John Paulson Could Lose Up To $650 Million On Latest Alleged Chinese Fraud

Tyler Durden's picture

That famous Chinese fraudcap swatter Muddy Waters was overdue to take down another Chinese fraud is not a surprise. Indeed, as reported earlier, the fraud-focused shorter just initiated coverage on Sino-Forest Corporation (TRE.TO), which the firm "Like Madoff, TRE is one of the rare frauds that is committed by an established institution. In TRE’s case, its early start as an RTO fraud, luck, and deft  navigation enabled it to grow into an institution whose “quality management” consistently delivered on earnings growth." The rating, not surprisingly, is Strong Sell, and the estimated per share value is <$1.00. MW describes the fraud as follows: "TRE, which was probably conceived as another  short-lived Canadian-listed resources pump and dump, was aggressively committing fraud since its RTO in 1995. The foundation of TRE’s fraud is its convoluted structure whereby it runs most of its revenues through “authorized intermediaries” (“AI”). AIs supposedly process TRE’s tax payments, which ensures that TRE leaves its auditors far less of a paper trail. On the other side of its books, TRE massively exaggerates its assets. We present smoking gun evidence that TRE overstated its Yunnan timber investments by approximately $900 million. TRE relies on Jakko Poyry to produce reports that give it legitimacy. TRE provides fraudulent data to Poyry, which produces reports that do nothing to ensure that TRE is legitimate. TRE’s capital raising is a multi-billion dollar ponzi scheme, and accompanied by substantial theft." So far so good: as soon as the report came out the stock traded down from CAD$18 to $14, and was promptly halted. Once again, none of this is surprising. What is surprising, is that the biggest holder of the stock, with over 34 million shares, which amount to just under $650 million, is none other than stock picker extraordinaire John Paulson. And to think Zero Hedge has been warning everyone about the dangers of the fraudcap space for 8 months now. Oh well, one analyst learned the hard way today.


Full report from MW:


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TruthInSunshine's picture

I am all in on the IPO of Hoo-Flung-Poo, a Chinese tech company that is manufacturing solar powered cleaning robots, that will IPO at around $122/share.

My good friend, Bang Dae-Ho, gave me this incredibly hot stock tip.

Can someone tell me where this company is located and what its products look like or how they work?


williambanzai7's picture

Ahem...I believe you mean Hu Flung Dung

augie's picture

Oddly enough, i keep recieving emails from Nigeria asking for my help in transfering 1,000,000,000. dollhairs into the U.S. for a 10% commision advertising that same tip as motive for the transfer.


might be worth looking into. I already sent my social security number and bank info to the guy, hope to hear back from him shortly. Fingers crossed!

unnamed enemy's picture

sounds like a great opportunity !!!

onarga74's picture

Could you post his email.  I've sent a 100k twice and would like to send him and additional 500k.  I like to help out when I can. The other day I sent 700k to Mr. Bernanke so he could buy some more aapl shares for the financial well being of the country.

Ted K's picture


Isn't it "Ai Fuk Yu Es Ay"???

Love the comedic art by the way.  You are the new Andy Warhol.

Cdad's picture

Can someone tell me where this company is located and what its products look like or how they work?

Nope, but you are in on the ground floor of an amazing "buying opportunity" to be sure.  Just ask Duncan Niederauer...if he is not too busy selling the floor out from under the once free market American capitalist system, or taking his afternoon constitutional in the room next to Jamie Dimon's co located computers.

Who cares about fundamentals anyway...or products...or accounting?

onarga74's picture

It's like 230 kilometers from Hu Yangks Nudlz

The Fonz's picture

please note: Do not confuse this company with TRE Tasmanian Royalty Exploration which is Jim Sinclairs company. THESE ARE NOT THE SAME. ty.

camoes's picture

Hope some fat finger sell TRE so that I can buy at a low bid

buzzsaw99's picture

weep not for jp, he got to keep his two and twenty from previous frauds.

TruthInSunshine's picture


That makes me more bearish on China than even anything ever put out by Chanos (who is among a single handful of people who has credibility, IMO).

Freddie's picture

Chanos is good.  There was a presentation on the web at Columbia or NYU or ??? with him talking about China. He is far less sleazy than most hedgies and shorts.

As far as this kid in China??  I think it is an Apple PR hype job. 

RobotTrader's picture

FXI is showing relative strength.

Blue chip Hong Kong shares are outperforming the SPY at the moment, still above the 11-day and 22-day EMA.

Only a fool invests in small cap junkers that pay no dividends.

lieutenantjohnchard's picture

guess you're a fool then for touting jkhy, tzoo and zlc.

robottrader: when you need a stock tip from an unemployed part time contract 1099 processor.

XPolemic's picture

Only a fool invests in small cap junkers that pay no dividends.

Thanks for sharing your trading strategy with us.

mogul rider's picture

Pump and dump?

Is that where a group of people say the world is coming to an end, cash is useless and there are only things to buy that will save you? They have the answer to save you - buy this, buy that

Several people then break off and form their own blogs and pump it even more? Thus a belief system is created that distorts reality and everything then becomes a conspiracy and if your not part of the belief you are rediculed by the pumpers who have many bets on the other side?

Pseudo technical analysis included?

Is that what a pump and dump is?

Bay of Pigs's picture

Distorts reality?

That's pretty funny coming from you.

oddjob's picture

Any fucking idiot knows you can dig up trees out of the ground for $5.

JW n FL's picture

everyone knows you cant eat trees.. or $5 bucks.. and / or $5 dollar trees!


so keep your hat on Mr.!

JW n FL's picture

short paulson! make money!

tallen's picture

No options to trade on this one :(.

Now down 34%

TopOnePercent's picture

This is very interesting and perhaps suggest previous success was because of banking on GS teflon legal largesse.


Very telling.


Perhaps some clients are going to find out for sure.

ReallySparky's picture

It's about time this cat lost some money.

Hedgetard55's picture

Looks like someone(s) got the NFP number for tomorrow - market rebounding, should be green by close.

carbonmutant's picture

Wow, Phantom trees produce phantom money...

This must be where Bennie and the Inkjets are getting their phantom paper....

Whatta's picture

any one else get just a little bit of warm-fuzzy seeing John Paulson's name in there?


PS...when are we gonna here that Squidman Sac hooked Paulson up with this "investment"?

mtguy's picture

Paulson's a genius when he cheats the system and makes money but when there aren't any Golden freebee's he's as mortal as any of us. Cheating bastard deserves much worse than this!

El Gato's picture

Why didn't ZH cover the Citron Research report about HRBN yesterday?  Another Chinese RTO in fraudspace. That would have made it 2 for yesterday (after "SkyPeople Fruit Juice" SKU was exposed). ZH, give Citron some love!

Somehow, somehow HRBN is treading water aroud $15.50 today after a beatdown yesterday. Why this thing trades >$0 is beyond me.

oddjob's picture

"Tree is dead"  Mr Wint

"most unfortunate" Mr. Kidd

Double down's picture

Another moron who did not read the report.  Overpaid rubber stamper.    

‘Gross Exaggeration’

Block’s report is “a complete, gross exaggeration,” said John Goldsmith, a Toronto-based money manager at Montrusco Bolton Investments Inc., which manages about C$4.9 billion ($5 billion), including Sino-Forest shares.

Goldsmith said he’s confident in Sino-Forest’s financial reporting because it’s been audited by Ernst & Young LLP and the company’s assets have been valued by consulting firm Poyry Oyj. A one-month delay in filing its next quarterly statement is due to a switch to international accounting standards, he said.

Buck Johnson's picture

I guess he lost his 3 quarters of a billion dollars investment.

Justaman's picture

Maybe he should stick to something understandable, like gold. 

DTCC 1999's picture

Sino-Forest Corporation huh - the man hates housing alright.