U.S. v. John Edwards, et al.

The superseding criminal indictment in the Edwards case charged a more clearly defined group of defendants: specific insiders who engaged in fraud through shell companies. Specifically, between approximately May 1997 and April 2008, the defendants used various shell companies – including Pinnacle Business Management, Inc. (May 1997 to December 2003); CMKM Diamonds, Inc. (November 2002 to October 2005); St. George Metals, Inc. (July 2004 to July 2005); and Global Diamond Exchange, Inc. (November 2005 to April 2008) – to defraud purchasers of stock in those companies. The defendants secretly authorized increases in the number of available shares and falsely represented or hid the true number of shares from investors. At the same time, the conspirators issued billions of shares to themselves through affiliates. By falsely claiming that these shares had not been issued to company affiliates, the conspirators were able to sell these shares without restrictions imposed by law. By issuing false and misleading press releases regarding the companies’ business activities, the defendants were able to drive up demand for the companies’ stock while selling their shares at a profit.

Five defendants have been convicted in this case, including Jeffrey Turino (conspiracy to commit securities fraud), and Melissa Spooner, Ginger Gutierrez, James Kinney and Jeffrey Mitchell (conspiracy to sell unregistered securities). These defendants received sentences of imprisonment and probation and terms of supervised release following service of sentence during which defendants are supervised by a U.S. Probation Officer.