#NVSen: New Berkley Attack Ad “Laughable” (LV Sun); “Reach and a Diversion (LVRJ); “Misleading to False” (Ch 8)

LV Sun: New Berkley Attack Ad “Laughable”

LV Review Journal: “It’s a reach and a diversion”

Channel 8: Ad ranges from “misleading to false”

Line of Attack: Did Dean Heller let a diamond scam happen under his watch?

David McGrath Schwartz

August 12, 2012

Attack: Dean Heller is responsible for a fraud in which a Las Vegas shell company sold stock in fictitious diamond mines.

Method of delivery: Rep. Shelley Berkley’s campaign started airing a statewide ad Thursday with the charge. It starts with a clip of a Heller ad from 2006, when he was running for Congress, saying he stopped fraudulent marketing schemes as secretary of state. It then says, “But while Heller was supposed to be stopping fraud, a Nevada diamond company broke the law, scamming investors out of $64 million dollars.”

The narrator also says, “Heller took campaign cash from a co-conspirator, and his office authorized the sale of the company’s stock.”

And the kicker: “Dean Heller. He’s never been for you.”

Strategy: Berkley needs to change the subject from the ongoing ethics investigation that has saddled her campaign. She is under investigation by the House ethics committee for her work on kidney care issues while her husband is a nephrologist. After running ads directly responding to the alleged ethics violations, this ad intends to take some of the heat off of her — she’s not the only one with ethical problem.

Fairness meter: There was, indeed, a diamond scam in Las Vegas. A Department of Justice investigation charged that from 2001 to 2009, CMKM Diamonds, Inc., a Las Vegas company, sold billions — billions — of shares to investors, using Internet marketing and sponsoring a car at “funny car” drag races throughout the country.

But the fundamental question of the ad is: How much responsibility does the secretary of state have in investigating companies registered to do business in Nevada?

Not much. The investors in the company have sued the Securities and Exchange Commission for the fraud. The Nevada secretary of state, the office Heller held for eight years before going to Congress in 2006, primarily presides over elections.

The Secretary of State’s Office does have the authority to investigate securities fraud, but it appears there was an SEC investigation at the time (it suspended trading of the stocks in 2005), and holding Heller’s office responsible for all frauds in Nevada during his time in office is unfair.

Also, calling a campaign contributor to Heller a “co-conspirator” in the case is wrong. The contribution the Berkley campaign points to came from Rendal Williams, who gave Heller $4,200 in 2005. Williams was CEO of U.S. Canadian Minerals, which had business dealing with CMKM. But Williams was never indicted or charged.

We label this ad Laughable.

http://www.lasvegassun.com/news/2012/aug/05/line-attack-did-dean-heller-let-diamond-scam-happe/  

Las Vegas Review-Journal
Berkley ad hits Heller on stock scandal
By Laura Myers

August 10, 2012

(Excerpts below)

“Looking to shift the focus from her own ethics troubles, U.S. Rep. Shelly Berkley on Friday went up with a hard-hitting TV ad against her GOP Senate opponent, accusing U.S. Sen. Dean Heller of allowing a Nevada diamond company to cheat investors out of $64 million while he was secretary of state.

“The new ad comes two weeks after Berkley, D-Nev., launched several ads defending herself for advocating to save a kidney transplant center at University Medical Center where her husband has a financial interest. She didn’t disclose his connection at the time, something the House Ethics Commission is investigating.

“’Obviously, Shelley Berkley’s lies about Medicare are not working, so now she is inventing new ones,’ said Chandler Smith, a spokeswoman for the campaign. ‘Congresswoman Berkley is a desperate politician whose ambitions are being destroyed by her own ethics problems.’

“Smith said Berkley’s campaign has been ‘trying to sell’ reporters on the story about Heller and the diamond company for months, but no one would buy it because there were no facts to support her allegations. So now she has resorted to running a blatantly false negative attack in a desperate attempt to create more fiction.

“The Heller campaign suggested Berkley is trying to turn the tables because her ads defending her kidney center advocacy aren’t working with voters and she is worried she is losing the race to Heller. ‘Shelley Berkley’s campaign has become increasingly desperate and has poured more than a million dollars into ads to refute the charges,’ the Heller campaign said. ‘Clearly, they aren’t working…’

“Eric Herzik, a political science professor at the University of Nevada, Reno, said the ad seems unfair.

“’It’s a reach and a diversion,’ Herzik said. ‘Given the volume of incorporations in Nevada, you’re going to have some fly-by-night operations and some fraudulent activities. To pin that on the secretary of state is a reach.’

“Herzik said Berkley is clearly worried her ethics problems will cost her the race unless she marks Heller, too.

“’She’s trying to divert attention from herself,’ he said. ‘And if this is the best she’s got, it’s not very good.’”

Read the full story here: http://www.lvrj.com/news/new-berkley-ad-accuses-heller-of-inaction-on-fraud-165780546.html?login=y

Channel 8 News Now
Fact Check: Berkley Ad Ties Heller to Alleged Scam

Aug 10, 2012

By Steve Kanigher

(Excerpts below)

“Verdict: A sliver of truth but mostly ranging from misleading to false. The sliver of truth is that when Republican Sen. Dean Heller was Nevada’s secretary of state, the Las Vegas company CMKM Diamonds incorporated in Nevada and began selling shares to investors.

“But the company, which peddled penny stocks, was delisted in 2005 by the Securities and Exchange Commission after the federal government alleged that the company’s claim of operating diamond mining operations was a scam. The government later indicted many of the principals, alleging they sold unregistered securities. Although the secretary of state’s office approves applications to form corporations and sell securities, the ad is misleading because the office is generally powerless to prevent scam artists from breaking the law.

“There are examples too numerous to name over the past several decades where individuals whose companies were otherwise in good standing with the Nevada Secretary of State’s office committed fraud.

“The worst part of the ad, though, is the false accusation that Heller took campaign cash from a ‘co-conspirator.’

“The campaign contribution in question was made in June 2005 to Heller’s 2006 campaign for Congress by Rendal Williams, then CEO of U.S. Canadian Minerals in Las Vegas. The Dow Jones News Service reported in 2004 that U.S. Canadian, with Williams at the helm, acquired a 5 percent interest in CMKM Diamonds. But Williams was not among the individuals indicted by the government in the CMKM case.”

To reach the full story, click here: http://www.8newsnow.com/story/19251061/fact-check-berkley-ad-ties-heller-to-alleged-scam