The Securities and Exchange Commission has brought fraud chargesagainst Heart Tronics Inc. (Pink Sheets: HRTT.PK), its co-chief executives and the husband of its majority shareholder, alleging that the company falsified sales, issued misleading press releases and committed numerous other violations.
The California Attorney General’s office has
filed a complaint against Mitchell J. Stein — who was featured in a Sharesleuth
investigation in 2008 — alleging that he and others participated in a scheme to deceive desperate homeowners into paying thousands of dollars each to join dubious lawsuits against their mortgage lenders.
According to the complaint, the lawyers and telemarketers involved in the scheme led the homeowners to believe that the suits would halt foreclosures on their homes, reduce their loan balances, bring them financial settlements, and possibly eliminate their mortgages entirely.
Authorities say the ring solicited homeowners in 17 states and persuaded at least 2,500 of them to pay as much as $10,000 each to join suits, some of which were never filed.
Stein, a Californa-based lawyer, was involved in the creation and development of Recom Managed Systems Inc., a medical device company that went public through a reverse merger. It later changed its name to Signalife Inc., and is currently known as Heart Tronics Inc. (Pink Sheets: HRTT.PK).
The attorney general’s office said in a press release that all of defendants had their assets seized and were enjoined from continuing their activities.
Muddy Waters LLC said in a research report that Sino-Forest Corp., a Canadian company with extensive timber holdings in China, has substantially overstated the amount of forest land it controls, as well as the amount of wood it has been harvesting.
Trading in the Mississauga, Ontario-based companys stock (TSX: TRE.TO) was halted by the Toronto Stock Exchange after the shares plunged 20 percent in less than 30 minutes.
Muddy Waters said in its 33-page report that the land purchases that Sino-Forest has reported in China did not square with government records, and appear to be overstated by as much as $900 million. The report also included photographs of apartment buildings and other nondescript structures at the addresses listed for some of Sino-Forest’s major customers and financial partners.
Unlike other Chinese businesses that trade on North American exchanges, Sino-Forest has attracted some large, savvy investors, includging Paulson & Co., which has more than $30 billion in assets under management.
Kandi Technologies Corp. said in a letter to shareholders that it stands by the revenue figures in its Securities and Exchange Commission filings. However, the Chinese maker of electric cars, go-karts and other vehicles acknowledged discrepancies in charts in those SEC filings that compared 2009 and 2010 unit sales for all of its product lines. It attributed the errors to “new accounting employees.”
Kandi did not directly address the question of how and where it sold the roughly 3,700 electric cars that it reported selling over the past two years. Sharesleuth’s investigation found that dealers in the United States — the company’s primary market — sold well under 1,000 of the vehicles..
Kandi said in its letter that it sells its vehicles to Chinese export agents, distributors and other middlemen, and that it had no knoweldge of — or relationship with — the dealers that market those vehicles to retail customers.
“To the best of our knowledge, these distributors through their dealer networks distribute our vehicles throughout the world,” the company said.
The AMEX has halted trading in the shares of NIVS IntelliMedia Technology Group Inc (AMEX: NIV) and China Intelligent Lighting & Electronics Inc. (AMEX: CIL).
NYSE Regulation Inc., which operates the exchange, said it was seeking additional information from both companies.
“NYSE Regulation is evaluationg both the need for certain public disclosure, as well as the overall suitability for the continued listing of the Company’s common stock. In this regard, NYSE Regulation is in the process of requesting additional information from the Company in connection with such assessment,” the organization said in each of the halt orders.
According to Securities and Exchange Commission filings, the chief executive of NIVS IntelliMedia, Tianfu Li, is the brother of the chief executive of China Intelligent Lighting, Xuemei Li.
Absaroka Capital Management LLC issued a follow up report on China Shen Zhou Mining & Resources Inc. (AMEX: SHZ), pointing out what it said were material misstatements or errors in the company’s Securities and Exchange Commission fiilings. The report, written as a letter to shareholders, also said that an analysis of the company’s financial statements using a forensic auditing tool raised additional concerns.
China Shen Zhou Mining issued a rebuttal March 10 to the original report. It disclosed in a subsequent SEC filing that its chief financial officer had resigned, making him the fourth CFO to leave that position in three years. Despite the negative reports, China Shen Zhou Mining’s shares have been rallying, along with shares of other Chinese minerals producers.
Three days after the Nasdaq exchange halted trading in its shares, New Oriental Energy & Chemical Corp has been delisted. The company’s stock now is traded on the Pink Sheets under the symbol NOEC.PK. New Oriental Energy was one of the Chinese companies covered in a recent Sharesleuth report about the undisclosed role that certain promoters and financiers played in a series of reverse mergers.
Shares of China Integrated Energy Inc. (Nasdaq: CBEH) lost more than a third of their value in the wake of a research report alleging that the company was fabricating revenue and earnings, and that it had transferred tens of millions in cash to the son of its chief executive through questionable acquisitions.
The 44-page report and a shorter follow-up were posted by someone who used the alias Sinclair Upton and claimed to be an investment manager.
China Integrated Energy has yet to respond to the allegations. It filed its audited annual report with the Securities and Exchange Commission on Wednesday.
Sharesleuth previously raised questions about China Integrated Energy in 2008, when it was known as China Bio Energy Group Holding Co. It was one of four Chinese companies that went public through reverse mergers with shells controlled by a group that included Martin A. Sumichrast, a former brokerage executive whose publicly traded firm, Global Capital Securities Corp., was delisted by Nasdaq because of its ties to people with serious criminal or regulator histories.
Absaroka Capital Management LLC published a research report Tuesday claiming that China Shen Zhou Mining & Resource Corp.(AMEX: SHZ) is “fraudulently misrepresenting its business and thus is massively overvalued by the market at this time.” Among other things, the hedge fund asserted that China Shen Zhou’s management has exaggerated the size of key mines, and that it will be impossible for the company to meet its financial projections for fiscal 2011.