Son of China Fire chairman gives up $30 million in stock

When China Fire
and Security Group Inc.
(Nasdaq: CFSG) went public through a reverse merger
in October 2006, Chairman Gangjin Li’s teen-aged son was listed
as the beneficial owner of roughly 10 percent of its shares.

This week, a Securities
and Exchange Commission filing
reported that the son had relinquished his
interest in that stock, which has a current market value of more than $30

According to the filing, Gangjin Li now has sole voting
power over the 2.67 million shares, giving him control of 57 percent of China
Fire’s common stock.  The filing offered
no explanation for the transfer, the latest in a series of disclosures about
the ownership of large blocks of shares issued when China Fire merged into a
public shell called UniPro Financial Services Inc.

Michael Thieu, a China Fire spokesman, said Gangjin Li
originally gave the shares to his son, Ang Li, to provide for his future. But
the son is about to turn 18 and will no longer be a minor, and his parents are
concerned about what might happen if he gains access to that wealth, Thieu

As a precaution, they decided to reverse the gift and use a
different vehicle, such as a trust, he said.

“This transaction is internal to the Li family,” he said.
“It has no impact on the company’s business operations or financials.”

Sharesleuth reported
last year
that the person listed as the beneficial owner of another 2.58
million China Fire shares was the sister-in-law of the company’s chief
executive officer, Brian Lin – a fact not disclosed in any of its SEC filings.

The sister-in-law, who operates natural food stores in
Canada and California, was listed
as the sole shareholder of a British Virgin Islands entity that sold millions
of dollars worth of China Fire stock at the end of 2007.

After our story appeared , China Fire issued a press
release and SEC filing
clarifying the actual owners of the shares held by
various British Virgin Islands entities. It said some of the people – including
the sister-in-law — who had been listed as beneficial owners were in fact
nominees standing in for other people.

The new
SEC filing
says that Gangjin Li gifted the 2.67 million shares to his son in
August 2006. It said that last Thursday, Ang Li’s mother and legal guardian, Chunfeng
Gao, ” irrevocably disclaimed and renounced any
and all legal and beneficial interest” in the shares on behalf of her son.

Ang Li is a student. He and his mother live in North
Vancouver, British Columbia. When Sharesleuth asked him last year how he came
to be listed as the owner of a big block of China Fire shares, he said he had
seen the documents but was unaware of the details.

Although the reversal of the share gift puts more stock
directly into Gangjin Li’s hands, that could be seen as a positive for the
company and for other investors, said Thieu, a former securities analyst.

“From my view, it actually will provide more stability,” he

China Fire’s stock closed Friday at $11.98 a share.

Barred brokerage executive has second alias

Kyle Rowe, a former brokerage executive barred from the industry in 2006, changed his name to Marvin K. Rowe II earlier this year – he says to honor his father.
But a third named used by Rowe, one that bears no resemblance to his father’s, has surfaced in a lawsuit filed in San Diego last summer by one of Rowe’s clients. 

The court file includes an affidavit filed in June 2008 by Parabolic LLC, one of Rowe’s stock-promotion companies. It was signed by a “Kyle Rower” — with an extra “r” at the end. The signature appears to match the one on a Securities and Exchange Commission form filed a few years earlier by Kyle Rowe – without the extra “r.” 
Sharesleuth also compared those signatures with one on an SEC filing by Parabolic, covering the sale of $750,000 of stock in a client company called Cal-Bay International Inc. It seemed to be a match, too. (see the documents below)
The affidavit was filed to support Parabolic in a dispute with Pangenex Corp., a Florida-based company. Pangenex had sued Parabolic, accusing the company in court documents of failing to perform any promotion services after taking $125,000 worth of common stock as payment, and of driving down Pangenex’s stock price by dumping that stock on the market. Parabolic denied wrongdoing and the case appeared to have been settled later that year.
Rowe was the subject of a previous Sharesleuth report in April. We discovered that he had legally changed his name, effectively obscuring his past run-ins with regulators.
His new firm, Going Public LLC, helps companies gain listings on stock exchanges in the United States and Germany. 
At the time, Irving Einhorn, an attorney representing Going Public, would not allow Rowe to be interviewed.
Rowe, however, started a Web site and posted an explanation in response
“I legally changed my first name to Marvin, the name of my 71-year-old father, who I love and respect more than any other man in the world,” Rowe says on the site. “I am very proud to carry his name. Period. Nothing more needs to be said about that.”
In that post, he made no mention of using last name “Rower.” 
When we asked him about it, he said: “Why don’t you write your questions or comments on my Blog in the comments section if you’d like and I’ll publish them and answer you right there if you get such a kick out of this.” 
Rowe then published the question in his blog’s comment section and posted an answer that indicated he thought using the name “Rower” could help him avoid attention from reporters. Both comments were later deleted.

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