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China Integrated Energy (CBEH): Alleged (Repeat) Chinese Fraud Du Jour

Tyler Durden's picture




 

Another day, another imminent perpetual trading halt of a Chinese reverse merger or some other imported domestically listed scam. Today's target (which is not new to adverse research reports - recall that Upton Sinclar Research recently present a comparable fraud case recently), per Alfred Little research, is Chinese company China Integrated Energy (CBEH), which Alfred Little spares little kinds word for: "China Integrated Energy, Inc. (NASDAQ: CBEH) is a complete hoax, according to a detailed investigation by the International Financial Research & Analysis Group (“IFRA”) commissioned by one of its hedge fund clients." Considering all the other words previously lashed out at CBEH, this may be one of the less scathing reports we have seen out there. That said, there is little to look forward to for stockholders per this report, as Alfred Little concludes "CBEH shareholders will almost certainly ecover nothing."

Key highlights from the report:

1. Four months nearly continuous on site observation and video surveillance of CBEH’s biodiesel operations in Xi’an (Tongchuan) confirm no meaningful production activity, completely demolishing management’s repeated claims the plant is running at 100% of capacity and generated $22,876,791 gross profit in 2010. On March 10, 2011, investigators caught and filmed CBEH management “redhanded” staging phony production activity at the factory with the criminal intent to defraud a group of 20 investors touring at the expense of CBEH’s investment bank, Rodman & Renshaw (NASDAQ: RODM).

2. Three months of on-site and video surveillance of CBEH’s recently acquired Chongqing Tianrun biodiesel plant confirm no meaningful production activity, either; completely contrary to management’s claims the plant is running at 100% of capacity since January

3. The largest PRC auditor performed an independent audit of CBEH’s 2009 financial statements showing no revenue from biodiesel sales while gross profit from its wholesale and retail diesel division was 46% lower than reported in its 2009 10-K filing.

4 The 100,000-ton Tongchuan biodiesel production line never even bothered to obtain a production license, which is absolutely required before it can sell any biodiesel. Nor does the Tongchuan 100,000-ton plant have any meaningful access to feedstock (waste or vegetable oils) or advanced technology as management claim.

5. Despite no meaningful production of biodiesel in its history and with little more than scrap value attributable to its idle plants, CBEH management falsely claims in its SEC filings that it invested $46.1 million acquiring and building out these totally unproductive assets over the last 5 years. Additionally, CBEH has announced it will spend another $46 million acquiring and building out its new Hainan plant in 2011.

6. In addition to greatly exaggerating the earnings of its wholesale and retail divisions, CBEH management falsely claims in its SEC filings it spent $53.2 million acquiring and leasing these assets over the last three years. It projects to spend another $8.2 million on Chongqing FengDou Keyu acquisition in 2011.

7. CBEH’s ongoing and continuous hoax allowed it to raise $85 million from investors to date, including $39.5 million most recently with the help of its investment banker Rodman & Renshaw (NASDAQ: RODM). The ongoing fraudulent acquisitions and capital expenditures combined with a legally unenforceable VIE structure in China ill result in a total loss for U.S. investors.

Much more in the full report which obviously does not see the company as continuing much longer as a going concern.

CBEH Alfred Little

 

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Mon, 03/28/2011 - 10:31 | 1108491 Alea Iacta Est
Alea Iacta Est's picture

There is no bubble in China.  Seriously, everything is top notch.  This is just more capitalist propaganda.

 

Cities with no people, companies with no revenue......

Mon, 03/28/2011 - 10:33 | 1108499 pendragon
pendragon's picture

rodman and renshaw...not the sharpest knives in the drawer

Mon, 03/28/2011 - 12:59 | 1109189 iinthesky
iinthesky's picture

What do they care they have multiple layers of insurance. Americans who put their FRNs in .... well... they're f*ked!

Mon, 03/28/2011 - 13:01 | 1109190 iinthesky
iinthesky's picture

What do they care they have multiple layers of insurance. Americans who put their FRNs in .... well... they're f*ked!

Mon, 03/28/2011 - 10:33 | 1108504 umop episdn
umop episdn's picture

"Nor does the Tongchuan 100,000?ton plant have any meaningful access to feedstock..."

Not unless you count the hot air and BS that seems available in unlimited supply. Methane, bitchez!

Thanks again for all the hard work and the excellent journalism. Is there anything you *can't* do?

Mon, 03/28/2011 - 11:30 | 1108773 aint no fortuna...
aint no fortunate son's picture

BTFD!

Mon, 03/28/2011 - 12:45 | 1109122 ElvisDog
ElvisDog's picture

That report is hilarious. Remind me not to buy any used cars from China.

Mon, 03/28/2011 - 15:41 | 1109852 Jonas Parker
Jonas Parker's picture

or new cars either...

Mon, 03/28/2011 - 10:39 | 1108526 imaginalis
imaginalis's picture

They are learning fast but still minor league in global fraudulence

Mon, 03/28/2011 - 10:42 | 1108531 WALLST8MY8BALL
WALLST8MY8BALL's picture

VIA THE OCC MEMO SYSTEM- Due to trading halts, as of Friday, March 25, 2011 and until further notice, China Agritech, Inc (CUSIP 16937A200), ShengdaTech, Inc (CUSIP 823213103) and Vitacost, Inc. (CUSIP 92847A200) are no longer eligible for stock loan or collateral pledge at OCC.  Only share reducing transactions will be allowed on outstanding stock loan and borrow positions.  Any equity pledges for collateral purposes will receive no value.

 

If you have any questions regarding this memo, please contact your Financial Surveillance representative.

Mon, 03/28/2011 - 10:42 | 1108532 SilverRhino
SilverRhino's picture

Ethics in business deals:  that's so last century.  

After seeing all this corruption I have a new rule: I will deal ethically and fairly with PEOPLE, sole proprietorships and partnerships.  LLCs deserve every screwing they get. 

 

Mon, 03/28/2011 - 10:43 | 1108534 RobotTrader
RobotTrader's picture

I have a pretty big position in FXI.  So far, I'm not complaining.  I'd never touch these Chinese IPO's, only the big caps for me.

Mon, 03/28/2011 - 10:45 | 1108543 spankthebernank
spankthebernank's picture

http://seekingalpha.com/article/259895-short-seller-attack-on-china-inte...

 

Hard to take this ass clown seriously when his pen name is Jamz Unlimited...what are we coming to???

Mon, 03/28/2011 - 10:45 | 1108547 Bleeping Fed
Bleeping Fed's picture

How long before investors start having an objective look at major Chinese SOE's?  Maybe that's too much to ask for--easier to just stick your head in the sand.

Mon, 03/28/2011 - 10:51 | 1108563 tallen
tallen's picture

I made a lot shorting this on the way down. It's obviously a pure fraud.

Mon, 03/28/2011 - 11:12 | 1108658 Quinvarius
Quinvarius's picture

This is why Chinese people like gold so much.  They don't even like buying Chinese made products, much less stocks.

Mon, 03/28/2011 - 11:45 | 1108845 blunderdog
blunderdog's picture

Those Chineses even knock off our fraud better than we do it ourselves.  So much for 'Merkin ingenuity.

Mon, 03/28/2011 - 12:17 | 1108989 Tucson Tom
Tucson Tom's picture

Somewhere in the suburbs of Chicago,T.Clifford Rodman is rolling in his confines.

Thu, 04/07/2011 - 10:33 | 1145050 tallen
tallen's picture

I've closed out my shorts to a great profit and moving them into HRBN, looks like the next chinese scam stock.

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