dear Frank Bruhm:

Thank you for your recent email to Molly White. Ms. White has asked that I respond to your inquiry. As you are probably aware, the SEC filed an action against CMKM Diamonds in April 2008. The complaint is available on our website at www.sec.gov/litigation/complaints/2008/comp20519.pdf.

Unfortunately, at this time, I can direct you only to the complaint and the allegations therein and not any specific evidence that the SEC staff may as a result of its investigation. If you are interested in monitoring this litigation, you can access court filings through the PACER system, see www.nvd.uscourts.gov/.

All SEC investigations are conducted privately. Facts are developed to the fullest extent possible through informal inquiry, interviewing witnesses, examining brokerage records, reviewing trading data, and other methods. Once the Commission issues a formal order of investigation, the Division's staff may compel witnesses by subpoena to testify and produce books, records, and other relevant documents. Following an investigation, SEC staff present their findings to the Commission for its review. The Commission can authorize the staff to file a case in federal court or bring an administrative action. In many cases, the Commission and the party charged decide to settle a matter without trial. The length of time it takes the staff to make an enforcement recommendation to the Commission will depend on the facts and circumstances of the individual case.

With respect to the recent complaint filed against CMKM Diamonds, I note that the staff is seeking various remedies, including disgorgement. We cannot predict whether or not the SEC will be successful in bringing this case and obtaining the remedies sought. In general, if the SEC is successful in a civil suit in which it is seeking disgorgement and collects the money that the Court orders to be paid, the staff may set up a disgorgement or investors claims fund. This requires that the Court approve both the plan and the recommended receiver. The plan should include information such as the claimants eligible to receive a portion of the amount collected. Investors in any SEC action can monitor whether or not a fund has been established by checkin our Investors Claims Fund page at www.sec.gov/divisions/enforce/claims.htm. You also can do a general search to see if any distribution plan has been posted for comment.

You may be interested in the SEC Rules that address disgorgement plans and Fair Funds, www.sec.gov/about/rulesprac2006.pdf. Fair Funds refer to the provision of Section 308(a) of the Sarbanes-Oxley Act of 2002 that provides that the Commission may file a motion in the district court to have civil penalties paid by a defendant "added to and become part of the disgorgement fund for the benefit of the victims of such violation." You should understand that the SEC staff member cannot predict whether they will make a motion under this provision in the event that it successfully obtains funds ordered disgorged.

Our response provides general information only and is not intended to be a substitute for, or relied on instead of, the actual federal securities laws themselves, or advice of an attorney. It should not be considered a complete discussion of all the possible issues arising under the federal securities or other laws.

Sincerely,Ann H. Sulzberg

Special Counsel U.S. Securities and Exchange Commission Office of Investor Education and Advocacy [phone]