Muddy Waters Presents "Irrefutable Evidence Of Securities Fraud" At CCME, Lowers Target Price To $3.54

Tyler Durden's picture

One of the most popular feuds against an allegedly fraudulent Chinese company continues as Muddy Waters just raises the bar by several notches: "Muddy Waters, LLC has amassed irrefutable evidence that China MediaExpress Holdings, Inc. (“CCME”) is a substantial fraud, and that management is engaging in a cover-up replete with further dissemination of fraudulent information. In light of the nature of the evidence, we believe that a de-listing from NASDAQ is not improbable; further, we believe that management stands to lose additional credibility. We therefore reduce our estimated value by one-third to $3.54."

From the report:

We present a recorded telephone conversation that contains an admission that CCME is engaging in securities fraud.  The conversation took place on February 23rd between the CCME salesperson who provided us with the advertiser kit we cited in our February 3, 2011 report (the “Report”) and one of our analysts.  The CCME salesperson initiated the conversation without notice in response to investigative actions taken by CCME’s auditor,

Deloitte Touche Tohmatsu (“Deloitte”).  During the conversation, the salesperson stated that:

  • CCME has been doubling the number of buses on which it has installed equipment for purposes of its SEC filings; and
  • CCME replaced recently replaced the salesperson’s hard drive due to the increased scrutiny.

The recording with subtitles is available at:
We document that in the course of rebutting our Report, Chairman Cheng provided fabricated information.  In Chairman Cheng’s February 7, 2011 letter (the “Chairman’s Letter”), Chairman Cheng challenged our assertion that CCME’s largest purported contract does not exist.  His proof includes an “excerpt” of buses he claims are covered by the disputed contract.  The excerpt contains license plate numbers of three buses.  We have official documentation (shown in Appendix A) from the Shanghai Public Security Bureau Traffic Management Administrator (the “Traffic Administrator”) that shows these three license plates numbers are fabricated.

We present the sales presentation we received in January from the aforementioned salesperson (the “Sales Presentation”) that shows CCME has fewer than half of the buses it claims.  The Sales Presentation (Appendix B), which shows CCME’s buses by province and city, corroborates the following facts we presented in our earlier Report:

  • CCME has fewer than half of the buses it claims; and
  • Its largest purported contract (with Shanghai Ba Shi for 1,892 buses) does not exist.  The number of buses for Shanghai-based operators in the presentation matches the number in the spreadsheet we received – 296.

We present a mini-documentary of the largest purported operator – Shanghai Ba Shi – specifically focusing on its inter-city buses and drivers.  The film shows that CCME’s hardware is not installed on the buses, despite CCME’s claim to have had hardware on these buses since at least mid-2008.
The video is available at:

Full report pdf:


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Xkwisetly Paneful's picture

The Chinese reverse merger scam is in full swing with the aid of chief enabler NASDAQ, at least two dozen listings are more fraud than not.  Many led by familiar fraudster names like Bennie Wey from years past.

themosmitsos's picture

I dont see what the big deal is. What the fuck was :P

Streetdog's picture

I don't understand why the market pays attention to these scammers, other than for the laugh.  The video shows a bus line that CCME does not do business with, monitors without the CCME logo and a disguised phone voice from an unidentified female.  Oops, the stock is up for the day.

nedwardkelly's picture

Man so many tough decisions these days. Buy stock in companies that could be scams, or short stock because someone that could be a scammer told me to... Hmmmm...

nedwardkelly's picture

If one questions whether it is Muddy Waters, LLC – and not CCME – that has fabricated information and documents, we
point out the following.  Our research director and sole member manager, Carson Block, is a United States citizen with
assets and family in, and significant ties to, the United States.  Although we do not know the extent of CCME
management’s ties to the United States, we venture to guess that they are significantly less than those of Mr. Block.


Oh, dudes a yank, so I should assume everything in this report is gospel?

PulauHantu29's picture

mmm, so how are they different then most of Wall Street?

billsykes's picture

So does this site have any merit to refute these claims?

nedwardkelly's picture

Thanks for the link.

Takeaway is that you shouldn't trust anyone.