On June 27th, just before our much needed summer vacation, A-Power (APWR), another one of the Chardan family of shells (read more about these sleazy deals, like SEED, here) had been halted by the NASDAQ. On August 18th, APWR issued a press release revealing the existence of an SEC investigation into the company:
SHENYANG, China, Aug. 18, 2011 /PRNewswire-Asia-FirstCall/ — A-Power Energy Generation Systems, Ltd. (NASDAQ: APWR) (“A-Power” or the “Company”), a leading provider of distributed power generation systems in China and a manufacturer of wind turbines, today announced that it was notified recently by the staff of the U.S. Securities and Exchange Commission (“SEC”) that the SEC has initiated a formal, nonpublic investigation into whether the Company or any of its personnel violated the federal securities laws.
On August 17, 2011, the SEC served the Company with a subpoena for documents in connection with its investigation.
As of today, the 29th of August, the shares remain halted. One of APWR‘s distinguishing features was, until his resignation in July 2011, the presence of another fine Chinese executive, Mak Kin Kwong aka Peter Mak aka Mak “King Kong”. Our good man, Mr. Mak “King Kong” Kin Kwong, follows the well established pattern of super-busy, super-star, CFOs before him, such as James T. Crane, and Gareth Tau Yau-Sing.
In addition to being the CFO of APWR, King Kong has sat on a downright dizzying array of boards, according to Bloomberg:
SHENG INTL HOLDINGS LTD BOARD MEMBER
SHENZHEN FIYATA HOLDINGS LTD BOARD MEMBER
CHENGDU UNIONFRIEND NETWORK BOARD MEMBER
GREAT WALL FUND MANAGEMENT CO BOARD MEMBER
TT COFFEE INVESTMENT LTD BOARD MEMBER
TT COFFEE CO LTD BOARD MEMBER
VENFUND VC MANAGEMENT LTD BOARD MEMBER
VENFUND BUSINESS CONSULTING BOARD MEMBER
361 DEGREES INTL LTD BOARD MEMBER
POU SHENG INTL HOLDINGS LTD BOARD MEMBER
CHINA SECURITY & SURVEILLANCE BOARD MEMBER (CSR)
TRINA SOLAR LTD BOARD MEMBER (TSL)
DRAGON PHARMACEUTICALS INC BOARD MEMBER
CHINA GREENTECH CORP LTD BOARD MEMBER (GRRF)
HUABAO INTL HOLDINGS BOARD MEMBER
GEMDALE INDUSTRIES INC BOARD MEMBER
VENFUND INVESTMENT MGMT LTD BOARD MEMBER
REAL GOLD MINING LTD BOARD MEMBER
And, until his disgraceful departure, King Kong Mak was the head of the Audit Committee at Trina Solar (TSL). Trina, a solar company deeply in bed with the Communist Chinese government, though their supply agreements, has been written on extensively at Bronte Capital, see here and here.
Besides TSL, on that list is China Security & Surveillance (CSR), formerly a shell known as Apex Wealth Enterprises (APXWF). Today, CSR is one of a group of Chinese fraudcaps with purported buyouts, like filthy, halted, Puda Coal (PUDA), the absurd Harbin Electric (HRBN), C-Wang’s Fushi Copperweld (FSIN) and silly China Natural Gas (CHNG).
A few years ago, before the reverse merger that created CSR, Apex was the plaything of a Hong Kong market denizen, Mr. Albert Li Sze Tang. Besides CSR, Li Sze Tang, and his wife, Lap Woon Wong, show up in many dirty Chinese deals, by far the most fascinating is their presence in the infamous China Water and Drinks (CWDK) scam. For readers unfamiliar with CWDK, read this excellent piece by The Street.com‘s Scott Eden and prepare to be shocked by not only how far these crooks will go but also by the horrifically low level of due dilligence performed by bankers.
Li Sze Tang also was involved in one of an early generation of Chinese reverse merger frauds, China Expert Technologies (CXTI), a now delisted disgrace, formerly a shell called Leopard Capital (LPRD). One of the contact people for Leopard, while it was controlled by Li Sze Tang, was Wilson Cheung. Wilson turns up later as a board member and CFO of….wait for it….CSR. Currently, Wilson controls his own shell, China Multimedia (CMMI).
CXTI was a fraud both so egregious and sadly commonplace with Chinese companies, that it has spawned its own course at Stanford. Here are links to many of the documents used in the course.
Li Sze Tang owned over 15% of CXTI, as seen in this filing. CXTI was a huge runner in the spring of 2007, hitting a high of $8.13 in May of that year. In July of 2007 the CFO of CXTI, Mr. “Simon” Fu Wan Chung jumped ship for Chardan North China Acquisition Co. (CNCA), a Chardan shell now known as Hollysys Automation (HOLI). In October of 2007, the SEC halted trading in CXTI:
Oct. 1 (Bloomberg) — The U.S. Securities and Exchange Commission temporarily froze trading in shares of Connect-A-Jet.com Inc. and China Expert Technology Inc., citing concerns public statements about the companies may mislead investors….China Expert’s stock was frozen because of questions about the “accuracy and adequacy of publicly disseminated information” involving its performance, business prospects and financial condition, the SEC said without describing the source of the statements. The builder of government computer networks is based in Shenzhen, China.
By October 2008 CXTI shares changed hands at $0.0001, that is one ten-thousandth of a penny. A big loser in CXTI, if he did not manage to get out in time, was Jeff Feinberg and his JLF fund. Jeff was once a huge holder in A-Power, and was a big investor in CSR in its early days. JLF shows up in halted China Ritar Power (CRTP) and many other pieces of Chinese reverse-merger garbage and Chardan chop-shop crap. Read a Barron’s piece on Jeff’s penchant for Chinese dreck here. For more fun, read about the bribery scandal that broke in 2009 involving JLF:
March 12 (Bloomberg) — U.S. regulators sued two former employees at JLF Asset Management LLC, the hedge-fund adviser founded by Jeffrey Feinberg, on claims they accepted bribes from brokers seeking trading business from 2003 to 2005. Ex-JLF trader Nicholas Vulpis and operations assistant Brian Travis collected $312,000 in travel, personal services and other kickbacks, the Securities and Exchange Commission said in a claim at federal court in Manhattan today. The suit also names a San Diego brokerage, its founder and a former associate of another firm, claiming they reaped more than $10 million in commissions on trades directed by the pair.
CXTI was finally delisted in March of this year. APWR remains halted, TSL is far off of its highs. With Li Sze Tang, and King Kong Mak involved in CSR, it is only reasonable to wonder about the legitimacy of the buyout proposal. This deal, like the Harbin transaction, is supposedly being financed by the China Development Bank. CDB might not be too big to fail, but they might well be too stupid or too complicit.
Entertaining and educational post. I have a few questions. How do you know which companies are reverse mergers? Do they all trade on one exchange? I’ve noticed more than a few trade on NASDAQ and am not sure if they all trade there. I made some money off of CAGC and wonder if YONG isn’t in the same boat. YONG seems to get the nod from motley fool, and motley fool seems to be a pretty smart group of investors. Do you think they are missing something? I’m self taught at investing so I have to constantly remind myself to stay humble, curious, and skeptical. So if I post dumb questions don’t hold back but charity will be greatly appreciated.
@kyleak
Good questions. Not all reverse merger companies trade on the NASDAQ. Most trade on the OTCBB, some on the Pink Sheets, and others on the Amex, NYSE, or NASDAQ. Typically, however, they all start on the OTCBB.
The easiest way to find out if a company is a reverse merger is to carefully read the 10K filings. See if the company was ever known under a different name, and then pull the filings for that, older, company.
Many of these scams have undergone several name and ticker changes as they morph from one hot new thing (think Internet! Biotech! Gold! Clean Energy!) to the next (China!).
Nice find on the YouTube link for Mak. Dude knows how to party. 🙂
@Fiona228
He sure does! Be sure to watch the whole series:
Peter “King Kong” Mak Kin Kwong Birthday Part 2
Part 3