Kandi Technologies responds to Sharesleuth story

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.

 

Shares of China Integrated Energy plunge after research report

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.

“Free-rider” pleads guilty in Ohio criminal case

The U.S. Attorney’s Office announced that Sean M. Daly pleaded guilty to securities fraud today (July 6) in connection with a case brought against him in Ohio last year. Prosecutors accused Daly of “free-riding” — buying stocks without the funds to cover the purchase in anticipation of an upward swing in the price. He was sentenced to 41 months in prison and ordered to pay $5.7 million in restitution to cover loses at the firms he traded through. Authorities said Daly operated his scheme from 2000 to 2007.

Suspect in hedge fund fraud investigation kills himself

Dieter Frerichs, director of K1 Invest and K1 Global, two hedge funds the FBI and several international law enforcement agencies are investigating, was sunbathing on the rocks near his house when German police arrived to serve a search warrant, according to the New York Times. Frerichs pulled a gun from his bag and jumped into the water. He fired one shot into the air then shot himself in the head. The funds are under the control of Helmut Kiener, who’s been in custody in Germany for months, in connection with a suspected pyramid scheme that cost private investors and banks more than $350 million.

Hot stock tip case against publisher will stand

Without comment, the U.S. Supreme Court declined to hear an appeal Monday from a financial newsletter publisher that was sued by the SEC for promising its readers a hot stock tip that failed to materialize. About 1200 people paid $1,000 each to the publishing firn, now known as Stansberry and Associates Investment Research. for access to the tip. Unlike most newsletter publishers that have been targeted by the SEC, Stansberry and Associates had no financial stake in the stock. A U.S. District Court sided with the SEC and so did the 4th Circuit Court of Appeals. The Reporters Committee for Freedom of the Press called the case ”a significant threat to the free dissemination of news about the financial markets and specific investment opportunities” and The New York times is said in an editorial that Congress should intervene to protect the First Amendment.

Derivatives cases a new test for securities regulators

“As the S.E.C. gains greater regulatory authority over derivatives, it remains to be seen whether the tried-and-true theories of securities fraud can be transferred to markets where the exchange of information is much more common and the traders are a great deal more sophisticated,” says Peter J. Hennings in the New York Times after federal judges delivered setbacks to the prosecutors in two fraud cases arising from the financial meltdown.

Former Saints kicker under federal investigation, again

Russell Erxleben, a former NFL player convicted of securities fraud in 1999 in a foreign currency trading scheme, is out of prison and under investigation again, according to the Austin American-Statesman. This time, it’s for selling pre-World War II bonds from Germany and not delivering them. Erxleben told the American-Statesmen the latest investigation is “a witch hunt.”

Leaders of fake financial firm charged

According to U.S. prosecutors, there wasn’t much truth to any claims made by Gryphon Holdings, a firm that claimed international offices, billions in a hedge fund and a string of super-star employees. “Instead … it is alleged the operation was run by shysters, led by 43-year-old Kenneth Marsh,” says the Australian Herald Sun. Marsh and 13 co-defendants have been charged with wire fraud and conspiracy to commit securities fraud. They face up to 20 years in prison if convicted.

Money and property seized from Who’s Your Daddy executives

Another Who’s Your Daddy Inc. executive has been caught up in a criminal drug trafficking case in San Diego.

Court documents filed since our original story show that, in March, agents seized a 32-foot powerboat valued at more than $100,000 from Dan Fleyshman, one of Who’s Your Daddy’s founders and the current director of sponsorship.

The seizures preceded a slew of federal drug indictments that included Edon Moyal, Fleyshman’s co-founder at Who’s Your Daddy (OTCBB: WYDI.OB).

Fleyshman is not a defendant in the case and has not been charged with any crimes. He told Sharesleuth that although the government seized the boat, it wasn’t actually his.

“I didn’t own the boat so it wasn’t seized from me, nor was anything else since I’m not a part of the case,” he said in an email.

Fleyshman said the boat had at one point belonged to a luxury store that he owned in downtown San Diego. He said it was purchased by one of the defendants in the drug trafficking case, which is why the government took it. However, the most current registration records for the boat still list Fleyschman’s store as the owner.

The U.S. Attorney’s office said it couldn’t comment on a pending case.

The government disclosed the seizure after prosecutors filed a bill of particulars for all of the items and cash that were taken as part of the investigation. In all, agents seized more than $500,000 worth of cash, cars and jewelry from people connected to the case. That includes some $40,000 in cash seized from Moyal, and a little more than $4,000 seized from Fleyshman, whose name was misspelled in the court documents.

Moyal was executive vice president of marketing and brand development at the time of his arrest. He, along with a handful of others, was charged with conspiracy to distribute marijuana and possession of marijuana with intent to distribute. According to court documents, agents conducting surveillance spotted Moyal handling boxes of marijuana that were later shipped from San Diego to Maryland.

Although Who’s Your Daddy said in a Securities and Exchange Commission filing in April that Moyal had resigned as an officer and director, it did not disclose his arrest or his federal indictment.

The case drew national attention when an undercover operation that was supposed to be a final bust went awry last spring and several defendants led police on high speed chase across San Diego freeways, throwing fistfuls of cash out their windows as they went.

Moyal and Fleyshman, both under 30, had been hailed in Entrepreneur and other publications for developing the Who’s Your Daddy line of clothing, energy drinks and other products, and for taking their company public at such a young age.

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