sec findings of fact

8/2/2019 SEC Findings of Fact

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JOHN B. BULGOZDY, Cal Bar No. 219897E-mail: [email protected] J. VAN HAVERMAAT, Cal. Bar No. 175761E-mail: [email protected]

Attorney for PlaintiffSecurities and Exchange CommissionRosalind R. Tyson, Regional DirectorMichele Wein Layne, Associate Regional DirectorJohn W. Berry, Regional Trial Counsel5670 Wilshire Boulevard, 11th FloorLos Angeles, California 90036Telephone: (323) 965-3998Facsimile: (323) 965-3908

UNITED STATES DISTRICT COURT

DISTRICT OF NEVADA

SECURITIES AND EXCHANGECOMMISSION,

Plaintiff,

vs.

MARCO GLISSON,

Defendant

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

PLAINTIFFSECURITIESANDEXCHANGECOMMISSIONSPROPOSEDFINDINGSOFFACTANDCONCLUSIONSOFLAW

Date: April 9, 2012Time: 9:00 a.m.Place: Courtroom 6B

(Hon. Lloyd D. George)

Case 2:09-cv-00104-LDG-GWF Document 106 Filed 04/02/12 Page 1 of 37


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Plaintiff Securities and Exchange Commission (Commission or SEC)

brought this civil enforcement action against defendant Marco Glisson, chargingGlisson with violating the broker-dealer registration provisions of Section 15(a) of

the Securities Exchange Act of 1934 (Exchange Act), 15 U.S.C. 78o(a), and

the registration provisions of Sections 5(a) and (c) of the Securities Act of 1933

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

The parties tried the issues to the Court beginning on April 9, 2012. The

court having considered the matter, including the arguments of counsel, the

evidence adduced at trial, and the documents on file herein, now therefore, makes

the following findings of fact and conclusions of law.

FINDINGS OF FACT

Background

1. During 2005 through October 2006, Glisson was a resident ofJanesville, Wisconsin. At the time, Glisson was married to Alma Padilla. During

2005 through October 2006, Padilla owned a restaurant located in Janesville,

Wisconsin named the Deli Dog House. Glisson worked part-time at the Deli Dog

House in 2005 through August 2006, while working as an assembly line worker at

General Motors. After Glissons retirement from General Motors in August 2006,

he worked full-time at the Deli Dog House restaurant in Janesville until October

2006. At the end of October 2006, Glisson moved from Janesville, Wisconsin, to

Las Vegas, Nevada. Glisson resided in Las Vegas from the end of October 2006 to

early 2007. In April or May, 2007, Glisson moved to Naples Florida.

2. Shortly after moving to Las Vegas, Glisson met ThidaratTungwongsathong, at a Starbucks in Las Vegas. Tungwongsathong was a Thai

national who had lived in the United States during various periods prior to 2006,

and was living in Las Vegas when she met Glisson. Tungwongsathong was not



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employed while she resided in Las Vegas. Glisson was divorced from Alma

Padilla on April 12, 2007. Glisson married Tungwongsathong on May 7, 2007.CMKM

3. CMKM was at all relevant times a Nevada corporation headquarteredin Las Vegas that reportedly acquired and developed mining properties in North

and South America. From 1999 through October 28, 2005, CMKMs stock was

registered with the Commission pursuant to Section 12(g) of the Exchange Act and

was quoted on the OTC Pink Sheets. During this period of time, individuals

could and did buy and sell shares of CMKM through registered brokers such as

Ameritrade and E-Trade. CMKMs ticker symbol was CMKX.

4. During the period 2005 through April 9, 2007, 1st Global StockTransfer LLC (1st Global) was the transfer agent for CMKM stock.

Glisson and CMKM

5. Sometime in late 2002 or early 2003, Glisson became aware ofCMKM through the Internet. Sometime after April 2004, Glisson became a

CMKM shareholder by purchasing CMKM securities in his account with

Ameritrade. After his first purchase of CMKM securities, Glisson made some

additional purchases and sales of CMKM stock in his Ameritrade account. After

his first purchase, Glisson sold CMKM securities in his Ameritrade account when

the price went up, and purchased CMKM securities in his Ameritrade account

when the price went down. Glisson tried to flip the stock, selling when the stock

went up a little bit, and buying when the stock went back down.

6. Glisson met Urban Casavant, the Chief Executive Officer of CMKM,on several occasions in 2004 and 2005, in Las Vegas and Chicago, at IHRA race

functions. For the Chicago CMKM function in 2004, Glisson catered the food for

that weekend.



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7. When Ameritrade stopped effecting transactions in CMKM, Glissonused an E-Trade account to buy and sell CMKM shares.

8. When Glisson bought and sold CMKM using the services of aregistered broker-dealer, Glisson did not know the identity of the person on the

other side of the transaction. The price was the market price, quoted in the Pink

Sheets. Glisson paid a commission, or fee, to the registered broker-dealer for each

trade in CMKM that was executed in his account. The registered broker-dealer

cleared the trades for Glisson, arranging for delivery of the stock and cash. The

registered broker-dealer also made any arrangements with the transfer agent to

issue certificates, if that was requested by Glisson.

9. Glisson monitored the performance of his CMKM securities via theInternet and CMKM press releases. Since around April 2004, Glisson visited and

participated in Internet chat rooms that discussed CMKM and its business, and

he met people online who owned or were interested in CMKM securities through

his participation in various CMKM Internet chat rooms. During 2005 through

2007, Glisson used the screen name Deli Dog or Deli when visiting and

posting in various Internet chat rooms relating to CMKM and CMKM Securities.

Glisson started using [email protected] as his email address in 2001,

and has continued to use this address into 2011.

The Deregistration of CMKM Stock

10. On March 3, 2005, the Commission issued an Order of Suspension ofTrading pursuant to Section 12(k) of the Securities Exchange Act of 1934, which

suspended trading in the securities of CMKM Diamonds, Inc., a/k/a Casavant

Mining Kimberlite International, Inc., for a period from March 3, 2005 through

March 16, 2005. The Order recited that questions had been raised about the

adequacy of publicly available information concerning, among other things,



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CMKM Diamonds assets and liabilities, mining and other business activities,

share structure and stock issuances, and corporate management. Since the fiscalyear ending December 31, 2002, CMKM Diamonds has been delinquent in its

periodic filing obligations under Section 13(a) of [the Exchange Act]. The

Commission is concerned that CMKM Diamonds may have unjustifiably relied on

a Form S-8 to issue unrestricted shares. The Commission is also concerned that

CMKM Diamonds and/or certain of its shareholders may have unjustifiably relied

on Rule 144(k) of the [Securities Act] in conducting an unlawful distribution of its

securities that failed to comply with the resale restrictions of Rules 144 and 145 of

the Securities Act. (Exhibits 401 & 402.)

11. On March 16, 2005, the Commission issued an Order InstitutingAdministrative Proceeding and Notice of Hearing Pursuant to Section 12(j) of the

Securities Exchange Act of 1934 in the Matter of CMKM Diamonds, Inc.,

Respondent. (Exhibit 403.)

12. On July 12, 2005, an administrative law judge issued an InitialDecision in the Matter of CMKM Diamonds, Inc., which after reciting factual and

legal findings, ordered that pursuant to Section 12(j) of the Securities Exchange

Act of 1934, the registration of each class of securities of CMKM Diamonds, Inc.

is hereby REVOKED. (emphasis in original). (Exhibit 404.)

13. On October 28, 2005, the Commission issued an Order which madefinal the initial decision of the administrative law judge. The October 28, 2005

Order stated: Notice is hereby given that the initial decision of the administrative

law judge has become a final decision of the Commission with respect to CMKM

Diamonds, Inc. The order contained in that decision revoking the registration of

the securities of CMKM Diamonds, Inc. is hereby declared effective. Thus, the

registration of each class of CMKM securities was revoked. (Exhibit 5.)



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14. At all times subsequent to October 28, 2005, CMKM has not had aregistration statement filed and declared effective under the Securities Act or theExchange Act.

15. Glisson learned that CMKMs registration had been revoked, and itsstock delisted, on or about the date the announcement was posted. Glisson

understood that CMKM had not filed a Form 15. Glisson understood that CMKM

stock was no longer tradeable, and he could not buy or sell CMKM through a

registered broker or dealer. Glisson understood that his holdings of CMKM, which

he estimated to be about 700 million shares, were deemed worthless.

Glissons Transactions in CMKM Stock

16. Glisson tried to make a profit when he bought and/or sold CMKMsecurities.

17. Glisson has never registered, or applied to be registered, with the SECas a securities broker or dealer.

18. Glisson has never been employed by a registered broker or dealer.19. At all times from December 2005 through 2010, there was no

registration statement in effect for any of the CMKM stock bought and sold by

Glisson.

A. Glissons CMKM Stock Transactions from 2005 to 2007

20. Beginning in December 2005, Glisson began buying and sellingderegistered CMKM stock with persons he contacted through the Internet. Glisson

bought and sold deregistered CMKM from December 2005 through May 2006,

when he stopped after being contacted by attorneys for the SEC and the Wisconsin

Department of Financial Institutions (DFI). In a letter dated June 6, 2006, an

attorney for Glisson contacted the DFI. In that letter, Glissons attorney stated that

Glisson operated as a sole proprietor in connection with such transactions in



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CMKM stock. The attorney also stated: Further, you are advised that Mr. Glisson

has ceased such activities. (Exhibit 9.) The letter to the DFI was transmitted, inturn, to the SEC, under cover of a letter dated July 7, 2006. (Exhibit 8.)

21. Glisson resumed effecting transactions in CMKM shares in September2006, and bought and sold deregistered shares until April 2007. On or about April

9, 2007, CMKM instructed its transfer agent, 1st Global, to immediately cease all

transfers and issuance of CMKM securities.

22. In connection with a motion for summary judgment in this case filed byplaintiff in 2009, Glisson submitted a declaration to this Court, under oath. In that

declaration, Glisson stated 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. (Exhibit

141 & Docket No. 28 in this Courts file.) Shortly after Glissons declaration was

filed and while the summary judgment motion was pending, in early 2010 Glisson

resumed selling deregistered CMKM securities to persons he met through the

Internet and chat rooms. Glisson realized revenues of approximately $1.6 million

from these 2010 sales. Glisson did not advise the Court that he was engaging in

conduct contrary to his sworn statement to this Court.

23. Glisson developed procedures for buying and selling deregisteredCMKM shares. In December 2005, Glisson contacted 1st Global, which was

CMKMs transfer agent, and asked if the firm was willing to perform transfer

agent services for him with respect to purchases and sales of CMKM stock.

Glisson spoke to Helen Bagley, who he knew as the owner of 1st Global. In

response to Glissons request, 1st Global agreed to cancel and re-issue CMKM

stock certificates in accordance with Glissons instructions.



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24. Glisson did not consult with an attorney for advice about whether itwas legal to purchase and sell CMKM stock before he began to engage intransactions in CMKM stock in December 2005. Glisson did not consult with an

attorney for advice about whether it was legal to purchase and sell CMKM at any

time thereafter through at least August 2007.

25. Both to find sellers and buyers, Glisson posted on the Internet that hewas buying shares, or selling shares, of CMKM. Glisson used the alias Deli Dog

when visiting various chat rooms. Glisson found buyers and sellers of CKMK

securities through his visits to various chat rooms from December 2005 through

April 2007. Glisson also found sellers and buyers of unregistered CMKM

securities through referrals from his suppliers and customers.

26. Glisson went to the chat room Pal Talk, which has multiple rooms.Glisson regularly visited Pal Talk rooms called Pro CMKX and The Belgiums

Room, and other chat rooms, where he exchanged posts about CMKM. Glisson

visited another chat room named Pro Board, where he also used the alias Deli

Dog. Glisson also visited a chat room named Willy Wizards Underground,

where he used the alias Deli Dog and participated in chats relating to CMKM

securities.

27. In the Internet chat rooms, Glisson posted that he was buying andselling CMKM stock, and posted his telephone number. Persons who wanted to

talk to Glisson about the purchase and sale of CMKM stock usually called Glisson

or sent him an email to inquire about his interest in and the terms of any such

transaction.

28. During the period between December 2005 and at least August 2007,Glisson talked to CMKM shareholders every day. Every day Glisson met with

CMKM shareholders face to face, on the computer, and/or on the telephone.



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Everywhere Glisson went he met with CMKM shareholders. When Glisson

gathered with other CMKM shareholders they talked about CMKM shareholders,meetings, about the company, about each other, and what was going on in their lives.

29. People who wanted to sell their CMKM shares contacted Glissonthrough Pal Talk, Internet, e-mail, and telephone. Glisson posted his telephone

number on the Internet and made it known that he was willing to purchase CMKM

shares. He did not post a price on the Internet, and never discussed price until he

was contacted. There was a board called the 66 Board that Glisson would call

bashers. These were people who wanted to sell their CMKM stock. Glisson

purchased stock from people on the 66 Board.

30. Glisson typically offered to buy CMKM stock for trip one, or$0.0001 per share. However, Glisson also paid trip two ($0.0002) up to trip

five ($0.0005) for deregistered CMKM stock during the period from December

2005 through April 2007.

31. Before buying deregistered CMKM stock, Glisson verified with 1stGlobal that the certificate was valid.

32. After verifying that the certificate was valid, Glisson would instructthe seller to send him the certificate and Glisson would send the money, either by

cashiers check or by wire. Glisson would wire the money from whatever financial

institution he was working out of at the time, either Blackhawk or BofA.

33. Glisson bought CKM stock in transactions with individuals in the UnitedStates and Canada. Glisson used the Internet, the telephone, mail, and bank wire

services to effect his purchases of CMKM stock, in interstate commerce. Glisson

sometimes paid for his purchases of CMKM stock using wire transfer facilities.

34. During the period from December 2005 through May 2006, Glissonsometimes used written agreements to set forth the terms of his purchases of



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CMKM stock, which were titled Stock Sell-Purchase Agreement. Joint Pretrial

Order, Section III (Admitted Facts) at 22. See also Joint Exhibits 3233, 3234,3235, 3236, 3237, 3238, 3243, 3245, 3246, 3091, 3092, 3252, and 3253. Glisson

developed the agreement to use for his CMKM stock purchases.

35. Also during this period, Glisson had some sellers execute letterswaiving all rights to any dividends or cash settlements associated with the CMKM

stock he was purchasing. Joint Pretrial Order, Section III (Admitted Facts) at 22.

See also Joint Exhibits 3231, 3232, 3239, 3240, 3241, 3242, 3244, 3247, 3248,

3250, and 3254.

36. Glisson was assisted in finding CMKM stock by individuals he metthrough the internet, who procured stock for Glisson. Two such individuals are

Steven Brewer and Michael Wright.

37. For the period between December 2005 through April 2007, whenGlisson was contacted by a prospective purchaser of CMKM stock, Glisson

typically provided such prospective purchasers with (1) his contact information, (2)

a price schedule for CMKM securities setting prices of between $0.0003 to

$0.00025 per share depending on the number of shares being purchased, and (3)

payment instructions including wire transfer information and an address for

mailing payment.

38. After Glisson received a communication from a person who wanted topurchase CMKM securities, Glisson required payment before consummating the

transaction. Glisson charged a $50 fee for each CMKM certificate that he sold,

during all relevant periods, including December 2005 through April 2007, and 2010.

39. Typically, after receiving payment, Glisson sent a letter of instructionto the transfer agent to cancel one certificate and issue new certificates to the

purchasers of such stock per Glissons letter of instruction. The transfer agent



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usually was asked to send the newly issued certificates to Glisson, or to hold them

for pick-up.40. From December 2005 through April 2007, Glisson sent instructions to

1st Global using Federal Express or U.S. Mail overnight services. 1st Global

charged Glisson a fee of between $16.50 and $17.50 for each certificate that

Glisson requested be cancelled, and between $16.50 and $17.50 for each new

certificate that Glisson had issued.

41. When Glisson received the CMKM stock certificates from the transferagent, he made a copy and then sent the stock certificates to the buyers. Glisson

also filled out a CMKM Task Force registration form for each new certificate, and

when he got a large amount of such forms, Glisson put the CMKM Task Force

registration forms into an envelope and shipped them to the CMKM Task Force.

42. The CMKM Task Force recorded owners of CMKM certificates in aneffort to confirm the CMKM shares that were validly issued and outstanding. The

CMKM Task Force was not an official governmental entity, but rather was

something affiliated with CMKM.

43. Numerous letters of instruction were sent by Glisson to 1st Global, totransfer of billions of shares of deregistered CMKM stock. During the period from

December 2005 to May 2006, Glisson sent over 70 letters of instruction to the

transfer agent to direct the transfer of more than 8 billion shares of CMKM stock.

A summary of the letters shows that Glisson transferred CMKM stock to hundreds

of buyers or other recipients.

44. Although Glisson sold CMKM stock again from September 2006through April 2007, Glisson produced letters of instruction to the stock transfer

agent only for the period from September 2006 to January 2007. Glisson sent

approximately 19 letters to the transfer agent during that period. A summary of the



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letters shows that Glisson directed the transfer of over 35 billion shares in that four

month period, to over a thousand buyers or other recipients.45. In late 2006, Glisson parked large amounts of CMKM stock with

Tungwongsathong because he was in the process of divorcing Padilla.

46. Glisson posted in Internet chat rooms and expressed the opinion topotential purchasers of CMKM that it was the stock of a lifetime and a great

opportunity, or that once they bought and the shares were registered with the

CMKM Task Force, they just had to sit back and wait for the assets to be given

out.

47. Glisson told prospective purchasers that they may be running out oftime if there was some cash payout in the next 30 to 60 days, or that time was

running out, or that he was getting low on shares. Glisson told prospective

purchasers in early 2006 to expect a payout in May or June.

48. Glisson told prospective purchasers that the more CMKM shares theypurchased, the better price he would give them.

49. Some of the people to whom Glisson sold CMKM stock in 2005-2007were people that Glisson did not know and never met.

50. Some of the people from whom Glisson purchased CMKM shareswere people that Glisson did not deal with directly. For example, Glisson

purchased shares held in the name of a third party, Monte Verde Holdings and/or

Rendal Williams, who Glisson did not know and to whom he never spoke. Glisson

purchased the Monte Verde/Rendal Williams shares from Steven Brewer. Glisson

knew that Rendal Williams was the officer of a joint venture partner of CMKM.

51. In 2007, Glisson and Tungwongsathong purchased shares inWordsmith Media, Inc. On or about August 13, 2010, Wordsmith Media

announced that it had received approval from the Financial Industry Regulatory



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Authority (FINRA) to quote its common stock on the OTC Pink Sheets under

the ticker symbol WDIS.52. In December 2005, there were approximately five accounts at

Blackhawk Community Credit Union (BCU) associated with either Glisson,

Padilla, or Deli Dog House. A sixth account was opened in May 2006. Of these

accounts, transactions related to CMKM securities occurred in three accounts: (1)

Account No. ##8307, primary account holder Marco Glisson, held jointly with

Alma Padilla (BCU 8307 Account); (2) Account No. ##3788 held in the name of

Alma Padilla (BCU 3788 Account); and (3) Account No. ##7650 held in the

name of Marco Glisson (BCU 7650 Account). The BCU 8307 Account was

closed on May 11, 2006, and the BCU 7650 Account was opened on the same date.

53. Glisson directed deposits and withdrawals into the BCU 8307Account, BCU 3788 Account, and BCU 7650 Account, relating to purchases and

sales of CMKM securities.

54. Beginning in December 2005 through at least November 2006,Glisson instructed persons who purchased CMKM stock from him to wire funds to,

at various times, the BCU 3788 Account, the BCU 8307 Account, and after May

2006, the BCU 7650 Account. In accordance with Glissons instructions,

individuals who purchased CMKM securities from Glisson during this period

wired funds into the accounts Glisson specified, or sent checks to Glisson which

were then deposited into one of the three accounts.

55. Most of the incoming wire transfers shown on Exhibit 16 are frompersons who purchased CMKM shares from Glisson. Exhibit 16 lists

approximately 497 wire transfers into the three accounts, which total

$1,960,844.60. These incoming wire transfers are proceeds from Glissons sale of

CMKM shares.



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56. Glisson used funds from the three accounts included in Exhibit 16 topurchase CMKM shares from third parties. Exhibit 16 lists approximately 56separate wire transfers out of the three accounts, which total $1,522,632.00. A

November 17, 2006 wire transfer in the amount of $105,000.00 from the 7650

Account was to one of Tungwongsathongs accounts, held POD Glisson, at BofA,

BofA 9145 Account.

57. In August 2006, Tungwongsathong opened two bank accounts atBofA in Las Vegas: (1) the BofA 3830 Account, and (2) the BofA 9145 Account,

which were designated as Individual accounts. In or around November 2006,

Tungwongsathong designated Glisson as Payable on Death (POD) beneficiary of

both accounts. At about the same time, Tungwongsathong changed the address for

the account statements to the address of Glissons apartment in Las Vegas, at 2200

S. Fort Apache Rd., Apt. 2017, Las Vegas, Nevada. (Exhibit 49.) Shortly after

Tungwongsathong changed the designation and address on her accounts, Glisson

transferred $105,000 from his 7650 Account at Blackhawk to the BofA 9145

Account.

58. In late 2006 through at least May 2007, Tungwongsathong had twoaccounts at Bank of America (BofA): (1) Interest Checking Account, Account

No. #### #### 3830 (BofA 3830 Account); and (2) Balance Rewards Money

Market, Account No. #### #### 9145 (BofA 9145 Account). Beginning in

November 2006, Glisson instructed persons who purchased CMKM stock from

him to make payments to Tungwongsathong by check or money order, or to wire

funds to Tungwongsathong. In accordance with Glissons instructions, individuals

who purchased CMKM securities from Glisson during this period sent payments as

Glisson specified. These payments were deposited into the BofA 9145 Account,

which was POD Glisson.



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59. Between November 2006 and May 2007, numerous deposits weremade into the BofA 9145 Account by Glisson, or at his direction, of checks andmoney orders that Glisson received through the mail from people who were

purchasing CMKM stock from him. (See, e.g., Exhibits 49, 50, 51, 57, 58, 59, 60,

61, 62, 63, 64, 65, 66, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 82, 85, 86, 87,

88, 89, 90, 91, 92, and 93.) In addition, at Glissons direction, at least two people

who purchased CMKM securities from Glisson were instructed by him to wire

funds into the BofA 9145 Account. (See, e.g., Exhibit 68.)

60. Between December 2005 and May 2007, Glisson received grossproceeds from sales of CMKM stock of at least $4,410,635.65.

61. Between December 2005 and May 2007, Glisson expended$1,644,985 to purchase CMKM stock.

62. Between December 2005 and May 2007, Glisson netted at least$2,765,650 from his sales of CMKM securities.

B. Glissons 2010 CMKM Stock Transactions

63. In 2010, Glisson resumed his activities as an unregistered dealer inCMKM securities, and sold CMKM securities for his own account as part of a

regularly conducted business activity. Glisson used means and instrumentalities of

interstate commerce to effect transactions in CMKM stock.

64. In 2010, Glisson continued to use Deli Dog as his alias when heposted in Internet chat rooms about CMKM, and used the Deli Dog email address

when communicating with people who wanted to buy CMKM stock from him.

65. In April 2010, CMKM contracted with Transfer Online to performtransfer agent services for CMKM stock, which allowed for the cancellation and

issuance of CMKM securities held in certificate form.

66. In connection with his 2010 CMKM sales, Glisson corresponded via



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email with prospective purchasers of CMKM securities. (See Exhibits 127 and

140.) Glisson sent, or caused to be sent, communications to CMKMs new transferagent, Transfer Online, which contained instructions for the transfer of CMKM

shares to third parties. (See, e.g., Exhibits 97 to 110.)

67. In 2010, Tungwongsathong had three bank accounts at Sun Trust Bankin Florida: (1) Account No. #########8392 (ST 8392 Account); (2) Account

No. #########8651 (ST 8651 Account); and (3) Account No. #########2437

(ST 2437 Account). Glisson was designated as a Payable on Death (POD)

beneficiary on each of the accounts. The ST 8392 Account and ST 8651 Account

were both active as of May 2008. The ST 2437 Account was opened in or around

July 15, 2010. The address on the statements for all three accounts was 3823

Tamiami Trail East, #567, Naples, Florida 34112-6224, which was a rented mailbox

Glisson used to receive his mail. (See Exhibits 406-1 to 406-6.)

68. For his sales of CMKM stock in 2010, Glisson directed purchaser tomake payments to Tungwongsathong.

69. Glisson deposited, or caused to be deposited, proceeds from 2010sales of CMKM stock into the ST 8651 Account, which was POD Glisson.

70. In 2010, Glisson regularly used the Internet, telephones, and mail tocommunicate with purchasers of CMKM securities. (See, e.g., Exhibits 127 and 140.)

71. In 2010, Glisson regularly communicated with the new transfer agentfor CMKM, Transfer Online, using the mails, Internet, and telephone, to transfer

CMKM shares to those who purchased from him.

72. In April 2010, Glisson admitted to a third party that he sold over$200,000 of CMKM stock in a single week; he wanted to dump some of his

CMKM stock while there was some excitement about a lawsuit that had been filed

by some CMKM shareholders; that he was in the business of selling CMKM



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securities; and that he needed a place to park $400,000.

Glissons Failure to Preserve Relevant Files73. The Commission issued a subpoena to Glisson on March 15, 2007,

which required Glisson to produce documents and to testify. Glisson printed out

about 176 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.

74. At his deposition in 2011, Glisson reported that the laptop computerhe 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.

75. Glissons failure to retain or secure these computers made itimpossible for Glisson to comply with his obligations to preserve and then produce

all relevant documents in response to validly issued subpoenas.1

CONCLUSIONS OF LAW

A. Glisson Violated Section 15(a)(1) Of The Exchange Act By ActingAs An Unregistered Broker And Dealer

76. Section 15(a)(1) of the Exchange Act provides:1 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 thatparty did not preserve relevant emails).



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

person other than a natural person or a natural person notassociated with a broker or dealer which is a person other than a

natural person (other than such a broker or dealer whose

business is exclusively intrastate and who does not make use of

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

the mails or any means of interstate commerce to effect any

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

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

commercial paper, bankers acceptances, or commercial bills)

unless such broker or dealer is registered in accordance with

subsection (b) of this section.

15 U.S.C. 78o(a)(1).

77. Scienter is not an element of a violation of Section 15(a). See SEC v.Offill, 2012 WL 246061, at *5 (N.D. Tex. Jan. 26, 2012); SEC v. Radical Bunny,

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

2011) (citing SEC v. Alliance Leasing Corp., No. 98-CV-1810-J (CGA), 2000 WL

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

78. The broker-dealer registration requirement of the Exchange Act isintended to protect investors against manipulation of stock prices through

regulation of transactions upon securities exchanges and in over-the-counter

markets. See Ernst & Ernst v. Hochfelder, 425 U.S. 185, 195 (1976) (citing S.

Rep. No. 792, 73d Cong., 2d Sess., 1-5 (1934)). The requirement that brokers and

dealers register is of the utmost importance in effecting the purposes of the

Exchange Act. The registration requirement enables the SEC to exercise discipline

over those who may engage in the securities business and it establishes necessary



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standards with respect to training, experience, and records. See, e.g., Regional

Properties, Inc. v. Financial and Real Estate Consulting Co., 678 F.2d 552, 561(5th Cir. 1982) (citing Eastside Church of Christ v. National Plan, Inc., 391 F.2d

357, 362 (5th Cir. 1968)).

79. Many legitimate brokerage firms operate as both brokers and dealers,and because both brokers and dealers are subject to the registration requirements

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

securities industry almost interchangeably with the terms broker and dealer,

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

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

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

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

1. Glisson Was A Dealer Of Unregistered CMKM Shares80. Section 3(a)(5)(A) of the Exchange Act defines the term dealer: In

General.The term dealer means any person engaged in the business of buying

and selling securities for such persons own account through a broker or

otherwise. 15 U.S.C. 78c(a)(5)(A).

81. Section 3(a)(5)(B) further provides: Exception for Person NotEngaged in the Business of Dealing.The term dealer does not include a person

that buys or sells securities for such persons own account, either individually or in

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

82. Determining whether someone is engaged in the business of adealer is the regularity of [his] participation in the buying and selling of securities

for his own account. See, e.g., SEC v. Offill, 2012 WL 246061, at *7. See also

SEC v. Ridenour, 913 F.2d 515 (8th Cir. 1990);Eastside Church of Christ v.

National Plan, Inc., 391 F.2d 357 (5th Cir. 1968); Couldock & Bohan, Inc. v.



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Societe Generale Sec. Corp., 93 F. Supp. 2d 220 (D. Conn. 2000).

83.

In Couldock & Bohan, 93 F. Supp. 2d 220, plaintiff was a Connecticutcorporation in the business of arranging purchases and sales of non-equity

securities. Plaintiff contended that it was not required to register as a broker or

dealer because it arranged matched purchases and sales by others. In these

matched transactions, the seller knew the plaintiff as the purchaser and delivered

the securities to the plaintiffs account; and on the other side of the transaction, the

buyer also knew the plaintiff as the seller and delivered funds to the plaintiffs

account. In other words, like Glisson, the plaintiff in Couldock & Bohan was in

the middle of the transaction. The court explained why plaintiffs actions under

such circumstances qualified it as a dealer as defined in the Exchange Act:

In Plaintiffs transactions, however, the buyer and seller were

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

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

not merely matching buyers and sellers, but rather was placing

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

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

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

Court thus has no difficulty in discerning from the undisputed

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

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

dealer of securities as defined in the Exchange Act.

Id. at 229.

84. In SEC v. Ridenour, 913 F.2d 515 (8th Cir. 1990), over a two yearperiod between 1979 and 1981, defendant Ridenour effected on his own behalf

over 100 matched transactions in which he would buy a security from a client,



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and then resell the same security within a short period of time at a profit. Id. at

516. The Eighth Circuit found Ridenours arguments that he was not required toregister as a broker-dealer to be unavailing, because the level of activity over

100 matched transactions in two years made him more than an active investor.

Id. at 517.

85. In SEC v. Offill, the defendant regularly bought and sold securities forhis own account in transactions involving a substantial number of shares and

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

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

individual investor making isolated transactions, but rather the only conclusion

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

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

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

86. Glissons conduct meets the statutory definition of a dealer because hedid a regular business in CMKM securities. Glissons letters of instruction to 1st

Global establish the regularity of Glissons business by showing how often Glisson

was ordering transfers CMKM shares (several times a day on some days, and

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

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

transacting shares (over 1,000).

87. Glisson also developed a regular method for dealing with prospectivebuyers. 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.

88. Although profitability is not one of the criteria for being a dealer, asthe Couldockcourt observed, putting oneself in the middle of stock transactions



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

buying low and selling high wherever possible.2

Glisson set the price at whichhe 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.3

89. Therefore, Glissons activity establishes that his trading in CMKMwas more than just a hobby, or conduct of an active investor.4 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.

2. Glisson Was A Broker Effecting Transactions InUnregistered CMKM Shares

90. Section 3(a)(4)(A) of the Exchange Act defines the term broker: InGeneral.The term broker means any person engaged in the business of effecting

transactions in securities for the accounts of others. 15 U.S.C. 78c(a)(4)(A).

91. As with the definition of dealer, Section 3 of the Exchange Act doesnot specifically define the phrase engaged in the business of a broker, and

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

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

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

2 Answer at 11, 12.3 Clearing, in the context of securities, consists of the comparison of thedetails of a transaction between brokers prior to settlement, and the final exchangeof 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).4 It is unclear how Glissons transactions in deregistered shares of CMKMwould ever qualify as activities of a normal investor, since CMKM stock was nottradeable, but for Glisson setting himself up as a broker-dealer in CMKM stock.



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

Capital, Ltd., 69 F. Supp. 2d 1, 12 (D.D.C. 1998)). Regularity of participation canbe shown by such factors as the dollar amount of securities sold, and the extent to

which advertisement or investor solicitation wee used. Id.

92. The Exchange Act also does not define effecting transactions for thepurposes of being a broker. In determining whether a person effected

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

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

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

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

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

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

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

93. Moreover, when assessing whether someone is considered a broker,courts have concluded that many of the activities that signify that one is a dealer

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

federal securities laws. For example, inEastside Church of Christ v. National

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

that defendant was a broker, the Fifth Circuit addressed whether it was also a

dealer. The Fifth Circuit found that the evidence that defendant bought and sold

church bonds for its own account, and sold some bonds to others, demands a

finding that defendant was a broker and a dealer: National purchased many

church bonds prior to the ones in question for its own account as part of its regular

business and sold some of them. Thus National was a broker and a dealer within

the meaning of the [Exchange] Act. Id.

94. In addition, courts have stated that regularity of participation is the



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primary indicia of being engaged in the business of being a broker, with courts

looking to the same factors for brokers as they do for dealers. SEC v. KentonCapital, Ltd., 69 F. Supp. 2d 1, 12 (D.D.C. 1998). There is no specific dollar

amount of transactions that is necessary to qualify as a broker, or level of

solicitation. See, e.g., SEC v. Kenton Capital, 69 F. Supp. 2d at 13 (defendants

collected $1.745 million from 12 investors and actively solicited participation); SEC

v. National Executive Planners, Ltd., 503 F. Supp. 1066, 1073 (M.D.N.C. 1980)

($4.3 million of securities sold and solicited clients actively);Joseph McCulley, SEC

No-Action Letter, 1972-73 Transfer Binder Fed. Sec. L. Rep. (CCH) 78,982, at 82,

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

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

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

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

be shown by: (1) solicitation of investors to purchase securities, (2) involvement in

negotiations between the issuer and the investor, and (3) receipt of transaction-

related compensation. SEC v. Earthly Mineral Solutions, Inc., Case No. 2:07-cv-

1057-JCM, 2011 WL 1103349, at *3 (D. Nev. March 23, 2011) (citing SEC v.

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

95. Here, Glisson actively sought to effect securities transactions, andsolicited investors, by posting on the Internet that he was buying and selling

CMKM stock. As discussed above, Glisson received transaction-based

compensation in two ways: (1) the spread between his purchase price and his sale

price, and (2) a $50 per certificate fee. Glisson also negotiated with buyers and

with sellers. Moreover, as also discussed above, Glisson regularly participated in

transactions in CMKM stock. Glissons regular activity over a 15-month period

generated over $4.4 million in sales of CMKM stock, or average monthly revenues



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of over $293,000.

96.

In addition, Glisson was effecting transactions for the account of thirdparties, and not just for his own account. Glisson ordered the transfer of stock

from third parties, to other third parties, without himself ever taking title to the

stock, and Glisson collected money from buyers and paid sellers, and collected

CMKM certificates from sellers and provided CMKM certificates to his buyers.

For example, on December 15, 2005, Glisson ordered the transfer of 25 million

shares held in the name of Thomas and Tracy Butcher, to four purchasers.5

Glisson collected payments from the purchasers, and paid the Butchers for their

shares, and collected and reissued stock certificates. Similarly, on November 7,

2006, Glisson ordered the transfer of 5 billion shares held in the names of Life

Line Entertainment, Sirinucha N. Mulasastra, and Rick Walker, with

approximately 1.8 billion transferred to about 249 purchasers, and the remaining

3.1 billion transferred into Glissons name.6 Again, Glisson did all the work

cancelling the shares of the sellers, arranging for new certificates to be issued in

the names of the buyers and distributing the certificates to the buyers, as well as

collecting payments from the buyers, and paying the sellers for their shares.

97. Thus, a preponderance of the evidence shows that Glisson was actingas a broker.

3. Glisson Violated Section 15(a) Of The Exchange Act ByFailing To Register As A Broker Or Dealer

98. Glisson concedes that he never registered as a broker or dealer, orassociated with a broker or dealer. As a result, having proven that Glisson was

either a broker, or a dealer, or both, the Commission established itsprima facie

5 See Joint Exhibit 3045.6 See Joint Exhibit 3018.



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case that Glisson violated Section 15(a) of the Exchange Act.

99.

Glissons conduct demonstrates the importance of the broker-dealerregistration requirements. In his emails, Glisson trafficked in rumors about an

impending dividend or payout to CMKM shareholders. Despite the fact that

Glisson had hundreds of millions, and billions, of shares of CMKM, in his emails

to prospective buyers Glisson suggested that shares were scarce and buyers had to

act fast. Moreover, through his actions Glisson effectively nullified the

Commissions trading suspension, deregistration, and delisting of CMKM stock,

which was done to protect investors from relying on unfounded rumors and

inaccurate information. Instead, Glisson set himself up as a one man broker,

dealer, and clearing agent for CMKM transactions.

100. Therefore, Glisson violated Section 15(a) of the Exchange Act.B. Glisson Violated Section 5 Of The Securities Act By Offering To

Purchase And Sell, And By Selling, Deregistered CMKM Stock

101. Sections 5(a) and (c) of the Securities Act make it unlawful to offer orsell a security in interstate commerce if a registration statement has not been filed

as to that security, unless the transactions qualifies as exempt from registration. 15

U.S.C. 77c(a) & (c). The definition of a security includes a companys stock.

15 U.S.C. 77b(a)(1).

102. To state aprima facie case, the Commission must show: (1) noregistration statement was in effect as to the securities; (2) the defendant, directly

or indirectly, sold or offered to sell the securities; and (3) the sale or offer was

made through interstate commerce or the mails. SEC v. Phan, 500 F.3d 895, 902

(9th Cir. 2007); SEC v. CMKM Diamonds, Inc., 2011 WL 3047476 (D. Nev. July

25, 2011). The Commission is not required to prove scienter to establish a

violation. See Phan, 500 F.3d at 906; CMKM, 2011 WL 3047476, at * 2; SEC v.



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Softpoint, Inc., 958 F. Supp 846, 859 (S.D.N.Y. 1997), affd159 F.3d 1348 (2d

Cir. 1998).1. The Undisputed Evidence Establishes APrima Facie

Violation Of Section 5 By Glisson

103. The Commission established itsprima facie case that Glisson violatedSection 5. Glisson admitted and stipulated that he bought and sold CMKM

securities in interstate commerce. Glisson does not contest that a registration

statement was not in effect. Glisson has admitted that he learned that CMKM

stock had been deregistered and delisted in November 2005.

104. Thus, Glisson has essentially admitted to all the elements of aprimafacie violation of Section 5.

2. Glisson Has The Burden Of Proving That He Is Entitled ToAny Claimed Exemptions From Section 5

105. Once the Commission establishes aprima facie violation, the burdenthen shifts to Glisson to prove that the offer and sale transactions were exempt

from the registration requirements. SEC v. Ralston Purina Co., 346 U.S. 119, 126

(1953); SEC v. Platforms Wireless International Corp., 617 F.3d 1072, 1086 (9th

Cir. 2010).

106. Section 5, by its terms, is all embracing; it prohibits the offer or saleof unregistered securities. See Phan, 500 F.3d at 902. Exemptions from

registration provisions are construed narrowly in order to further the purpose of

the Act, which is to provide full and fair disclosure of the character of the

securities, and to prevent frauds in the sale thereof. Platforms Wireless, 617 F.3d

at 1086 (quoting SEC v. Murphy, 626 F.2d 633, 641 (9th Cir. 1980)).

107. Glisson asserts that his transactions are exempt from registrationunder Section 4(1) of the Securities Act, 15 U.S.C. 77d(1), which exempts from



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the registration provisions transactions by any person other than an issuer,

underwriter, or dealer. Specifically, Glisson asserts that he was not a dealer inCMKM stock, and thus is entitled to this exemption.7

108. However, Glisson cannot satisfy his burden of showing that thisexemption applies here. As a threshold matter, this provision exempts

transactions, not persons. Moreover, as discussed above with respect to the

Commissions Section 15 claim, the preponderance of the evidence establishes that

Glisson was a dealer in CMKM stock. As a result, Glisson cannot to meet his

burden of showing that his sales of CMKM were exempt under Section 4(1).

C. Glisson Cannot Avail Himself Of A Reliance Of Counsel Defense109. In the Joint Pretrial Order, Glisson asserts a reliance on counsel

defense.8

110. The reliance on counsel defense may be asserted if it is establishedthat the defendant (1) made a complete disclosure to counsel, (2) requested

counsels advice as to the legality or appropriateness of the challenged conduct, (3)

received advice that it was legal or appropriate, and (4) relied in good faith on that

advice. SEC v. Goldfield Deep Mines Company of Nevada, 758 F.2d 459, 467 (9th

Cir. 1985). The defendant has the burden of establishing each element of a

reliance on counsel defense. Id. Moreover, if the defendant acted contrary to the

advice or did not act in good faith, the defense is not available. United States v.

Evangelista, 122 F.3d 112, 117 (2d Cir. 1997) .

111. This defense should be rejected here for a number of reasons. Glissontestified that he did not consult an attorney before he began selling CMKM in

7 See Joint Pretrial Order at Section I.B (Defendants Contentions), at p. 4.8 SeeJointPretrial Order at Section VI.B (Defendants Statement of Issues ofLaw (including fact and law)), at 14.



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December 2005, or at any time, to determine if his actions were legal. Moreover

because violations of Sections 5 and 15(a) are non-scienter based, an advice ofcounsel defense is not available. See SEC v. Holschuh, 694 F.2d 130, 137 n.10

(7th Cir. 1982) ([G]ood faith is not relevant to whether there has been a primary

violation of the registration requirements.).

112. In addition, to assert a reliance on counsel defense, a defendant mustwaive privilege to establish that the elements of the defense. Glisson has not done

so, and the Court should reject any arguments by Glisson that he relied on advice

of counsel.

D. The Court Should Impose Appropriate Remedies, IncludingInjunctive Relief, Disgorgement, Prejudgment Interest Thereon,

A Third Tier Civil Penalty, And A Penny Stock Bar

1. Injunctive Relief Is Necessary And Appropriate113. A permanent injunction against Glisson is necessary to enjoin him

from future violations of the securities registration and the broker-dealer

registration provisions of the federal securities laws.

114. Section 20(b) of the Securities Act, 15 U.S.C. 77t(b), and Section21(d) of the Exchange Act, 15 U.S.C. 78u(d)(1), provide that a permanent

injunction shall be granted upon a proper showing in actions brought by the

Commission. To obtain a permanent injunction, the Commission must show there

[is] a reasonable likelihood of future violations of the securities laws. Murphy,

626 F.2d at 655. In predicting the likelihood of future violations, a court must

assess the totality of the circumstances surrounding the defendant and his

violations. Id.; see also SEC v. Fehn, 97 F.3d 1276, 1295-96 (9th Cir. 1996).

Foremost among these circumstances is the existence of past violations by the

defendant, from which the Court may infer the likelihood of future violations.



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Murphy, 626 F.2d at 655. The factors that courts consider include the degree of

scienter involved; the isolated or recurrent nature of the infraction; the defendantsrecognition of the wrongful nature of his conduct; the likelihood, because of

defendants professional occupation, that future violations might occur; and the

sincerity of his assurances against future violations. Murphy,626 F.2d at 655;

accord Fehn, 97 F.3d at 1295-96.

115. Here, the evidence establishes that Glisson has violated Section 15(a)of the Exchange Act and Section 5 of the Securities Act, which weighs in favor of

an injunction. Moreover, Glisson has shown that the Court cannot credit any

assurances he may provide against future violations. In his 2009 Declaration,

Glisson swore that he would never sell CMKM stock again. While that declaration

was on file and the Commissions motion for summary judgment was pending,

Glisson sold billions of shares of CMKM stock and realized additional profits of at

least $1.6 million. Glisson has testified that he will buy and sell CMKM until a

cease and desist order against him is put in place. Glissons conduct has extended

over a period of almost five years, with stops and starts.

116. Thus, injunctive relief is necessary in this case.2. Glisson Should Be Ordered To Disgorge His Ill-Gotten

Gains And Pay Prejudgment Interest

117. Federal courts have broad equitable powers to order disgorgement ofill-gotten gains from securities law violators. SEC v. First Pacific Bancorp, 142

F.3d 1186, 1191 (9th Cir. 1998). Courts have broad equity powers to order the

disgorgement of ill-gotten gains obtained through the violation of the securities

laws. Id. The purpose of disgorgement is to prevent unjust enrichment and to

deter others from violating securities laws. Id. The amount of disgorgement

should include all gains flowing from the illegal activities. SEC v. J.T.



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Wallenbrock & Assoc., 440 F.3d 1109, 1114 (9th Cir. 2006).

118.

In calculating disgorgement, the Commission need only show areasonable approximation of profits, or ill-gotten gains, causally connected to the

violation. First Pacific Bancorp, 142 F.3d at 1192 n.6. A defendant may be

ordered to disgorge the entireproceeds of an illegal offering whether or not he

personally received the funds. Id. at 1191.

119. Once the Commission has established that the disgorgement figurereasonably approximates the unlawful proceeds, the burden of proof shifts to the

defendant, who must demonstrate that the disgorgement figure is not a reasonable

approximation. SEC v. Calvo, 378 F.3d 1211, 1217 (11th Cir. 2004); SEC v.

Hughes Capital Corp., 917 F. Supp. 1080, 1085 (D.N.J. 1996), affd, 124 F.3d 449

(3d Cir. 1997).

120. A reasonable approximation of Glissons profits from acting as anunregistered broker and dealer, and buying and selling deregistered CMKM stock,

is $2,765,650. This number is determined by adding CMKM-related deposits into

various bank accounts Glisson used at different times between 2005 and 2007,

which totaled $4,410,635.65. From this amount is deducted the costs Glisson

incurred as a dealer in CMKM stock to buy stock, based upon available bank

account information, which the Commission calculated as $1,644,985.00. This

results in a reasonable estimate of profits of approximately $2,765,650.65.9

121. The Court should award prejudgment interest on the disgorgementamounts. Courts order prejudgment interest to ensure that the wrongdoer does not

profit from the illegal activity. SEC v. Manor Nursing Ctrs., Inc., 458 F.2d 1082,

9 Plaintiffs Exhibits 508-5, 508-6, 527, and 528. Glisson has never produceda complete accounting of all his CMKM activities, or provided an estimate of hisprofit. Glisson has declared profits of around $1.2 million for tax purposes for2006 and 2007, and Tungwongsathong declared profits of around $400,000 for2007.



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1105 (2d Cir. 1972); SEC v. CMKM Diamonds, Inc., 635 F. Supp. 2d 1185, 1190

(D. Nev. 2009). The Commission has calculated prejudgment interest from July 1,2007 around the time Glisson stopped his CMKM business in 2007, through the

first date of trial, which amounts to $670,574.79, and a total of disgorgement and

prejudgment interest of $3,436,225.44.10

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

122. Section 20(d) of the Securities Act, 15 U.S.C. 77t(d), and Section21(d)(3) of the Exchange Act, 15 U.S.C. 78u(d)(3), provide that the Commission

may seek monetary civil penalties for violations of those Acts. The Securities Act

and the Exchange Act provide that penalties be assessed according to a three tier

system which corresponds to specified degrees of culpability. See 15 U.S.C.

77t(d) & 78u(d)(3); CMKM, 635 F. Supp. 2d at 1191. Here the Commission seeks

the imposition of a third tier penalty, which applies to violations of the Securities

Act and Exchange Act that (1) involve fraud, deceit, manipulation, or reckless

disregard for a regulatory requirement; and (2) directly or indirectly resulted in

substantial losses or created a significant risk of substantial losses to other

persons. 15 U.S.C. 77t(d)(2)(C) & 78u(d)(3)(B)(iii).

123. In mid-2006, after being contacted by the SEC and the WisconsinDFI, Glisson temporarily stopped his business of buying and selling CMKM

securities. Glissons attorney sent letters to the DFI and SEC which stated that

Glisson had ceased his activities in CMKM stock. However, Glisson stopped for

only a short time, and resumed his activities in September 2006.

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10 See Plaintiffs Exhibits 508-5, 508-6, 527, and 528.



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124. In 2009, in connection with his effort to avoid summary judgment,Glisson swore to this Court that he would never sell CMKM again. Less than 6months after making that sworn statement to the Court, and while the motion for

summary judgment was pending, Glisson resumed his CMKM sales, deriving

profits of $1.6 million.

125. Glissons conduct, in stopping, assuring regulators and/or the Courtthat he will not do it again, and then reneging on such promises and oaths, is

evidence of a reckless disregard of a regulatory requirement. Glissons conduct

also directly or indirectly resulted in a substantial loss or risk of loss to investors.

Glisson admitted that when CMKM stock was deregistered, it was deemed

worthless and was not tradeable. Glissons brokerage account statements from that

period show the stock as worthless. In 2009, Glisson asserted in a sworn statement

that his holdings of CMKM stock were worthless. Yet Glisson peddled his

admittedly worthless holdings of CMKM to thousands of gullible purchasers,

raking in millions of dollars in profits, in early 2010.

126. A third tier penalty can be in an amount equal to the defendantspecuniary gain. Glissons pecuniary gain, as measured by the disgorgement figure,

is about $2.7 million. Glissons 2010 sales of deregistered CMKM generated

another $1.6 million of pure profit. In view of Glissons reckless disregard for

regulatory requirements and the substantial losses likely caused by Glissons

conduct, a third tier civil penalty in the amount of $1.4 million should be imposed

against Glisson.

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

127. Section 21(d)(6) of the Exchange Act, 15 U.S.C. 78u(d)(6), allows afederal court to impose a penny stock bar in Commission actions against any person

participating in, or, at the time of the alleged misconduct, who was participating in,

an offering of penny stock. Section 21(d)(6)(B) of the Exchange Act defines a

person participating in a penny stock offering as any person engaging in activities

with a broker, dealer, or issuer for the purposes of issuing, trading, or inducing or

attempting to induce the purchase or sale of, any penny stock.

128. At all times, CMKM was a penny stock because it was an equitysecurity priced at less than five dollars a share indeed, it was priced at fractions

of a cent a share. See Section 3(a)(51) of the Exchange Act, 15 U.S.C.

78c(a)(51), and Rule 3a51-1(d), 17 C.F.R. 240.3A51-1(d) (For the purposes of

Section 3(a)(51) of the Act, the term penny stock shall mean any equity security

other than a security: (d) .that has a price of five dollars or more.)

129. When deciding whether to impose a penny stock bar, courts consider avariety of factors, including: (1) the egregiousness of the underlying securities law

violation; (2) the defendants repeat offender status; (3) the defendants role or

position when he engaged in the fraud; (4) the defendants degree of scienter; (5)

the defendants economic stake in the violation; and (6) the likelihood that the

misconduct will recur. SEC v. Abellan, 2009 U.S. Dist. Lexis 113450 (W.D.

Wash. Dec. 7, 2009).

130. Here, Glisson was central to the violations of the federal securitieslaws involving a penny stock. Glissons conduct resulted in a Commission

deregistration order being circumvented for the personal financial benefit of

Glisson. Glisson repeated the actions at different periods, and made false promises



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to this Court and regulatory authorities that he had ceased his activity, or would

never do it again. In view of his past conduct, it is highly likely that Glissonsmisconduct will recur. A penny stock bar is therefore appropriate.

Date: April 2, 2012 Respectfully submitted,

/s/ John B. BulgozdyJohn B. BulgozdyDavid J. VanHavermaat

Attorneys for PlaintiffSecurities and Exchange Commission



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PROOF OF SERVICE

I am over the age of 18 years and not a party to this action. My business address is:

[X] U.S. SECURITIES AND EXCHANGE COMMISSION, 5670 WilshireBoulevard, 11th Floor, Los Angeles, California 90036-3648Telephone No. (323) 965-3998; Facsimile No. (323) 965-3908.

On April 2, 2012, I caused to be served the document entitledPLAINTIFFSECURITIESANDEXCHANGECOMMISSIONSPROPOSEDFINDINGSOFFACTANDCONCLUSIONSOFLAW on all the parties to this actionaddressed as stated on the attached service list:

[ ] OFFICE MAIL: By placing in sealed envelope(s), which I placed forcollection and mailing today following ordinary business practices. I amreadily familiar with this agencys practice for collection and processing of

correspondence for mailing; such correspondence would be deposited withthe U.S. Postal Service on the same day in the ordinary course of business.

[ ] PERSONAL DEPOSIT IN MAIL: By placing in sealedenvelope(s), which I personally deposited with the U.S. Postal Service.Each such envelope was deposited with the U.S. Postal Service at LosAngeles, California, with first class postage thereon fully prepaid.

[ ] EXPRESS U.S. MAIL: Each such envelope was deposited in a facilityregularly maintained at the U.S. Postal Service for receipt of ExpressMail at Los Angeles, California, with Express Mail postage paid.

[ ] HAND DELIVERY: I caused to be hand delivered each such envelope tothe office of the addressee as stated on the attached service list.

[ ] UNITED PARCEL SERVICE: By placing in sealed envelope(s)designated by United Parcel Service (UPS) with delivery fees paid orprovided for, which I deposited in a facility regularly maintained by UPS ordelivered to a UPS courier, at Los Angeles, California.

[ ] ELECTRONIC MAIL: By transmitting the document by electronic mailto the electronic mail address as stated on the attached service list.

[X] E-FILING: By causing the document to be electronically filed via theCourts CM/ECF system, which effects electronic service on counsel who

are registered with the CM/ECF system.[ ] FAX: By transmitting the document by facsimile transmission. The

transmission was reported as complete and without error.

I declare under penalty of perjury that the foregoing is true and correct.

Date: April 2, 2012 /s/ John B. BulgozdyJohn B. Bulgozdy



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SEC v. MARCO GLISSONUnited States District Court - District of Nevada

Case No. 2:09-cv-00104-LDG-GWF(LA-3028)

SERVICE LIST

Frederick A. Santacroce, Esq. (served via CM/ECF only)706 S. Eighth StreetLas Vegas, NV 89101Email: [email protected]

Attorney for Marco Glisson

Robert H. Bretz, Esq. (served via CM/ECF only)578 Washington Boulevard, Suite 843Marina del Rey, CA 90292Email: [email protected]

Attorney for Marco Glisson


sec findings of fact

Documents