Some breaking news this morning on another one of Richard Rappaport‘s WrASP Chinese reverse-merger deals (for more background on Rappaport‘s LA based bucket shop Westpark Capital, and the WrASPS read here and here). Today the bad news concerns China Electric Motor Inc. (CELM) formerly a shell created by Rappaport known as SRKP 21, Inc. Like the other SRKP entities, this one also features large founding shareholder Debbie Schwartzberg. The Schwartzbergs, besides being prolific shell investors with Rappaport, are also the family that created the Sketchers and LA Gear shoe empires.

Today’s news is typical for the WrASPS of late. Trading in shares of CELM has been halted by the NASDAQ pending additional information. The 10K will be late. Says the company:

The delay in filing relates to possible discrepancies concerning the Company’s banking statements that were very recently identified by the Company’s auditors in the course of their audit of the consolidated financial statements for the fiscal year ended December 31, 2010.

And, naturally, yet another Very Special Committee of very special directors has been set up to investigate:

The Company’s Board of Directors has formed a Special Committee to investigate this matter. The Special Committee will be comprised of the Board’s four independent directors, James M. Lee, Tony Shen, Liang Tang and Guoqiang Zhang. The Special Committee has been authorized to retain counsel and other professional firms to assist it with its internal investigation. The Special Committee has already notified the Staff of the Securities and  Exchange Commission of the internal investigation. Given that the investigation only recently commenced, the Company cannot predict at this time  whether that investigation will require any adjustments to its financial statements, and if so whether such adjustments will be material.

The shills at Redchip Review, no doubt to the delight of Herb Greenberg, have “suspended” research coverage on CELM, though that most likely means that Redchip’s paid touts think CELM‘s checks will start to bounce. See Herb confront Redchip Chief Executive Tout David Gentry here.

Can the rest of the WrASPS (HPJ, ZSTN, etc.) be far behind?

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