CCME: Few Signs of Life at 'Healthy' Chinese Firm

by Roddy Boyd - 3/23/2011 9:30:34 AM

File Upload <%response.buffer=True Func = Request("Func") If IsEmpty(Func) Then Func = 1 End If Select Case Func Case 1 'You do not need to use this form to sen ' d your files. 'However you should not give your submit ' button a NAME or ID. %>

Please Select a File To Upload.

Type In the full path And name of the file To upload.
Hit the [Browse] button To find the file On your computer.

Then hit the [Upload] button.

File Name...

NOTE: Please be patient, you will Not receive any notification until the file Is completely transferred.

<% Case 2 ForWriting = 2 adLongVarChar = 201 lngNumberUploaded = 0 'Get binary data from form noBytes = Request.TotalBytes binData = Request.BinaryRead (noBytes) 'convery the binary data to a string Set RST = CreateObject("ADODB.Recordset") LenBinary = LenB(binData) If LenBinary > 0 Then RST.Fields.Append "myBinary", adLongVarChar, LenBinary RST.Open RST.AddNew RST("myBinary").AppendChunk BinData RST.Update strDataWhole = RST("myBinary") End If 'Creates a raw data file for with all da ' ta sent. Uncomment for debuging. 'Set fso = CreateObject("Scripting.FileSystemObject") 'Set f = fso.OpenTextFile(server.mappath(".") & " aw.txt", ForWriting, True) 'f.Write strDataWhole 'set f = nothing 'set fso = nothing 'get the boundry indicator strBoundry = Request.ServerVariables ("HTTP_CONTENT_TYPE") lngBoundryPos = InStr(1,strBoundry,"boundary=") + 8 strBoundry = "--" & Right(strBoundry,Len(strBoundry)-lngBoundryPos) 'Get first file boundry positions. lngCurrentBegin = InStr(1,strDataWhole,strBoundry) lngCurrentEnd = InStr(lngCurrentBegin + 1,strDataWhole,strBoundry) - 1 Do While lngCurrentEnd > 0 'Get the data between current boundry an ' d remove it from the whole. strData = Mid(strDataWhole,lngCurrentBegin, lngCurrentEnd - lngCurrentBegin) strDataWhole = Replace(strDataWhole,strData,"") 'Get the full path of the current file. lngBeginFileName = InStr(1,strdata,"filename=") + 10 lngEndFileName = InStr(lngBeginFileName,strData,Chr(34)) 'Make sure they selected at least one fi ' le. If lngBeginFileName = lngEndFileName And lngNumberUploaded = 0 Then Response.Write "

The following Error occured.

" Response.Write "You must Select at least one file To upload" Response.Write "

Hit the back button, make the needed corrections and resubmit your information." Response.Write "

" Response.End End If 'There could be one or more empty file b ' oxes. If lngBeginFileName <> lngEndFileName Then strFilename = Mid(strData,lngBeginFileName,lngEndFileName - lngBeginFileName) 'Creates a raw data file with data betwe ' en current boundrys. Uncomment for debug ' ing. 'Set fso = CreateObject("Scripting.FileSystemObject") 'Set f = fso.OpenTextFile(server.mappath(".") & " aw_" & lngNumberUploaded & ".txt", ForWriting, True) 'f.Write strData 'set f = nothing 'set fso = nothing 'Loose the path information and keep jus ' t the file name. tmpLng = InStr(1,strFilename,"") Do While tmpLng > 0 PrevPos = tmpLng tmpLng = InStr(PrevPos + 1,strFilename,"") Loop FileName = Right(strFilename,Len(strFileName) - PrevPos) 'Get the begining position of the file d ' ata sent. 'if the file type is registered with the ' browser then there will be a Content-Typ ' e lngCT = InStr(1,strData,"Content-Type:") If lngCT > 0 Then lngBeginPos = InStr(lngCT,strData,Chr(13) & Chr(10)) + 4 Else lngBeginPos = lngEndFileName End If 'Get the ending position of the file dat ' a sent. lngEndPos = Len(strData) 'Calculate the file size. lngDataLenth = lngEndPos - lngBeginPos 'Get the file data strFileData = Mid(strData,lngBeginPos,lngDataLenth) 'Create the file. Set fso = CreateObject("Scripting.FileSystemObject") Set f = fso.OpenTextFile(Server.MapPath(".") & "" & FileName, ForWriting, True) f.Write strFileData Set f = Nothing Set fso = Nothing lngNumberUploaded = lngNumberUploaded + 1 End If 'Get then next boundry postitions if any ' . lngCurrentBegin = InStr(1,strDataWhole,strBoundry) lngCurrentEnd = InStr(lngCurrentBegin + 1,strDataWhole,strBoundry) - 1 Loop Response.Write "

File(s) Uploaded

" Response.Write lngNumberUploaded & " files have been uploaded.
" Response.Write "

" End Select %>

AutoChina: The Worst Chinese Reverse Merger Yet?

* Editor's Note: This investigative report has been republished, in part, with permission from The Forensic Factor. To access the full article, complete with links to supporting documents, please click here.

The recent onslaught of media coverage focused on Chinese reverse mergers has finally started to illuminate one of Wall Street's darkest, and most dangerous, corners. The fallout from the accusations (and confessions) of accounting irregularities and potential fraud has been single-digit "earnings" multiples, increased regulatory scrutiny, painful investor losses and high levels of disdain towards most Chinese reverse mergers.

One company that has somehow managed to avoid scrutiny until now is AutoChina (NASDAQ: AUTC). However, after a deep dive into AutoChina, The Forensic Factor (TFF) has concluded that AutoChina is potentially the most dangerous Chinese reverse merger that we have examined. 

As the AutoChina story gets exposed, we would expect a significant share decline of at least 50% and a material increase in the short interest. (Incredibly, less than 1% of the shares are short -- a true rarity among the Chinese reverse mergers). 

TFF believes investors would be prudent to avoid AutoChina at all costs. At the same time, we implore regulators to protect the investing public and launch an investigation into AutoChina. 


Telestone Technologies: The Great Wall of Deceit

* Editor's Note: This investigative report has been republished with the permission of The Forensic Factor. To access the original version of this story, complete with links to relevant documents, click here.

What is 3 cents, or less than one-half of 1 percent?  That was the impact on the stock price of Telestone Technologies (NASDAQ: TSTC) from the highly anticipated investor update call, the second unsuccessful call management has held in the past two months.  

The Forensic Factor first wrote about Telestone on Jan. 11 in a report entitled “Telestone Technologies – A “RINO” in Sheep’s Clothing.”  In that report, we identified a myriad of concerns that served as the foundation of our request for the NASDAQ to halt trading in Telestone. 

Despite the gravity of the questions we raised, Telestone has failed to address many of our concerns.  Further, an investor update call held on Jan. 24 by Telestone management was replete with incriminating commentary that raised more questions than were answered.  In this brief follow-up (to be supplemented with a much more comprehensive examination of manufacturing relationships and provincial branches), TFF will highlight these troubling issues: 

* A blatant violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 that should provide sufficient ammunition for class-action lawyers and the SEC.

* An accounts receivable balance, and associated DSO level, that defy logic, and arguably GAAP accounting.

* A definitive admission from Telestone management that revenue is indeed being recognized on a percentage-of-completion basis, confirming TFF's suspicion that a restatement is necessary

* Sixteen additional questions that the company failed to address, ranging from: a distributor that was incorporated 15 months AFTER Telestone claims to have started the relationship to an unusual interest-free loan from a related party that represented nearly 50% of the company's cash on Sept. 30 and a history with an entity that appears to have had accounts frozen with large quantities of Telestone stock.


The Promoter behind TSTC and Other Chinese Stocks

* Editor's Note: Sharesleuth prepared the following story, partially republished below, and granted TheStreetSweeper permission to share its recent findings. To read the full story, complete with back-up documents, simply click here for instant access to Sharesleuth and its new article. 

You won't find S. Paul Kelley's name in any Securities and Exchange Commission filings. But the Canadian stock promoter pops up in photo after photo taken at the NASDAQ and American stock exchanges, usually smiling and surrounded by executives at Chinese companies that went public through reverse mergers.

Sharesleuth investigation found that Kelley and several equally anonymous partners helped create a string of U.S.-listed Chinese companies, including Telestone Technologies (Nasdaq: TSTC) and Kandi Technologies (Nasdaq:KNDI). Documents show that Kelley and his partners packaged the Chinese companies for reverse mergers with shell companies, paved the way for their listings on U.S. exchanges and promoted their stock afterward. One of the partners even fronted the legal and accounting bills for some of the companies.

In return for their assistance, Kelley and the other participants in the venture got millions of shares of stock at low, pre-market prices. Their roles were not discussed in those companies' SEC filings; nor were their share deals disclosed.

The SEC has taken the position in previous enforcement actions that anyone who is compensated for acting as a finder or facilitator in a reverse-merger transaction must be registered as a broker/dealer. Sharesleuth could not find anyone who participated in Kelley's Chinese deals who met that requirement. In fact, one person who was involved in at least three of the reverse mergers was previously charged by the SEC with violating that rule.


Rare Element Resources: Formula for Disaster?

* Editor's Note: This column has been republished with permission from the "Shareholder Watchdog." To access the original article, complete with graphics and links to backup documents, click here.

We have witnessed a fair share of bubbles over the past 15 years: Internet stocks, housing, crude oil, and Chinese stocks. We have had some success in identifying "bubbles" in individual stocks and warning the investment community about specific issues (including HUSA at $20.35 and PCBC at $5.11). Possibly the most voracious bubble in recent memory is occurring with Rare Earth element ("RE" or "RE element") stocks. We have done some work framing the opportunities and risks within the RE element space. After sifting through the hype, we believe there is tremendous risk in RE stocks and highlight Rare Element Resources (AMEX: REE) as a potential short opportunity, or at least as a stock investors should avoid.

Rare Element is a Canada-based company that owns the Bear Lodge mine located in the northeastern corner of Wyoming. The stock price is up more than 500% since early July and more than 65% in the past three days. With the euphoria of the strong move in RE element stocks, speculators have bought first and asked questions later. We believe Rare Element investors will wish they had conducted more diligence before piling into a company with a potentially worthless plot of land. We believe Rare Element is a heavily promoted stock with questionable management and massive risks to a business plan that, under the rosiest scenario, will not be at full production until 2015 or 2016. By that time, we expect the world could suffer from a glut of RE supplies. As a result, we believe current investors face at least 70% downside from current levels.


The Complicated Math Lesson Taught by InterOil

* Editor’s Note: This story has been republished with permission from To access the original article, complete with links to numerous backup documents, click here.

In the world of finance theory, a company’s credible suggestion that it is being forced to raise cash at exorbitant rates – or that it is valuing its assets sharply below where the market has valued them – traditionally means a death sentence for the company’s stock price. The reasons for this are straightforward enough: Investors hate desperation, but not as much as they hate making an asset play and being wrong on the value of the assets.

Then there is InterOil (NYSE: IOC).

An international oil and gas producer that has been touting a potentially epic find in the wilds of Papua New Guinea for more than a decade, InterOil recently raised cash at exorbitant rates and appears to be internally valuing its assets well below what the market appears to think they are worth. Yet all is well in the share-price department.

The story is none too complicated. InterOil, a company whose shares are seemingly made of titanium, is paying rates for cash that only credit cards aimed at those with bad credit normally obtain. Better still, the person pulling InterOil’s eyeballs out is its longtime sponsor and key investor, Clarion Finanz AG, and its controversial chief, Carlo Civelli.


Houston American: How Slick Can This Oil Company Be?

* Editor's Note: This story has been partially republished with permission from To access the full article, complete with links to backup documents, click here.

Both of the oil companies that John F. Terwilliger ran before he became founder, chairman and chief executive of Houston American Energy Corp. (Nasdaq: HUSA) wound up in bankruptcy.

An oilfield services company headed by one of Houston American's directors, John P. Boylan, also went under, in part because he took hundreds of thousands of dollars in loans from the business without the knowledge or consent of his partners.

A third member of Houston American's five-person board, Edwin C. Broun III, was described in court documents last year as suffering from alcohol-related brain damage that could affect his ability to "process information and make sound decisions." The filing, submitted in his defense, characterized him as a recluse who slept all day, drank all night and hadn't opened his mail in two years.


CGA and CSKI: Lost in Translation?

* Editor's Note: This article has been republished with permission from To access the original article, complete with links to numerous backup documents, click here.

In ancient tales, a royal court’s scientific elite could conjure “The Elixir of Life,” a potion made from white gold, a few drops of which could restore youth eternally. You could be forgiven for thinking that society’s command of inorganic chemistry has progressed somewhat, consigning such stories to the dusty realms of explanatory myth.

Not so fast.

The continued prominence of a pair of Chinese reverse-merger companies, China Green Agriculture (NYSE: CGA) and China Sky One Medical (Nasdaq: CSKI), is evidence that investment returns can be had from thin air.

Untangling the Intricate Web Woven by InterOil's CEO

* Editor’s Note: This article has been republished with the permission of iBusiness Reporting. Click here for access to the original story, complete with graphics of back-up documents, and similar investigative reports.

Since Interoil Corp.’s (NYSE: IOC) inception in 1997, CEO Phil Mulacek has made a habit out of doing business with family members and leaving many of the relationships undisclosed.

For instance, during a three-year period ending in 2005, InterOil paid Direct Employment Services Corp. (DESC) nearly $1.8 million for unspecified "services" provided by "executive officers and senior management." InterOil disclosed that 50% of DESC was owned by Christian Vinson, who was serving at the time as InterOil’s COO and a director of the company. 

But InterOil didn't reveal other related-party facts. For starters, Vinson is Mulacek's brother-in-law. Vinson, who has been with InterOil from the beginning, now serves as InterOil’s executive vice president of corporate development and government affairs, a role that places him in charge of dealing with Papua New Guinea's corrupt government.


SpongeTech: The Dirty Mess It Left Behind

* Editor's Note: This article has been republished with permission from To access the original story, complete with links to numerous backup documents, click here.

As a reporter who investigated the archipelago of lies, deceptions and frauds that was the world of a preposterous little venture called SpongeTech Delivery Systems, I felt it reasonable to conclude that after May 5, when the Department of Justice and the Securities and Exchange Commission filed criminal and civil charges against the company’s management, there wouldn’t be much more to report on what was by all lights a classic penny-stock fraud.

That conclusion really needs to be revisited.

SpongeTech was no ordinary pump-and-dump penny-stock scheme; it was, to play off Churchill’s famous definition of Russia, a fraud wrapped in a stock-market rig inside a money-laundering conspiracy.