Reading the very detailed information and analysis that John at Bronte Capital has posted about China Agritech (CACG) got your author intrigued. Looking through CAGC‘s filings, it did not take long to find a name that has been on my radar screen for a while, CAGC‘s very own Audit Chair.
Presenting another candidate for a Bad Director award, the inimitable Gene Michael Bennett. Unfurl the GIANT red flag now, friends, it flies over CAGC for certain.
Gene spends most of his days as the CEO of the impressive sounding American General Business Association. What he is doing there I am not sure, but it certainly is not working on their web site, which is here. There are some great party pictures on the site, one can only hope, for comedy’s sake, that Gene is the husky gentlemen with the flowing golden locks in this shot.
A lot of the content on the AGBA site is copied directly from Wikipedia. Compare the text here on Wikipedia and on the AGBA site here. Even worse are the parts of the site that are simply nonsensical, such as the hilarious About Us page, and a personal favorite, the Corporate Governance section.
Which brings us to the main point. Exactly what kind of governance IS Gene providing as a Director and Chair of the Audit Committee at CAGC?
Well, Gene was once a CPA, although in his most recent biographies it is stated that he is “inactive”. It does make one wonder, is he “inactive” in the same way James T. Crane of SBAY is now “inactive“?
The first time your author saw Gene’s name come up was in relation to a little pink sheet darling headquartered in Orange County, CA, called Providential Holdings, Inc. (PRVH). See more about them here.
Providential started life as JR Consulting (JRJI) way back in the early 1980s and had quite the spike in the mid 90s, peaking at $8.50 or so a share in 1996. By the time Gene was appointed CFO in November 2001 the stock was trading at about $1, with massive average volume of close to 1000 shares a day.
FOUNTAIN VALLEY, Calif.–(BUSINESS WIRE)–Nov. 13, 2001– Providential Holdings Inc. (Pink Sheets:PRVH) (www.prvh.com) today announced the appointment of Gene M. Bennett as its new chief financial officer to oversee financial and administrative areas of the company and its divisions. “We are very pleased to have Mr. Bennett join our management team as one of the top key members to help lead our company and its subsidiaries. As we have refocused our scope of businesses to build a robust organization that will potentially create significant value for our investors, the appointment of Mr. Bennett is part of the overall corporate strategy to re-engineer the company for future growth and expansion,” said Henry D. Fahman, chairman and CEO of Providential Holdings.
By March 2005, with the shares now trading around a nickel, Gene must have been getting restless, because he became the Asian Business Development Officer for PRVH.
HUNTINGTON BEACH, Calif., March 22 /PRNewswire-FirstCall/ — Providential Holdings, Inc. (OTC Bulletin Board: PRVH), a provider of international advisory services specializing in mergers and acquisitions, announced today that the Company’s chief financial officer Gene Bennett, has been appointed as Providential Holding’s Asian Business Development Officer. Henry Fahman will be serving as the interim chief financial officer while the Company searches for a qualified candidate.
While Gene was at Providential, their auditor was the infamous Kabani & Co., a popular auditing firm for junk reverse-merger companies, and Chinese reverse-mergers in particular. Read more about Kabani here in a great Barron’s piece
Today it is known as PHI Group (PHIE) and trades for a healthy penny a share.
No matter when Gene became “inactive” as a CPA, he must have been developing a lot of business in Asia in his new job at Providential, because he really burst onto the China Reverse Merger scene in 2007.
In April 2007, Gene joined the board of China Fire and Safety (CFSG fka UPFS fka UPRO). According to this press release:
BEIJING, April 17 /Xinhua-PRNewswire/ — China Fire & Security Group, Inc. (BULLETIN BOARD: CFSG) “China Fire”, a leading industrial fire protection products and solutions provider in China, today announced the appointment of four new members to its board of directors, Mr. Gene Michael Bennett, Ms. Tieying Guo, Mr. Guoyou Zhang and Mr. Yushen Liu.
Mr. Bennett’s career includes extensive financial and accounting experience as a Chief Financial Officer and corporate consultant. From 2000 to 2004, Mr. Bennett, age 59, was the Partner of ProCFO, a California based firm providing contract CFO services for high tech firms in the US. Currently, Mr. Bennett as a CPA and Partner of Nexis Investment Consulting Corporation has been working as a corporate consultant in Beijing where he his assisting in bringing China-based companies up the US standard in various areas including Corporate governance, Internal Control and accounting transparency. In addition to his appointment on the board Mr. Bennett has been named Chairman of the Audit Committee. Mr. Bennett received a law degree from University of Michigan, and a bachelor’s degree in Accounting and an MBA degree both from Michigan State University.
CFSG has been exhaustively researched by Chris Carey at Sharesleuth. Read his fantastic piece here. For our purposes, the most interesting thing that Carey discovered, besides the presence of crooks like John F. LaSala in the reverse merger, was that Gene lied on his resume.
Sharesleuth also discovered that the sole American on China Fire’s board of directors, Gene Michael Bennett, does not have the law degree that he claimed. And contrary to what China Fire said in its press release announcing his appointment, he is not a Certified Public Accountant and has not been licensed as one in the United States for many years. Bennett heads China Fire’s audit committee, which is responsible for overseeing financial reporting, internal controls and transactions between the company and its officers, directors and affiliates.
Not content with just one board seat, in April 2007 he also joined the board and became Chair of the Audit Committee of Asian Financial (nka Duoyuan Printing). In July 2007 Gene takes on the CFO duties there as well.
BEIJING, July 23 /Xinhua-PRNewswire/ — Asian Financial, Inc. (“Asian Financial”, “Company”), a leading provider of offset printing equipment and solutions in China through its wholly-owned operating subsidiary, Duoyuan Digital Printing Technology Industry (China) Co., Ltd. (“Duoyuan”), announced the appointment of Gene Michael Bennett as its Chief Financial Officer. Mr. Bennett will be responsible for the Company’s overall financial planning and controls, Chinese and U.S. GAAP compliant financial reporting, SEC filings, investor relations, merger and acquisition (“M&A”) activities and corporate finance.
Asian Financial soon became known as Duoyuan Printing (DYP). In 2008 Gene left the CFO spot at DYP.
Duoyuan was once the poster child for Chinese reverse merger stocks. On November 9, 2009 the head of DYP even rang the bell at the NYSE. Not even a year later, in September 2010, the DYP story fell apart. The CEO and CFO leave. Deloitte left as the auditor. The shares plunged. This was a company where not only was Gene once CFO, but also was Chair of the Audit Committee. Good work Gene!
(Contrary to popular belief DYP was not a true IPO, Asian Financial deregistered and then filed a new S-1 under the Duoyuan name, but anyone with good search skills will see right through that ruse.)
So far we have looked at three of the companies where Gene has been involved. One trades for a penny, one is a deal filled with known crooks, and the third is one of the biggest China frauds to be exposed in 2010. As they say on Wall Street, three data points is a trend…
But we are really only up to April 2007 in Gene’s impressive resume…he’s only just getting started. We can cover the rest in a future post.
Thanks! A very interesting and refreshing look at the CACG story. You clearly put a lot of research into this.
CPHI also has Gene Michael Bennett of AGBA as a director. Therefore I have to question the reliability of the intangibles and accounts receivable on the CPHI financial statements in making decisions on CPHI as an investment.