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Case 2:09-cv-00104-LDG-GWF

Document 105

Filed 04/02/12

Page 1 of 44

JOHN B. BULGOZDY, Cal Bar No. 219897 E-mail: bulgozdyj@sec.gov

DAVID J. VAN HAVERMAAT, Cal. Bar No. 175761 E-mail: vanhavermaatd@sec.gov

Attorney for Plaintiff

Securities and Exchange Commission Rosalind R. Tyson, Regional Director

Michele Wein Layne, Associate Regional Director John W. Berry, Regional Trial Counsel

5670 Wilshire Boulevard, 11th Floor Los Angeles, California 90036

Telephone:

Facsimile:

(323) 965-3998 (323) 965-3908

UNITED STATES DISTRICT COURT

DISTRICT OF NEVADA

SECURITIES AND EXCHANGE COMMISSION,

Plaintiff,

vs.

MARCO GLISSON,

Defendant

Case No. 2:09-cv-00104-LDG-GWF

PLAINTIFF SECURITIES AND EXCHANGE COMMISSION’S TRIAL BRIEF

Date:

April 9, 2012

Time:

9:00 a.m.

Place:

Courtroom 6B (Hon. Lloyd D. George)

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TABLE OF CONTENTS

Page 2 of 44

 

Page

I. INTRODUCTION

1

II. STATEMENT OF EVIDENCE TO BE INTRODUCED AT TRIAL

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A. Glisson’s Involvement With CMKM Before The Stock

Was Deregistered (2003 To Late 2005)

3

B. CMKM’s Registration Was Revoked And Its Stock

Delisted

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C. After CMKM Stock Was Deregistered And Delisted,

Glisson Regularly Engaged In Transactions In CMKM Stock

With Buyers And Sellers He Found Through The Internet

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1. Glisson Developed Methods For Buying CMKM Stock

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2. Glisson’s Method For Selling Deregistered CMKM

Shares

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3. Letters Of Instruction To 1st Global Show The

Regularity Of Glisson’s Activity In Deregistered

CMKM Stock

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4. Bank Activity In Accounts Glisson Used For

CMKM-Related Transactions Show The Regularity Of His Activity

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5. Emails Produced By Glisson Provide Examples Of Glisson’s Solicitation Of Investors

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D. Glisson Repeatedly Claimed That He Stopped His Activities In CMKM Shares, But Resumed Buying And Selling

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1. In June 2006, Glisson’s Attorney Says Glisson Ceased His Activities, But Glisson Resumes In

 

September 2006

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2. Glisson Swears To This Court In November 2009

That He Has No Intention Of Selling CMKM, Then

Sells Billions Of Shares Beginning In Early 2010

14

 

E.

Several Computers Glisson Used For CMKM Activities

Were Lost Or Broken Before Documents Could Be Produced

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III.

LEGAL ARGUMENT

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A. Glisson Violated Section 15(a)(1) Of The Exchange Act

 

By Acting As An Unregistered Broker And Dealer

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1. Glisson Was A Dealer Of Unregistered CMKM

Shares

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2. Glisson Was A Broker Effecting Transactions In

Unregistered CMKM Shares

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3. Glisson Violated Section 15(a) Of The Exchange Act

By Failing To Register As A Broker Or Dealer

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B. Glisson Violated Section 5 Of The Securities Act By Offering To Purchase And Sell, And By Selling,

 

Deregistered CMKM Stock

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1. The Undisputed Evidence Establishes A Prima

Facie Violation Of Section 5 By Glisson

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2. Glisson Has The Burden Of Proving That He Is

Entitled To Any Claimed Exemptions From Section 5

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C. Glisson Cannot Avail Himself Of A Reliance Of Counsel

 

Defense

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Case 2:09-cv-00104-LDG-GWF

Document 105

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D. The Court Should Impose Appropriate Remedies, Including Injunctive Relief, Disgorgement, Prejudgment Interest

Thereon, A Third Tier Civil Penalty, And A Penny Stock Bar

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1. Injunctive Relief Is Necessary And Appropriate

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2. Glisson Should Be Ordered To Disgorge His Ill-Gotten Gains And Pay Prejudgment Interest

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3. The Court Should Impose A Third Tier Civil Penalty In The Amount Of $1.4 Million

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4. Glisson Should Be Barred From Participating In Any Offering Of Penny Stock

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TABLE OF AUTHORITIES

 

Page

 

CASES

Couldock & Bohan, Inc. v. Societe Generale Sec. Corp. 93 F. Supp. 2d 220 (D. Conn. 2000)

17, 18, 20

Eastside Church of Christ v. National Plan, Inc.

391

F.2d 357 (5th Cir. 1968)

17, 18, 22

Ernst & Ernst v. Hochfelder

425

U.S. 185 (1976)

16

Joseph McCulley

1972-73 Transfer Binder Fed. Sec. L. Rep. (CCH) ¶ 78,982 (Aug. 2, 1972)

22

Regional Properties, Inc. v. Financial and Real Estate Consulting Co.

678

F.2d 552 (5th Cir. 1982)

17

SEC v. Abellan

2009

U.S. Dist. Lexis 113450 (W.D. Wash. Dec. 7, 2009)

32

SEC v. Alliance Leasing Corp.

2000

WL 35612001 (S.D. Cal. Mar. 20, 2000)

16

SEC v. Calvo

378

F.3d 1211 (11th Cir. 2004)

29

SEC v. CMKM Diamonds, Inc.

2011

WL 3047476 (D. Nev. July 25, 2011)

25

SEC v. CMKM Diamonds, Inc.

635

F. Supp. 2d 1185 (D. Nev. 2009)

30

SEC v. Deyon

977

F. Supp. 510 (D. Me. 1997)

22

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Case 2:09-cv-00104-LDG-GWF

Document 105

SEC v. Earthly Mineral Solutions, Inc.

Filed 04/02/12

Page 6 of 44

2011

WL 1103349 (D. Nev. March 23, 2011)

21, 22

SEC v. Fehn

97

F.3d 1276 (9th Cir. 1996)

28

SEC v. First Pacific Bancorp

142

F.3d 1186 (9th Cir. 1998)

29

SEC v. Goldfield Deep Mines Company of Nevada

758

F.2d 459 (9th Cir. 1985)

27

SEC v. Hansen

1984

WL 2413 (S.D.N.Y. Apr. 6, 1984)

23

SEC v. Holschuh

694

F.2d 130 (7th Cir. 1982)

27

SEC v. Hughes Capital Corp.

917

F. Supp. 1080 (D.N.J. 1996), aff’d, 124 F.3d 449 (3d Cir. 1997)

29

SEC v. J.T. Wallenbrock & Assoc.

440

F.3d 1109 (9th Cir. 2006)

29

SEC v. Kenton Capital, Ltd.

69

F. Supp. 2d 1 (D.D.C. 1998)

21, 22

SEC v. Manor Nursing Ctrs., Inc.

458

F.2d 1082 (2d Cir. 1972)

30

SEC v. Murphy

626

F.2d 633 (9th Cir. 1980)

26, 28

SEC v. National Executive Planners, Ltd.

503

F. Supp. 1066 (M.D.N.C. 1980)

22

SEC v. Offill

2012

WL 246061 (N.D. Tex. Jan. 26, 2012)

16, 18, 19, 21

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Case 2:09-cv-00104-LDG-GWF

SEC v. Phan

Document 105

Filed 04/02/12

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500

F.3d 895 (9th Cir. 2007)

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SEC v. Platforms Wireless International Corp.

617

F.3d 1072 (9th Cir. 2010)

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SEC v. Radical Bunny, LLC

2011

WL 1458698 (D. Ariz. April 12, 2011)

16

SEC v. Ralston Purina Co.

346

U.S. 119 (1953)

26

SEC v. Ridenour

913

F.2d 515 (8th Cir. 1990)

18, 19

SEC v. Softpoint, Inc.

958

F. Supp 846 (S.D.N.Y. 1997), aff’d 159 F.3d 1348 (2d Cir. 1998)

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SEC v. U.S. Pension Trust Corp.

2010

WL 3894082 (S.D. Fla. Sept. 30, 2010)

21

United States v. Evangelista

122

F.3d 112 (2d Cir. 1997)

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Zubulake v. UBS Warburg LLC

229

F.R.D. 422 (S.D.N.Y. 2004)

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FEDERAL STATUTES

Securities Act of 1933

 

Section 2(a)(1) [15 U.S.C. § 77b(a)(1)]

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Section 4(1) [15 U.S.C. § 77d(1)]

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Section 5 [15 U.S.C. § 77e]

26, 27, 28

Section 5(a) [15 U.S.C. § 77e(a)]

1, 3, 25

Section 5(c) [15 U.S.C. § 77e(c)]

1, 3, 25

Section 20(b) [15 U.S.C. § 77t(b)]

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Section 20(d) [15 U.S.C. § 77t(d)]

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Section 20(d)(2)(C) [15 U.S.C. § 77t(d)(2)(C)]

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Securities Exchange Act of 1934

Section 3(a)(4)(A) [15 U.S.C. § 78c(a)(4)(A)]

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Section 3(a)(5)(A) [15 U.S.C. § 78c(a)(5)(A)]

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Section 3(a)(5)(B) [15 U.S.C. § 78c(a)(5)(B)]

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Section 3(a)(51) [15 U.S.C. § 78c(a)(51)]

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Section 15 [15 U.S.C. § 78o]

21

Section 15(a) [15 U.S.C. § 78o(a)]

1, 3, 16, 24, 27, 28

Section 15(a)(1) [15 U.S.C. § 78o(a)(1)]

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Case 2:09-cv-00104-LDG-GWF

Document 105

Section 21(d) [15 U.S.C. § 78u(d)(1)]

Section 21(d)(3) [15 U.S.C. § 78u(d)(3)]

Filed 04/02/12

Section 21(d)(3)(B)(iii) [15 U.S.C. § 78u(d)(3)(B)(iii)]

Section 21(d)(6) [15 U.S.C. § 78u(d)(6)]

Section 21(d)(6)(B) [15 U.S.C. § 78u(d)(6)(B)]

FEDERAL REGULATIONS

Rule 3a51-1(d) [17 C.F.R. § 240.3A51-1(d)]

OTHER AUTHORITIES

Page 9 of 44

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32

David A. Lipton, A Primer on Broker-Dealer Registration

36 Cath. U.L. Rev. 899 (1987)

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I.

INTRODUCTION

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Plaintiff Securities and Exchange Commission (“Commission” or “SEC”)

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respectfully submits this trial brief in advance of the April 9, 2012 trial of its

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claims against defendant Marco Glisson. The Commission has charged Glisson

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with failing to register as a broker or dealer, as required by Section 15(a) of the

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Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. § 78o(a), and with

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offering for sale and selling unregistered securities of CMKM Diamonds, Inc.

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(“CMKM”), in violation of Sections 5(a) and (c) of the Securities Act of 1933

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(“Securities Act”), 15 U.S.C. § 77e(a) & (c).

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Many of the relevant facts are either undisputed, or have previously been

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admitted to by Glisson during sworn testimony, which narrows the issues to be

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decided at trial. It is undisputed that the registration of CMKM’s stock was revoked

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in October 2005, and CMKM stock was delisted from trading. It is also undisputed

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that from December 2005 to May 2006, and from September 2006 to May 2007,

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Glisson bought and sold billions of shares of deregistered CMKM stock, in

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interstate commerce. In addition, it is undisputed that Glisson never registered with

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the Commission as a broker or a dealer, or associated with a broker or dealer.

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Given these undisputed facts, with respect to the Commission’s Section 15

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claim, the issue to be decided at trial is whether Glisson’s regular business of buying

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and selling CMKM stock after December 2005 made him a broker and/or a dealer

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such that he violated Section 15(a) of the Exchange Act. For the Section 5 claim, the

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undisputed facts establish the Commission’s prima facie case that Glisson violated

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Section 5 when he purchased and sold unregistered CMKM stock in interstate

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commerce. As a result, the issue to be decided at trial for this claim is whether

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Glisson can prove he is entitled to an exemption from the registration provisions of

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Section 5(a) and (c) of the Securities Act because he contends he was not a dealer.

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In addressing both of these issues, the preponderance of the evidence will

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readily demonstrate that Glisson was both a broker and a dealer. The evidence will

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show that Glisson engaged in the business of effecting transactions in securities for

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his own account, and for the accounts of others, and Glisson was buying and

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selling CMKM as part of a regular business. Glisson solicited investors to buy and

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sell CMKM stock by posting on the Internet and in chat rooms, negotiated his

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purchases with sellers, and paid for CMKM shares from bank accounts he used for

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CMKM transactions. When an investor expressed interest in buying CMKM

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stock, Glisson sent them his instructions for purchases, which included a price list,

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a fee for each certificate, a requirement of payment in advance, and a demand for

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personal information including social security numbers. Glisson profited on the

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spread between his purchase price and his sale price.

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Other evidence will also establish that Glisson had a regular business in

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CMKM shares. There are numerous letters of instruction that Glisson sent to

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CMKM’s transfer agent, to transfer billions of shares of CMKM from sellers to

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other third parties, to himself, or to his nominee. The regularity of Glisson’s

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business is also evidenced by bank records which confirm that Glisson was

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engaged in buying and selling CMKM stock on an almost daily basis when he was

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active. The evidence will show that over a roughly 15 month period, Glisson was

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in the middle of transfers of over 30 billion shares of CMKM stock, and collected

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over $4 million in revenues from sales of CMKM stock to over a thousand people.

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Glisson’s business was also profitable, since he controlled the spread, and a

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reasonable estimate of his profits is approximately $2,765,650.

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The evidence will show that Glisson transferred some CMKM shares into his

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name and resold them, thus qualifying as a dealer who traded for his own account.

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However, Glisson also arranged to transfer shares owned by third parties to other

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third parties, effectively acting as a broker. In both cases, Glisson acted as his own

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clearing house, receiving stock certificates, issuing instructions to cancel certificates

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and for new certificates, and delivering the new certificates to buyers, while also

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paying sellers and collecting from buyers. All of this evidence, much of undisputed

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or stipulated, will show that Glisson was a broker and/or dealer in CKMM stock.

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Therefore, the evidence will show that Glisson violated Section 15(a) of the

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Exchange Act by acting as an unregistered broker and dealer of delisted CMKM

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stock, and that he violated Section 5(a) and (c) of the Securities Act by engaging in

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unregistered transactions of that stock. The Commission thus asks that the Court

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(1) issue findings of fact and conclusions of law that these violations occurred; (2)

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issue a permanent injunction against future violations of these provisions by

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Glisson; (3) order Glisson to disgorge his ill-gotten gains of approximately

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$2,765,650, and pay prejudgment interest thereon in the amount of $670,574.79;

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(4) order Glisson to pay a third tier civil penalty in the amount of $1.4 million; and

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(5) impose a penny stock bar against Glisson.

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II.

STATEMENT OF EVIDENCE TO BE INTRODUCED AT TRIAL

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A.

Glisson’s Involvement With CMKM Before The Stock Was

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Deregistered (2003 To Late 2005)

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Glisson first became aware of CMKM in late 2002 or early 2003, through

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the Internet. In late 2003 or early 2004, Glisson decided to purchase some CMKM

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stock, which he did through his stock brokerage account at Ameritrade. CMKM

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stock had the ticker symbol “CMKX,” and persons who followed CMKM were

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sometimes referred to as “CMKX-ers.” After he purchased CMKM stock, he

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followed it on the Internet. Glisson also monitored Internet chat rooms and press

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releases issued by CMKM. Glisson became active in the CMKM community of

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shareholders, both over the Internet and in person. Glisson regularly visited

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Internet chat rooms related to CMKM, where he used the screen name “Deli Dog”

or “Deli.” Glisson apparently got this name from his then-wife’s restaurant in

Janesville, Wisconsin, which was called the Deli Dog House. In addition, Glisson

attended CMKM-sponsored parties and events at various race car events.

At some point in time, Glisson was no longer able to trade CMKM stock

through Ameritrade, and he started trading CMKM stock through an account at E-

Trade. Around October or November 2005, Glisson could no longer trade CMKM

stock through his E-Trade account.

B. CMKM’s Registration Was Revoked And Its Stock Delisted

On October 25, 2005, the Commission issued an order revoking the

registration of the securities of CMKM. At all times subsequent to October 28,

2005, CMKM has not had a registration statement filed and declared effective

under the Securities Act or the Exchange Act. 1

Glisson testified that he learned though the Internet that CMKM’s

registration had been revoked and the stock was delisted on the day the order was

posted. Glisson understood that CMKM was no longer “tradeable,” and it could

not be bought or sold on the “open market” anymore. At the time CMKM’s

registration was revoked and it was delisted, Glisson owned millions of shares of

CMKM, which, as a result of deregistration and delisting, were deemed worthless.

C. After CMKM Stock Was Deregistered And Delisted, Glisson

Regularly Engaged In Transactions In CMKM Stock With

Buyers And Sellers He Found Through The Internet

It is undisputed that from December 2005 through May 2007, Glisson

bought and sold shares of CMKM securities in interstate commerce, and using

1 See Joint Pretrial Order, Section IV (Plaintiff’s Facts Not Admitted and Not Contested) at ¶¶ 4-5.

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means and instrumentalities of interstate commerce to effect such transactions. 2

According to Glisson’s sworn testimony, at some point in late December

2005, he contacted Helen Bagley, 3 who was at the time the owner of CMKM’s stock

transfer agent – 1st Global Stock Transfer, LLC (“1st Global”). 1st Global’s offices

were in Las Vegas, Nevada, while at this time Glisson lived in Janesville,

Wisconsin. Glisson testified that he did not recall the exact conversation he had

with Bagley, except that he asked for instructions on how to transfer a CMKM

certificate. Bagley gave Glisson instructions on how to do it, and directed him to 1st

Global’s internet site. Glisson admits that he did not seek legal advice on whether it

was legal to buy or sell unregistered CMKM securities at this time, or at any time.

Around December 2005, Glisson began negotiating purchases and sales of

CMKM stock with persons he found through the Internet. Glisson visited various

Internet chat rooms, such as “Pal Talk” or “Pro Board,” and he exchanged posts

about CMKM using the “Deli Dog” or “Deli” screen name. There was a chat room

called the “66 Board,” which was for people who were negative on CMKM stock,

and Glisson posted on the 66 Board that he was willing to buy CMKM stock.

Glisson visited other chat rooms that were for people who were positive on

CMKM stock, such as “Pro CMKX” and “The Belgium’s Room,” and in those

rooms Glisson posted that he was willing to sell CMKM stock. In his posts,

Glisson provided his email address and his telephone number.

Glisson typically bought deregistered CMKM shares for $0.0001 per share,

which he called “trip one,” although he sometimes paid $0.0002 (“trip two”) per share

2 Answer of Marco Glisson at ¶¶ 4, 11, 12, 15, 16 (Docket No. 9); Joint Pretrial Order, Section III (Admitted Facts) at ¶¶ 21, 38 (Docket No. 67).

3 Bagley was found to have violated Section 5 of the Securities Act in connection with her role in the distribution of CMKM stock. See SEC v. CMKM Diamonds, Inc., Case No. 2:08-cv-0437-LRH-RJJ, 2011 WL 3047476 (D. Nev. July 25, 2011).

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or more. In one large transaction, Glisson bought 7 billion CMKM shares $310,000,

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or about $0.00004 (“quad four”) per share. Glisson set the price at which he would

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sell CMKM shares, and he charged $0.0002 (“trip two”) per share, or higher. Glisson

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made a profit on the spread between his purchase price and his sales price.

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Glisson transferred CMKM shares by sending “letters of instruction” to 1st

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Global. These letters of instruction show that, sometimes, Glisson instructed the

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transfer agent to transfer stock owned by a third party, to various other third party

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purchasers, without Glisson ever taking title to the stock. In other letters, Glisson

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instructed the transfer agent to transfer CMKM stock into his name, or to a

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nominee such as his girlfriend (now wife), Thidarat Tungwongsathong. In yet

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other letters, Glisson transferred CMKM shares held in his name to various third

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parties. In all cases, Glisson sent the certificates to be cancelled to the transfer

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agent with instructions to issue new certificates with names and amounts, and

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instructed the transfer agent to give him the new CMKM certificates.

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Glisson paid his sellers from his bank accounts, using wire transfers or cashier’s

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checks, and collected money from his buyers for CMKM shares, as well as a $50 fee

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per certificate. Glisson instructed buyers either to wire money into a designated

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account, or to send a check or money order payable to Glisson or to

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Tungwongsathong. After getting the new certificates from the transfer agent, Glisson

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made copies of them and filled out forms to “register” the certificates with something

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called the “CMKM Task Force.” Glisson then sent the certificates to his customers.

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1.

Glisson Developed Methods For Buying CMKM Stock

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Glisson developed methods for buying CMKM stock, such as using forms to

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memorialize his purchases, and using finders, although Glisson’s methods changed

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over time. For example, between December 2005 and May 2006, Glisson used

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written agreements for his purchases of CMKM stock, which were titled “Stock

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Sell-Purchase Agreement.” 4 Glisson also had sellers execute letters waiving all

rights to any dividends or cash settlements associated with the CMKM stock that

he was purchasing. 5 During the period from December 2005 through April or May

2006, there were various rumors that circulated in Internet chat rooms of a pending

pay-out to CMKM shareholders. Glisson purportedly used these waiver letters to

cut-off claims of his sellers to any such rumored payments.

At least two persons, whom Glisson claims he met only through the Internet

and telephone, found shares for Glisson to buy: Steve Brewer and Michael Wright.

Glisson testified that he paid Wright several hundred thousand dollars for stock

Wright found, which is confirmed by bank records showing substantial payments

to Wright over a period of time, while letters of instruction to 1st Global do not

show corresponding transfers of stock in Wright’s name.

Brewer found large amounts of CMKM stock that was owned by people

who had been affiliated with CMKM. During 2006, Brewer supplied Glisson with

several billion shares of stock that were owned by a man named Rendal Williams

or a company associated with Williams named Monte Verde International

Holdings LLC. Bank records do not show any payments by Glisson to Williams or

Monte Verde, and Glisson apparently paid Brewer for the shares. Glisson testified

that he knew Williams was the president of a company affiliated with CMKM

called U.S. Canadian Minerals.

4 See Joint Pretrial Order, Section III (Admitted Facts) at ¶ 22. A number of Joint Exhibits are contracts that Glisson used when he purchased CMKM stock

from third parties, such as Joint Exhibit 3233, which is a January 24, 2006 “Stock Sell-Purchase Agreement” between Marco Glisson and Eiji Toda and Sakae Toda.

Other examples of such agreements are Joint Exhibits 3234, 3235, 3236, 3237, 3238, 3243, 3245, 3246, 3091, 3092, 3252, and 3253.

5 See Joint Pretrial Order, Section III (Admitted Facts) at ¶ 22. A number of

Joint Exhibits are copies of such letters, such as Joint Exhibit 3231, which is a December 27, 2005 letter from Leor Zolman. Other examples of such letters are Joint Exhibits 3232, 3239, 3240, 3241, 3242, 3244, 3247, 3248, 3250, and 3254.¶

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Brewer also arranged for Glisson to buy 7 billion shares of CMKM stock

from Urban Casavant, the Chairman of the Board, President, and CEO of CMKM

until mid-2006. Glisson paid $310,000 for these shares using cashier’s checks

drawn on Tungwongsathong’s account at Bank of America. Glisson’s purchase of

a large block of CMKM shares from Casavant apparently contradicts Glisson’s

sworn statement to this Court, in opposition to the SEC’s motion for summary

judgment, that Glisson never had any business relationship with Casavant: “I have

never had any business or other relationship with CMKM and/or its management

or related persons including without limitation John Edwards, Urban Casavant,

Brian Dvorak, Ginger Gutierrez and/or James Kinney.” 6

2. Glisson’s Method For Selling Deregistered CMKM Shares

Glisson admittedly followed a routine for his sale of deregistered CMKM

shares, which was necessary in view of the large volume of transactions Glisson

engaged in on a regular basis. When a prospective purchase contacted him, Glisson

typically sent them an email with (1) his contact information, (2) a price schedule

setting forth the prices he charged to sell CMKM, between “trip 3” ($0.0003) and

“trip 25” ($0.00025) per share depending on the number of shares being purchased,

and (3) payment instructions including either wire transfer information or an address

to mail payment. Glisson typically required payment from a purchaser before he

would consummate a sale. 7 In addition to the price of the stock, Glisson charged a

fee of $50 for each certificate that a customer wanted issued.

After receiving payment, Glisson sent a letter of instruction to CMKM’s

stock transfer agent, 1st Global, with instructions to cancel certain certificates and

6 See Plaintiff’s Exhibit 141(Declaration of Marco Glisson in Support of his Opposition to SEC’s Motion for Summary Judgment, dated November 13,2009,

at¶ 4 (Docket No. 28).

7 See Joint Pretrial Order, Section III (Admitted Facts) at ¶¶ 24, 25.

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to issue new certificates to the persons identified by Glisson in the “letter of

instruction.” Glisson instructed 1st Global to either mail the certificates to him or

to hold them for pick-up. 8 As an additional service for his customers, Glisson

“registered” the new CMKM certificates with the “CMKM Task Force.” 9 The

“CMKM Task Force” was a group affiliated with CMKM; it was not a

governmental agency, or affiliated in any way with any governmental agency.

3. Letters Of Instruction To 1st Global Show The Regularity

Of Glisson’s Activity In Deregistered CMKM Stock

The vast majority of Glisson’s activity in deregistered CMKM stock after

December 2005 was not transacted through a registered broker or dealer, so there

are no reliable third party records of Glisson’s stock transactions. However, the

“letters of instruction” that Glisson sent to 1st Global provide substantial evidence

of the regularity of Glisson’s business in CMKM shares. 10

In the six month period from December 2005 to May 2006, Glisson sent

over 70 letters of instruction to 1st Global to transfer more than 8 million CMKM

shares. 11 Glisson produced nineteen (19) letters of instruction that he sent to 1st

Global during the four month period from September 2006 to January 25, 2007.

Although Glisson engaged in transactions in CMKM stock after January 25, 2007,

he did not produce any letters to 1st Global after that date. The letters of

instruction for this four-month period from September to January show that

Glisson instructed CMKM’s transfer agent to re-issue certificates for over 25

8 See Joint Pretrial Order, Section III (Admitted Facts) at ¶¶ 14, 26.

9 See Joint Pretrial Order, Section III (Admitted Facts) at ¶¶ 28, 29.

10 Glisson’s production of letters of instruction to 1 st Global does not

encompass the universe of his transactions. Glisson did not produce any letters of instruction for his CMKM transactions that occurred after January 25, 2007.

11 See, e.g., Plaintiff’s Exhibit 509-1 (summary chart of letters 12-05 to 5-06); see also, e.g., Joint Exhibits 3042 to 3085.

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billion shares to over a thousand customers. 12 On average, Glisson sent over two

letters each week to the transfer agent during the 10 months period for which we

have transfer letters.

On some days, Glisson sent several letters of instruction to the transfer

agent. 13 At some times, Glisson sent letters more frequently: for example, he sent

a total of four letters dated November 1, 2006; November 2, 2006; and November

7, 2006. In these letters, Glisson directed the transfer of 6 billion CMKM shares to

over 400 people. 14 Just twenty days later, in a November 27, 2006 letter of

instruction, Glisson transferred 1,107,299,000 CMKM shares held in his name to

over 190 different buyers. 15

4. Bank Activity In Accounts Glisson Used For CMKM-

Related Transactions Show The Regularity Of His Activity

Between December 2005 and May 2007, Glisson used at least four different

bank accounts for his CMKM transactions: three accounts at Blackhawk Community

Credit Union (“BCU”), located in Janesville, Wisconsin; and a fourth account at

Bank of America (“BofA”), in Las Vegas, Nevada. Glisson used different accounts

at different times, depending on his location and his relationship with his ex-wife,

Alma Padilla. In total, Glisson generated over $4 million in deposits into these four

accounts from sales of CMKM stock during the relevant period. 16

From December 2005 to May 2006, Glisson used two BCU accounts for

CMKM related transactions: (1) a joint account he held with his then-wife, Alma

12 See Plaintiff’s Exhibit 509-2.

13 For example, Glisson sent seven (7) separate letters of instruction to 1st

Global dated December 15, 2005; and he sent four (4) dated February 10, 2006. See, e.g., Plaintiff’s Exhibit 509-1 (stock transfer letter summary).

14 See Plaintiff’s Exhibit 509-2; Joint Exhibits 3008, 3009, 3010, 3018.

15 See Joint Exhibit 3019.

16 See Plaintiff’s Exhibit 508-5.

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Padilla, with an account number that ended in 8307 (“BCU 8307 Account”); or (2)

an account held in his then-wife’s name, Alma Padilla, with an account number

that ended in 3788 (“BCU 3788 Account”). In May 2006, to keep his CMKM

transactions away from Ms. Padilla, Glisson closed the joint account, BCU 8307

Account, and opened an account in his name at BCU, which account number ended

in 7650 (“BCU 7650 Account”). 17

Evidence at trial will show that there were regular CMKM related deposits

and withdrawals into the three BCU accounts during the period from December

2005 to May 2006, and into the BCU 7650 Account from September 2006 to

November 2006 – with almost daily activity during that period. 18 CMKM related

deposits into BCU 3788 Account were $116,637.37; into BCU 8307 Account were

$904,628.77; and into the BCU 7650 Account were $1,056,528.33. 19

On or about October 29 or 31, 2006, Glisson abruptly left Janesville,

Wisconsin, and moved to Las Vegas, where he met a woman named Thidarat

Tungwongsathong in a Starbucks. On or about November 17, 2006, Glisson

transferred $105,000 to a BofA bank account that had been held in the name of

Tungwongsathong, but to which Glisson had been added to as a “payable on

death” beneficiary – an account that ends with the four digits 9145 (the “BofA

9145 Account”). Thereafter, Glisson told people who wanted to purchase CMKM

stock to send their payments to Tungwongsathong, and funds were deposited into

the BofA 9145 Account. Between November 2006 and May 2007, total CMKM-

17 See Joint Pretrial Order, Section III (Admitted Facts) at ¶¶ 32, 33 (regarding the 8307 and 7650 accounts).

18 Plaintiff has prepared summary charts showing Glisson’s CMKM related bank activity, letters of instruction, and email activity, for the two periods, which

show almost daily activity. See Plaintiff’s Exhibits 529 and 530. This summary is consistent with Glisson’s claim that he talked to CMKM shareholders every day.

19 See, e.g., Plaintiff’s Exhibit 508-5, which is a summary of Glisson’s CMKM related deposits by account.

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related deposits into the BofA 9145 Account were $2,332,841.18 – not including

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the $105,000 from Glisson. 20 Again, the volume of deposits, in terms of amount

3

and individual payments that were deposited, shows the regularity of Glisson’s

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CMKM transactions.

 

5

5.

Emails Produced By Glisson Provide Examples Of Glisson’s

6

Solicitation Of Investors

7

Glisson produced a limited amount of email correspondence that he had with

8

persons about CMKM. Glisson’s production of emails covered a limited time

9

period, from around December 2005 to May 2006, and Glisson did not produce all

10

communications for that time period – because the laptop he used purportedly went

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missing shortly after he was subpoenaed by the SEC. However, the limited universe

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of emails available shows how Glisson solicited investors to buy CMKM stock.

13

In an email dated February 9, 2006, Glisson wrote a prospective purchaser:

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“I would love to work with you on this, once in a life time stock, the best I can do

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for 5,000,000 shares of CMKX is 2,000, plus there is a 50.00 cert [sic] fee from the

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T/A. so the total would be 2050.00,” and “I feel we may be running out of time on

17

this … please move on it quickly.” In a subsequent email in the chain, Glisson

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wrote: “the more you buy the better the price, I can 10,000,000 for 3,000 plus

19

50.00 cert fee, that the best I can do, we are running out of shares,” “what a pay off

20

it will be,” and “time is running out and getting low on shares.” In a subsequent

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email in the same chain, Glisson wrote: “when I get the cert back I will send it to

22

you and do the paper work for the CMKX Task Force, all you will have to do is

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wait on any payments or div, we will get, it be send to this address of record.” 21

24

In a January 13, 2006 email, Glisson instructed a potential purchaser to get

25

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20 See Plaintiff’s Exhibit 508-5.

21 See Joint Exhibit 3086.

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the paper work to him “ASAP … the faster the better … and we may be running

out of time, if they payout some type of cash payment in the next 30 to 60 days

would be great for all of us.” 22

In an April 20, 2006 email to another potential purchaser, Glisson wrote:

“I’am [sic] been told the deal done, just waithing [sic] on every one to sign, I think

we will see cash by the end of May, no later than June, I sure hope so for all of us

CMKX’er, just let me know ASAP because I’m running out of shares for sell

[sic].” In an earlier email in that chain, Glisson wrote: “If you know of any one

[sic] else wanting shares let me know, I only have a few left.” 23

D. Glisson Repeatedly Claimed That He Stopped His Activities In

CMKM Shares, But Resumed Buying And Selling

On at least two occasions, in response to actions by government agencies,

Glisson or his attorney represented that Glisson ceased his activities in CMKM

shares, but Glisson then resumed his activities a short time later.

1. In June 2006, Glisson’s Attorney Says Glisson Ceased His

Activities, But Glisson Resumes In September 2006

In March and April 2006, Glisson was contacted by the SEC and the

Wisconsin Department of Financial Institutions (“DFI”) concerning his CMKM

stock activities. Glisson retained attorney Terry Nelson, of Foley & Lardner, who

wrote letters responding to the DFI and the SEC. In a June 6, 2006 letter to the

DFI, Mr. Nelson wrote: “Mr. Glisson has ceased such activities.” 24 In a letter to the

SEC dated July 7, 2006, Mr. Nelson sent the SEC a copy of his letter to the DFI. 25

22 See Joint Exhibit 3088.

23 See Joint Exhibit 3090.

24 See Plaintiff’s Exhibit 9.

25 See Plaintiff’s Exhibit 8.

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However, contrary to the representation made by his attorney, Glisson

resumed his activities in CMKM around September of 2006. When asked about

this during testimony, Glisson testified if someone wanted him to stop buying and

selling CMKM stock, then they needed to “issue me a cease and desist order.”

2. Glisson Swears To This Court In November 2009 That He

Has No Intention Of Selling CMKM, Then Sells Billions Of

Shares Beginning In Early 2010

In opposition to plaintiff’s motion for summary judgment, Glisson promised

the Court, in a sworn declaration, dated November 13, 2009, and filed with the Court

on November 16, 2009, that he had “no intention to purchase or sell any shares of any

public company including without limitation CMKM at any time in the future; and I

will so testify in person at the trial of this case where I can demonstrate to the

satisfaction of the Court that I mean what I say about such future conduct.” 26

Shortly after Glisson’s declaration was filed by his attorney, and while

plaintiff’s motion for summary judgment was under submission, Glisson resumed

selling CMKM shares. Glisson sold billions of CMKM shares during a few short

months in 2010, and realized gross proceeds of approximately $1.6 million.

Glisson did not advise the Court that he had reneged on his sworn statement and

promise to the Court while his motion was pending, and indeed, seeks to exclude

evidence of his 2010 conduct from the trial.

E. Several Computers Glisson Used For CMKM Activities Were

Lost Or Broken Before Documents Could Be Produced

The Commission issued a subpoena to Glisson on March 15, 2007, which

required Glisson to produce documents and testify. Glisson printed out about 176

26 See Plaintiff’s Exhibit 141 (Declaration of Marco Glisson in Support of his Opposition to SEC’s Motion for Summary Judgment, dated November 13,2009, at¶ 74 (Docket No. 28).

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pages of emails and other documents at some point after he received the subpoena.

However, shortly thereafter, in May 2007, Glisson claimed that his laptop

computer went missing from his vehicle at a race event he was attending in

Rockingham, North Carolina. Glisson testified that the computer had CMKM

related documents on it when it went missing, and which may not have been

printed. Glisson testified that his ex-wife, Alma Padilla, had misplaced another

laptop that he would have used prior to October 2006, and would not let him have

access to the desktop computer he left in Wisconsin.

At his deposition in 2011, Glisson reported that the laptop computer he had

used for the prior couple of years had crashed and “the hard drive burned up” in

mid-December 2010 – at about the time that the Commission was moving to re-

open discovery. Glisson testified that as a result he was able to recover “very

little” from that laptop.

Glisson’s failure to retain or secure these computers made it impossible for

Glisson to comply with his obligations to preserve and then produce all relevant

documents in response to validly issued subpoenas. 27

III. LEGAL ARGUMENT

A. Glisson Violated Section 15(a)(1) Of The Exchange Act By Acting

As An Unregistered Broker And Dealer

Glisson admits that he never registered as a broker or dealer, or associated

with a broker or dealer, in connection with his purchases and sales of CMKM stock

from December 2005 through May 2007. 28

Section 15(a)(1) of the Exchange Act provides:

27 See, e.g., Zubulake v. UBS Warburg LLC, 229 F.R.D. 422 (S.D.N.Y. 2004) (giving jury instruction that jury is to take adverse inference from fact that party

did not preserve relevant emails).

28 See Answer at ¶ 3; Joint Pretrial Order, Section III (Admitted Facts) at ¶¶ 39, 40.

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1

It shall be unlawful for any broker or dealer which is either a

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person other than a natural person or a natural person not

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associated with a broker or dealer which is a person other than a

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natural person (other than such a broker or dealer whose

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business is exclusively intrastate and who does not make use of

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any facility of a national securities exchange) to make use of

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the mails or any means of interstate commerce to effect any

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transactions in, or to induce or attempt to induce the purchase

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or sale of, any security (other than an exempted security or

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commercial paper, bankers’ acceptances, or commercial bills)

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unless such broker or dealer is registered in accordance with

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subsection (b) of this section.

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15 U.S.C. § 78o(a)(1).

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Scienter is not an element of a violation of Section 15(a). See SEC v. Offill,

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2012 WL 246061, at *5 (N.D. Tex. Jan. 26, 2012); SEC v. Radical Bunny, LLC,

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Case No. CV-09-1560-PHX, 2011 WL 1458698, at *6 (D. Ariz. April 12, 2011)

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(citing SEC v. Alliance Leasing Corp., No. 98-CV-1810-J (CGA), 2000 WL

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35612001, at *6 (S.D. Cal. Mar. 20, 2000)).

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The broker-dealer registration requirement of the Exchange Act is intended to

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protect investors against manipulation of stock prices through regulation of

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transactions upon securities exchanges and in over-the-counter markets. See Ernst

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& Ernst v. Hochfelder, 425 U.S. 185, 195 (1976) (citing S. Rep. No. 792, 73d Cong.,

23

2d Sess., 1-5 (1934)).

The requirement that brokers and dealers register is of the

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utmost importance in effecting the purposes of the Exchange Act. The registration

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requirement enables the SEC to exercise discipline over those who may engage in

26

the securities business and it establishes necessary standards with respect to training,

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experience, and records. See, e.g., Regional Properties, Inc. v. Financial and Real

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Estate Consulting Co., 678 F.2d 552, 561 (5th Cir. 1982) (citing Eastside Church of

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Christ v. National Plan, Inc., 391 F.2d 357, 362 (5th Cir. 1968)).

4

Many legitimate brokerage firms operate as both brokers and dealers, and

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because both brokers and dealers are subject to the registration requirements under

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the federal securities laws, the term “broker-dealer” is frequently used in the

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securities industry almost interchangeably with the terms “broker” and “dealer,”

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with little distinction given to the different type of trading activities involved. See

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Couldock & Bohan, Inc. v. Societe Generale Sec. Corp., 93 F. Supp. 2d 220, 223

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n.1 (D. Conn. 2000) (citing David A. Lipton, A Primer on Broker-Dealer

11

Registration, 36 Cath. U.L. Rev. 899, 909-10 (1987)).

12

The Commission will establish by a preponderance of the evidence that

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Glisson was both a broker and a dealer. Glisson does not dispute that he did not

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register with the Commission as either a broker or a dealer. Therefore, a finding

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that he violated Section 15(a)(1) of the Exchange Act is warranted.

16

1.

Glisson Was A Dealer Of Unregistered CMKM Shares

17

The evidence will establish that Glisson was a dealer. Section 3(a)(5)(A) of

18

the Exchange Act defines the term “dealer”: “In General.—The term ‘dealer’

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means any person engaged in the business of buying and selling securities for such

20

person’s own account through a broker or otherwise.” 15 U.S.C. § 78c(a)(5)(A).

21

Section 3(a)(5)(B) further provides: “Exception for Person Not Engaged in the

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Business of Dealing.—The term ‘dealer’ does not include a person that buys or

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sells securities for such person’s own account, either individually or in a fiduciary

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capacity, but not as part of a regular business.”

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Several courts have explained that determining whether someone is

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“‘engaged in the business’ of a dealer is the ‘regularity of [his] participation’ in the

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buying and selling of securities for his own account.” See, e.g., SEC v. Offill, 2012

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WL 246061, at *7. See also SEC v. Ridenour, 913 F.2d 515 (8th Cir. 1990);

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Eastside Church of Christ v. National Plan, Inc., 391 F.2d 357 (5th Cir. 1968);

4

Couldock & Bohan, Inc. v. Societe Generale Sec. Corp., 93 F. Supp. 2d 220 (D.

5

Conn. 2000).

6

In applying the test of what constitutes a dealer, one court addressed an

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analogous situation to Glisson’s in Couldock & Bohan, 93 F. Supp. 2d 220. In that

8

case, plaintiff was a Connecticut corporation in the business of arranging purchases

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and sales of non-equity securities. Plaintiff contended that it was not required to

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register as a broker or dealer because it arranged matched purchases and sales by

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others. In these “matched” transactions, the seller knew the plaintiff as the

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purchaser and delivered the securities to the plaintiff’s account; and on the other

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side of the transaction, the buyer also knew the plaintiff as the seller and delivered

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funds to the plaintiff’s account. In other words, like Glisson, the plaintiff in

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Couldock & Bohan was in the middle of the transaction. The court explained why

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plaintiff’s actions under such circumstances qualified it as a “dealer” as defined in

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the Exchange Act:

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In Plaintiff’s transactions, however, the buyer and seller were

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never put in contact with each other, either directly or indirectly

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through their own clearing brokers. It is clear that Plaintiff was

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not merely matching buyers and sellers, but rather was placing

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itself squarely in the middle of each transaction in order to reap

23

the profits from the spread, i.e., the price difference between the

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buy and sell sides of the transactions, for its own account. The

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Court thus has no difficulty in discerning from the undisputed

26

facts that Plaintiff was a buyer and seller of securities for its own

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account as part of its regular business, and thus was a dealer of

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securities as defined in the Exchange Act.

3

Id. at 229.

4

The decision in SEC v. Ridenour, 913 F.2d 515 (8th Cir. 1990), is also

5

directly applicable to this case. In Ridenour, over a two year period between 1979

6

and 1981, defendant Ridenour effected on his own behalf over 100 “matched

7

transactions” in which he would buy a security from a client, and then resell the

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same security within a short period of time at a profit. Id. at 516. The Eighth

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Circuit found Ridenour’s arguments that he was not required to register as a

10

broker-dealer to be “unavailing,” because the level of activity – over 100 matched

11

transactions in two years – “made him more than an active investor.” Id. at 517.

12

Likewise, in SEC v. Offill, the defendant regularly bought and sold securities

13

for his own account in transactions involving a substantial number of shares and

14

money – more than 3 million shares of two issuers for more than $250,000. The

15

court found that such activity was not that of a person “buying and selling as an

16

individual investor making isolated transactions,” but rather the only conclusion

17

was that defendant was “'engag[ing] in the business’ of buying and selling

18

securities,” and was therefore a “dealer” under Section 3(a)(5) of the Exchange

19

Act. SEC v. Offill, 2012 WL 246061, at *9.

20

The evidence to be introduced at trial, as well as evidence from the Joint

21

Exhibits, will establish that Glisson’s conduct meets the statutory definition of a

22

dealer because he did a regular business in CMKM securities. Glisson’s letters of

23

instruction to 1st Global establish the regularity of Glisson’s business by showing

24

how often Glisson was ordering transfers CMKM shares (several times a day on

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some days, and several times a week in some weeks), the volume of shares Glisson

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was buying and selling (over 30 billion), and the number of people with whom

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The evidence at trial will also establish that Glisson developed a regular

method for dealing with prospective buyers. Glisson sent prospective buyers his

price list, informed them that he charged a fee for each certificate, required

payment in advance, and provided the additional service of “registering”

certificates with the CMKM Task Force.

Although profitability is not one of the criteria for being a dealer, as the

Couldock court observed, putting oneself in the middle of stock transactions and

collecting the spread is another sign that a person is a dealer. Glisson was “buying

low and selling high wherever possible.” 29 Glisson set the price at which he would

buy, and the price at which he would sell, and his profit was the spread or his

mark-up. Glisson self-cleared his purchases and sales, handling the final exchange

of securities for cash on delivery. 30

Therefore, Glisson’s activity establishes that his trading in CMKM was more

than just a hobby, or conduct of an active investor. 31 Glisson bought and sold

billions of shares to thousands of people, self-cleared the transactions, and

collected millions of dollars, all in a stock that could not be bought and sold in the

open market. Thus, Glisson was a dealer for the purposes of the Exchange Act.

///

///

29 Answer at ¶¶ 11, 12.

30 “Clearing, in the context of securities, consists of the comparison of the details of a transaction between brokers prior to settlement, and the final exchange

of securities for cash on delivery.” Couldock &Bohan, 93 F. Supp. 2d at 223 n.4 (citing Dictionary of Finance and Investment Terms, 88-89 (Downes & Goodman,

eds. 4th ed. 1995).

31 It is unclear how Glisson’s transactions in deregistered shares of CMKM would ever qualify as activities of a normal investor, since CMKM stock was not “tradeable,” but for Glisson setting himself up as a broker-dealer in CMKM stock.

20

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1

2.

Glisson Was A Broker Effecting Transactions In

2

Unregistered CMKM Shares

3

Section 3(a)(4)(A) of the Exchange Act defines the term broker: “In

4

General.—The term ‘broker’ means any person engaged in the business of

5

effecting transactions in securities for the accounts of others.” 15 U.S.C. §

6

78c(a)(4)(A). As with the definition of dealer, Section 3 of the Exchange Act does

7

not specifically define the phrase “engaged in the business” of a broker, and

8

similarly, various courts have described “engaged in the business” of a broker as

9

“effecting transactions in” or “buying and selling,” securities. Offill, 2012 WL

10

246061, at *7. One court has held that “regularity of participation is the primary

11

indicia of being engaged in the business” of a broker. Id. (citing SEC v. Kenton

12

Capital, Ltd., 69 F. Supp. 2d 1, 12 (D.D.C. 1998)). Regularity of participation can

13

be shown by such factors as the dollar amount of securities sold, and the extent to

14

which advertisement or investor solicitation wee used. Id.

15

The Exchange Act also does not define “effecting transactions” for the

16

purposes of being a broker. In determining whether a person “effected

17

transactions,” courts consider several factors, such as whether the person (1)

18

solicited investors to purchase securities, (2) was involved in negotiations between

19

the issuer and the investors, and (3) received transaction-related compensation. Id.

20

(citing SEC v. Earthly Mineral Solutions, Inc., Case No. 2:07-cv-1057-JCM, 2011

21

WL 1103349, at *3 (D. Nev. March 23, 2011)). See also SEC v. U.S. Pension

22

Trust Corp., 2010 WL 3894082, at *21 (S.D. Fla. Sept. 30, 2010) (listing 11

23

factors courts may consider when determining whether someone is a broker).

24

Moreover, when assessing whether someone is considered a “broker,” courts

25

have concluded that many of the activities that signify that one is a “dealer” under

26

the federal securities laws also establish that one is a “broker” under the federal

21

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securities laws. For example, in Eastside Church of Christ v. National Plan, Inc.,

2

391 F.2d at 362, after finding that the evidence showed conclusively that defendant

3

was a broker, the Fifth Circuit addressed whether it was also a dealer. The Fifth

4

Circuit found that the evidence that defendant bought and sold church bonds for its

5

own account, and sold some bonds to others, “demands a finding” that defendant

6

was a broker and a dealer: “National purchased many church bonds prior to the

7

ones in question for its own account as part of its regular business and sold some of

8

them. Thus National was a broker and a dealer within the meaning of the

9

[Exchange] Act.” Id.

10

In addition, courts have stated that “regularity of participation is the primary

11

indicia of being engaged in the business” of being a broker, with courts looking to

12

the same factors for brokers as they do for dealers. SEC v. Kenton Capital, Ltd., 69

13

F. Supp. 2d 1, 12 (D.D.C. 1998). There is no specific dollar amount of

14

transactions that is necessary to qualify as a broker, or level of solicitation. See,

15

e.g., SEC v. Kenton Capital, 69 F. Supp. 2d at 13 (defendants collected $1.745

16

million from 12 investors and actively solicited participation); SEC v. National

17

Executive Planners, Ltd., 503 F. Supp. 1066, 1073 (M.D.N.C. 1980) ($4.3 million

18

of securities sold and solicited clients actively); Joseph McCulley, SEC No-Action

19

Letter, 1972-73 Transfer Binder Fed. Sec. L. Rep. (CCH) ¶ 78,982, at 82, 111

20

(Aug. 2, 1972) (advertising “on a single isolated basis” is not enough, but more

21

than that would require registration); SEC v. Deyon, 977 F. Supp. 510, 518 (D. Me.

22

1997) (finding that defendants “actively sought to effect securities transactions”

23

and therefore were brokers). Being engaged in the business of being a broker may

24

also be shown by: “(1) solicitation of investors to purchase securities, (2)

25

involvement in negotiations between the issuer and the investor, and (3) receipt of

26

transaction-related compensation.” SEC v. Earthly Mineral Solutions, Inc., Case

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No. 2:07-cv-1057-JCM, 2011 WL 1103349, at *3 (citing SEC v. Hansen, 1984 WL

2

2413 (S.D.N.Y. Apr. 6, 1984)).

3

Here, the evidence will establish that Glisson actively sought to effect

4

securities transactions, and solicited investors, by posting on the Internet that he

5

was buying and selling CMKM stock. As discussed above, Glisson received

6

transaction-based compensation in two ways: (1) the spread between his purchase

7

price and his sale price, and (2) a $50 per certificate fee. The evidence will also

8

show that Glisson negotiated with buyers and with sellers. Moreover, as also

9

discussed above, the evidence will establish the regularity of Glisson’s

10

participation in transactions in CMKM stock. Glisson’s regular activity over a 15-

11

month period generated over $4.4 million in sales of CMKM stock, or average

12

monthly revenues of over $293,000.

13

Glisson was effecting transactions for the account of third parties, and not

14

just for his own account. Glisson ordered the transfer of stock from third parties,

15

to other third parties, without himself ever taking title to the stock, and Glisson

16

collected money from buyers and paid sellers, and collected CMKM certificates

17

from sellers and provided CMKM certificates to his buyers. For example, on

18

December 15, 2005, Glisson ordered the transfer of 25 million shares held in the

19