glisson case sec brief

8/2/2019 Glisson Case SEC Brief

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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

PLAINTIFFSECURITIESANDEXCHANGECOMMISSIONSTRIALBRIEF

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

(Hon. Lloyd D. George)

Case 2:09-cv-00104-LDG-GWF Document 105 Filed 04/02/12 Page 1 of 44


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TABLE OF CONTENTS

Page

I. INTRODUCTION ...........................................................................................1II. STATEMENT OF EVIDENCE TO BE INTRODUCED AT TRIAL ........... 3

A. Glissons Involvement With CMKM Before The StockWas Deregistered (2003 To Late 2005) ................................................3

B. CMKMs Registration Was Revoked And Its StockDelisted .................................................................................................. 4C. After CMKM Stock Was Deregistered And Delisted,

Glisson Regularly Engaged In Transactions In CMKM StockWith Buyers And Sellers He Found Through The Internet .................. 41. Glisson Developed Methods For Buying CMKM Stock ............ 62. Glissons Method For Selling Deregistered CMKM

Shares ..........................................................................................83. Letters Of Instruction To 1st Global Show The

Regularity Of Glissons Activity In DeregisteredCMKM Stock .............................................................................. 9

4. Bank Activity In Accounts Glisson Used ForCMKM-Related Transactions Show The RegularityOf His Activity .......................................................................... 10

5. Emails Produced By Glisson Provide ExamplesOf Glissons Solicitation Of Investors ...................................... 12

D. Glisson Repeatedly Claimed That He Stopped His ActivitiesIn CMKM Shares, But Resumed Buying And Selling .......................13



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1. In June 2006, Glissons Attorney Says GlissonCeased His Activities, But Glisson Resumes In

September 2006......................................................................... 132. Glisson Swears To This Court In November 2009

That He Has No Intention Of Selling CMKM, ThenSells Billions Of Shares Beginning In Early 2010 ................... 14

E. Several Computers Glisson Used For CMKM ActivitiesWere Lost Or Broken Before Documents Could Be Produced ..................... 14

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

By Acting As An Unregistered Broker And Dealer ........................... 151. Glisson Was A Dealer Of Unregistered CMKM

Shares ........................................................................................172. Glisson Was A Broker Effecting Transactions In

Unregistered CMKM Shares ..................................................... 213. Glisson Violated Section 15(a) Of The Exchange Act

By Failing To Register As A Broker Or Dealer .......................24B. Glisson Violated Section 5 Of The Securities Act By

Offering To Purchase And Sell, And By Selling,Deregistered CMKM Stock .................................................................251. The Undisputed Evidence Establishes A Prima

Facie Violation Of Section 5 By Glisson ................................. 252. Glisson Has The Burden Of Proving That He Is

Entitled To Any Claimed Exemptions From Section 5 ............ 25C. Glisson Cannot Avail Himself Of A Reliance Of Counsel

Defense ................................................................................................26



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

Thereon, A Third Tier Civil Penalty, And A Penny Stock Bar .......... 271. Injunctive Relief Is Necessary And Appropriate ...................... 272. Glisson Should Be Ordered To Disgorge His Ill-Gotten

Gains And Pay Prejudgment Interest ........................................ 293. The Court Should Impose A Third Tier Civil Penalty

In The Amount Of $1.4 Million ................................................304. Glisson Should Be Barred From Participating In

Any Offering Of Penny Stock................................................... 32



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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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SEC v. Earthly Mineral Solutions, Inc.

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. Hansen1984 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), affd, 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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SEC v. Phan

500 F.3d 895 (9th Cir. 2007) ......................................................................... 25

SEC v. Platforms Wireless International Corp.

617 F.3d 1072 (9th Cir. 2010) .......................................................................26

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. Ridenour913 F.2d 515 (8th Cir. 1990) .................................................................. 18, 19

SEC v. Softpoint, Inc.

958 F. Supp 846 (S.D.N.Y. 1997), affd159 F.3d 1348 (2d Cir. 1998) .......25

SEC v. U.S. Pension Trust Corp.

2010 WL 3894082 (S.D. Fla. Sept. 30, 2010) ...............................................21

United States v. Evangelista122 F.3d 112 (2d Cir. 1997) ..........................................................................27

Zubulake v. UBS Warburg LLC

229 F.R.D. 422 (S.D.N.Y. 2004) ...................................................................15

FEDERAL STATUTES

Securities Act of 1933

Section 2(a)(1)[15 U.S.C. 77b(a)(1)] ..................................................................................25

Section 4(1)[15 U.S.C. 77d(1)] ...................................................................................... 26



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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)] .......................................................................................27

Section 20(d)[15 U.S.C. 77t(d)] .......................................................................................30

Section 20(d)(2)(C)[15 U.S.C. 77t(d)(2)(C)] .............................................................................31

Securities Exchange Act of 1934

Section 3(a)(4)(A)[15 U.S.C. 78c(a)(4)(A)] ............................................................................21

Section 3(a)(5)(A)[15 U.S.C. 78c(a)(5)(A)] ............................................................................17

Section 3(a)(5)(B)[15 U.S.C. 78c(a)(5)(B)] .............................................................................17

Section 3(a)(51)[15 U.S.C. 78c(a)(51)] ................................................................................32

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)] .................................................................................. 15



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Section 21(d)[15 U.S.C. 78u(d)(1)] .................................................................................28

Section 21(d)(3)[15 U.S.C. 78u(d)(3)] .................................................................................30

Section 21(d)(3)(B)(iii)[15 U.S.C. 78u(d)(3)(B)(iii)] ......................................................................31

Section 21(d)(6)[15 U.S.C. 78u(d)(6)] .................................................................................32

Section 21(d)(6)(B)[15 U.S.C. 78u(d)(6)(B)] ............................................................................32

FEDERAL REGULATIONS

Rule 3a51-1(d)[17 C.F.R. 240.3A51-1(d)] .........................................................................32

OTHER AUTHORITIES

David A. Lipton,A Primer on Broker-Dealer Registration36 Cath. U.L. Rev. 899 (1987) ......................................................................17



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I. INTRODUCTIONPlaintiff Securities and Exchange Commission (Commission or SEC)

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

claims against defendant Marco Glisson. The Commission has charged Glisson

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

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

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

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

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

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

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

decided at trial. It is undisputed that the registration of CMKMs stock was revoked

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

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

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

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

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

Given these undisputed facts, with respect to the Commissions Section 15

claim, the issue to be decided at trial is whether Glissons regular business of buying

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

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

undisputed facts establish the Commissionsprima facie case that Glisson violated

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

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

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

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

readily demonstrate that Glisson was both a broker and a dealer. The evidence willshow that Glisson engaged in the business of effecting transactions in securities for

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

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

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

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

CMKM transactions. When an investor expressed interest in buying CMKM

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

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

personal information including social security numbers. Glisson profited on the

spread between his purchase price and his sale price.

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

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

CMKMs transfer agent, to transfer billions of shares of CMKM from sellers to

other third parties, to himself, or to his nominee. The regularity of Glissons

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

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

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

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

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

Glissons business was also profitable, since he controlled the spread, and a

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

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

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

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

clearing house, receiving stock certificates, issuing instructions to cancel certificatesand for new certificates, and delivering the new certificates to buyers, while also

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

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

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

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

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

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

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

issue a permanent injunction against future violations of these provisions by

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

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

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

(5) impose a penny stock bar against Glisson.

II. STATEMENT OF EVIDENCE TO BE INTRODUCED AT TRIALA. Glissons Involvement With CMKM Before The Stock Was

Deregistered (2003 To Late 2005)

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

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

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

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

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

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

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

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-wifes restaurant inJanesville, 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. CMKMs Registration Was Revoked And Its Stock DelistedOn 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 CMKMs

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 CMKMs

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, GlissonRegularly 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 (Plaintiffs Facts Not Admitted and NotContested) at 4-5.



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

According to Glissons sworn testimony, at some point in late December2005, he contacted Helen Bagley,3 who was at the time the owner of CMKMs stock

transfer agent 1st Global Stock Transfer, LLC (1st Global). 1st Globals 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

Globals 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 Belgiums 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); JointPretrial Order, Section III (Admitted Facts) at 21, 38 (Docket No. 67).3 Bagley was found to have violated Section 5 of the Securities Act inconnection 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,

or about $0.00004 (quad four) per share. Glisson set the price at which he wouldsell CMKM shares, and he charged $0.0002 (trip two) per share, or higher. Glisson

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

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

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

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

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

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

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

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

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

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

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

Glisson paid his sellers from his bank accounts, using wire transfers or cashiers

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

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

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

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

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

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

1. Glisson Developed Methods For Buying CMKM StockGlisson developed methods for buying CMKM stock, such as using forms to

memorialize his purchases, and using finders, although Glissons methods changed

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

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 thathe 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 Wrights 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 ofJoint Exhibits are contracts that Glisson used when he purchased CMKM stockfrom third parties, such as Joint Exhibit 3233, which is a January 24, 2006 StockSell-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 ofJoint Exhibits are copies of such letters, such as Joint Exhibit 3231, which is aDecember 27, 2005 letter from Leor Zolman. Other examples of such letters areJoint 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 CMKMuntil mid-2006. Glisson paid $310,000 for these shares using cashiers checks

drawn on Tungwongsathongs account at Bank of America. Glissons purchase of

a large block of CMKM shares from Casavant apparently contradicts Glissons

sworn statement to this Court, in opposition to the SECs 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. Glissons Method For Selling Deregistered CMKM SharesGlisson 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 CMKMs

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

6 See Plaintiffs Exhibit 141(Declaration of Marco Glisson in Support of hisOpposition to SECs 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 orto 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 RegularityOf Glissons Activity In Deregistered CMKM Stock

The vast majority of Glissons 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 Glissons stock transactions. However, the

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

of the regularity of Glissons 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 CMKMs 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 Glissons production of letters of instruction to 1st Global does notencompass the universe of his transactions. Glisson did not produce any letters ofinstruction for his CMKM transactions that occurred after January 25, 2007.11 See, e.g., Plaintiffs 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 wehave 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 Plaintiffs Exhibit 509-2.13 For example, Glisson sent seven (7) separate letters of instruction to 1stGlobal dated December 15, 2005; and he sent four (4) dated February 10, 2006.See, e.g., Plaintiffs Exhibit 509-1 (stock transfer letter summary).14 See Plaintiffs Exhibit 509-2; Joint Exhibits 3008, 3009, 3010, 3018.15 See Joint Exhibit 3019.16 See Plaintiffs 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-wifes name, Alma Padilla, with an account numberthat 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 (regardingthe 8307 and 7650 accounts).18 Plaintiff has prepared summary charts showing Glissons CMKM relatedbank activity, letters of instruction, and email activity, for the two periods, whichshow almost daily activity. See Plaintiffs Exhibits 529 and 530. This summary isconsistent with Glissons claim that he talked to CMKM shareholders every day.19 See, e.g., Plaintiffs Exhibit 508-5, which is a summary of Glissons CMKMrelated deposits by account.



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

the $105,000 from Glisson.

20

Again, the volume of deposits, in terms of amountand individual payments that were deposited, shows the regularity of Glissons

CMKM transactions.

5. Emails Produced By Glisson Provide Examples Of GlissonsSolicitation Of Investors

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

persons about CMKM. Glissons production of emails covered a limited time

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

20 See Plaintiffs Exhibit 508-5.21 See Joint Exhibit 3086.



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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 aboutthis 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 HeHas No Intention Of Selling CMKM, Then Sells Billions Of

Shares Beginning In Early 2010

In opposition to plaintiffs 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 Glissons declaration was filed by his attorney, and while

plaintiffs 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 WereLost 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 Plaintiffs Exhibit 141 (Declaration of Marco Glisson in Support of hisOpposition to SECs 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 laptopcomputer 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.

Glissons 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 ARGUMENTA. 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 partydid not preserve relevant emails).28 See Answer at 3; Joint Pretrial Order, Section III (Admitted Facts) at 39, 40.



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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).

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)).

The broker-dealer registration requirement of the Exchange Act is intended 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 standards with respect to training,



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

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)).

The Commission will establish by a preponderance of the evidence that

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

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

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

1. Glisson Was A Dealer Of Unregistered CMKM SharesThe evidence will establish that Glisson was a dealer. 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).

Section 3(a)(5)(B) further provides: Exception for Person Not Engaged 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.

Several courts have explained that determining whether someone is

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

WL 246061, at *7. See alsoSEC 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. Societe Generale Sec. Corp., 93 F. Supp. 2d 220 (D.

Conn. 2000).

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

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

case, plaintiff was a Connecticut corporation 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



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

securities as defined in the Exchange Act.Id. at 229.

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

directly applicable to this case. InRidenour, over a two year period 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, 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 to register 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.

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

for his 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.

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

Exhibits, will establish that Glissons conduct meets the statutory definition of a

dealer because he did 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



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Glisson was transacting shares (over 1,000).

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

Couldockcourt 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, Glissons 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 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).31 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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2. Glisson Was A Broker Effecting Transactions InUnregistered CMKM Shares

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

General.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). As with the definition of dealer, Section 3 of the Exchange Act does

not 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

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 can

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

which advertisement or investor solicitation wee used. Id.

The Exchange Act also does not define effecting transactions for the

purposes 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).

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



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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 defendantwas 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.

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



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

2413 (S.D.N.Y. Apr. 6, 1984)).Here, the evidence will establish that Glisson actively sought to effect

securities transactions, and solicited 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. The evidence will also

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

discussed above, the evidence will establish the regularity of Glissons

participation 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 of over $293,000.

Glisson was effecting transactions for the account of third parties, 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.32 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

32 See Joint Exhibit 3045.



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Glissons name.33 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 anddistributing the certificates to the buyers, as well as collecting payments from the

buyers, and paying the sellers for their shares. Thus, a preponderance of the

evidence will show that Glisson was acting as a broker.

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

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

with a broker or dealer. As a result, once the evidence at trial establishes that

Glisson was either a broker, or a dealer, or both, the Commission will have made a

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

Indeed, Glissons conduct demonstrates the importance of the broker-dealer

registration 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.

The Commission, therefore, asks that this Court find that Glisson violated

Section 15(a) of the Exchange Act.

///

///

33 See Joint Exhibit 3018.



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B. Glisson Violated Section 5 Of The Securities Act By Offering ToPurchase And Sell, And By Selling, Deregistered CMKM Stock

Sections 5(a) and (c) of the Securities Act make it unlawful to offer or sell 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).

To state aprima facie case, the Commission must show: (1) no registration

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. 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 FacieViolation Of Section 5 By Glisson

Glisson has 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. Thus, Glisson has

essentially admitted to all the elements of aprima facie violation of Section 5.

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

Once the Commission establishes aprima facie violation, the burden then

shifts to Glisson to prove that the offer and sale transactions were exempt from the



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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).Section 5, by its terms, is all embracing; it prohibits the offer or sale of

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)).

Glisson asserts that his transactions are exempt from registration under

Section 4(1) of the Securities Act, 15 U.S.C. 77d(1), which exempts from the

registration provisions transactions by any person other than an issuer,

underwriter, or dealer. Specifically, Glisson asserts that he was not a dealer in

CMKM stock, and thus is entitled to this exemption.34

However, Glisson will not be able to carry his burden of showing that this

exemption 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 at trial will establish that

Glisson was a dealer in CMKM stock. As a result, Glisson will be unable 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 DefenseIn the Joint Pretrial Order, Glisson asserts a reliance on counsel defense.35

The reliance on counsel defense may be asserted if it is established that the

defendant (1) made a complete disclosure to counsel, (2) requested counsels

34 See Joint Pretrial Order at Section I.B (Defendants Contentions), at p. 4.35 See Joint Pretrial Order at Section VI.B (Defendants Statement of Issues ofLaw (including fact and law)), at 14.



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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).

This defense should be rejected here for a number of reasons. Glisson

testified that he did not consult an attorney before he began selling CMKM in

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 of

counsel 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.).

In addition, to assert a reliance on counsel defense, a defendant must waive

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 AppropriateThe evidence at trial will demonstrate that 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. Section 20(b) of the Securities Act, 15 U.S.C. 77t(b), and Section 21(d) of



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

Federal courts have broad equitable powers to order disgorgement of ill-

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. Wallenbrock &

Assoc., 440 F.3d 1109, 1114 (9th Cir. 2006). In calculating disgorgement, the

Commission need only show a reasonable 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. Once the

Commission has established that the disgorgement figure reasonably 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).

The evidence at trial will establish that a reasonable approximation of

Glissons profits from acting as an unregistered broker and dealer, and buying and

selling deregistered CMKM stock, is $2,765,650. The Commission arrived at this

number 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, the Commission deducted the costs Glisson incurred as a dealer

in CMKM stock to buy stock, based upon available bank account information,



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which the Commission calculated as $1,644,985.00. This resulted in a reasonable

estimate of profits of approximately $2,765,650.65.36

The Court should award prejudgment interest on the disgorgement amounts.

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, 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 $3,436,225.44.37

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

Section 20(d) of the Securities Act, 15 U.S.C. 77t(d), and Section 21(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

36 Plaintiffs Exhibits 508-5, 508-6, 527, and 528. Glisson has never produced acomplete accounting of all his CMKM activities, or provided an estimate of hisprofit. Glisson has declared profits of around $1.2 million for tax purposes for 2006and 2007, and Tungwongsathong declared profits of around $400,000 for 2007.37 See Plaintiffs Exhibits 508-5, 508-6, 527, and 528.



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

The evidence will establish that in mid-2006, after being contacted by theSEC and the Wisconsin DFI, 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.

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 6 months 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.

Glissons conduct, in stopping, assuring regulators and/or the Court that 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.

A third tier penalty can be in an amount equal to the defendants pecuniary

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, the

Commission requests that the Court impose a third tier civil penalty in the amount



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of $1.4 million against Glisson.

4.

Glisson Should Be Barred From Participating In AnyOffering Of Penny Stock

Section 21(d)(6) of the Exchange Act, 15 U.S.C. 78u(d)(6), allows a

federal 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. At all times, CMKM was a penny stock because it was an equity security

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.)

When deciding whether to impose a penny stock bar, courts consider a

variety 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).

Here, Glisson was central to the violations of the federal securities laws

involving a penny stock. Glissons conduct resulted in a Commission

deregistration order being circumvented for the personal financial benefit of



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

to this Court and regulatory authorities that he had ceased his activity, or wouldnever do it again. In view of his past conduct, it is highly likely that Glissons

misconduct will recur. A penny stock bar is therefore appropriate.

Date: April 2, 2012 Respectfully submitted,

/s/ John B. Bulgozdy

John B. BulgozdyDavid J. VanHavermaatAttorneys 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 entitledPLAINTIFFSECURITIESANDEXCHANGECOMMISSIONSTRIALBRIEFon all the parties to this action addressed as stated on the attached service list:

[