Local China Firm Charged with Fraud

Rami Grunbaum, Seattle Times, May 17, 2014

Allegations of fraud at Chinese companies trading on the U.S. stock market have become commonplace in recent years, but federal prosecutors here say Seattle-based L&L Energy is the first to be charged with crimes.

The U.S. Attorney’s Office this month added L&L, the company, to the indictment for securities fraud the office unsealed in March against its founder and CEO, Dickson Lee.

“I believe this is the first company like that indicted in the United States,” said Andrew Friedman, chief of the office’s complex crimes unit.

{snip}

L&L, which mines coal in rural southwestern China, can’t go to prison, of course.

But if found guilty on all seven counts, the company faces a maximum penalty of $25 million, said U.S. Attorney’s Office spokeswoman Emily Langlie.

That’s more than four times the net income L&L reported last quarter, and criminal penalties are typically not covered by corporate insurance policies.

The indictment underscores the number of Chinese companies much larger than L&L that have blown up after being accused of fraud, at much greater cost to their shareholders.

Sino-Forest, which traded on the Toronto Stock Exchange, cost investors more than $3 billion. Longtop Financial Technologies and Puda Coal are among the better-known cases where hundreds of millions of dollars in stock value evaporated after exaggerated profits, falsely claimed assets and other shenanigans were uncovered.

{snip}

Some U.S.-listed China companies faced civil suits by regulators, and many were hit by shareholder lawsuits–37 in the peak year of 2011, according to NERA Economic Consulting of San Francisco.

So why is little L&L, whose market capitalization after it gained a Nasdaq listing in 2010 was never more than about $400 million, targeted for the dubious distinction of a criminal indictment?

The specific charges offer one explanation. Lee and L&L are accused of filing “false, fraudulent and misleading” SEC reports in 2008 and 2009 that said a Hong Kong resident identified as “N.L.” was L&L’s chief financial officer and had signed off on the company’s financial statements.

According to prosecutors, that person had declined to work for the company and “had nothing to do with L&L” at the time, and Lee was simply signing the financial reports and certifications himself.

Building a case to prove those allegations may be relatively straightforward because it doesn’t require evidence from auditors or employees on the ground in China.

Much more difficult are those situations where a Chinese company falsified assets, invented customers or otherwise fiddled the books.

{snip}

Lee, who stepped down as L&L CEO after the indictment, has pleaded not guilty. His attorney, Russ Aoki, has argued in court filings that he should be released from pretrial detention because “without Mr. Lee’s assistance . . . L&L Energy may be unable to protect the company’s thousands of investors from irreparable harm because of the company’s inability to fulfill its commitments or continue operations.”

L&L, which was delisted from Nasdaq last fall, has not yet entered a plea in the criminal case. {snip}

{snip}

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  • r j p

    This has been going on in all industries since Chinese stocks started listing on US exchanges.
    They are quarters behind in filing their 10-Q’s and 10-K’s.
    They routinely fail to issue news releases that they will be releasing information material information that could affect capital markets.
    Incidentally the listing requirements for foreign companies listing on US exchanges are less stringent.

  • Martel

    Immigrants tend to replicate the conditions of their home countries when they reach a certain number. Any skilled auditor, proficient in the Chinese language, would have a field day in any Chinatown of your choice.

  • What a shocker. I have a Chinese friend who has informed me that hacking, fraud, and identity theft is such an issue in China that most services require an obstacle course of security measures to use – much more than the simple password or captcha here in the US. Maybe it’s “in the water.” The more Asians that come over here, the more I expect fraud, at every level, to increase.

    • AndrewInterrupted

      I think you just hurt Rabbi Engelman’s feelings. <;-D

      • Romulus

        What!!!????,…. No comment From the Jew/ Chinese shill Engleman!!
        Do not be fooled Amrenners!! That fraud replied to me in no uncertain terms on alt right last week that he is in NO way supportive of white realists/ Wn.
        He even went so far as to take credit for Spartacus’ permanent banishment!

        • He is conspicuously absent, isn’t he? I’m sure he’ll come around soon enough and tell us some more about how sexy Chinese women are, or whatever it is he’s on about now.

          • Romulus

            Given that amren has had an essay posted in the features section of this website, makes me highly suspect of his origin/profile. His commentary generally consists of copying and pasting original material and passing off leftists diatribe as facts.

            Read his essay on Rome and judge for yourself. IMHO his purpose is to antagonize commentators into vitriolic discussion to enable their removal from this forum.
            Go through his comment history ( especially last summer, as he debates David Ashton, Spartacus and myself) and it will become perfectly obvious of his nature.

            He is on AltRight right now as we type. He is impervious to logic and empirical data on his two favorite ethnics.

          • AndrewInterrupted

            Yes, a skipping record.

          • JohnEngelman

            My record keeps repeating facts my adversaries do not want to be told about.

          • SpawnTaviousJackson

            YOU DONTS GOT NO KREPLACH!!! YOU DONTS GOTS NO KREPLACH!!!!

          • JohnEngelman

            My arguments are logical. I enjoy exposing the logical fallacies of my detractors.

          • SpawnTaviousJackson

            YOU DONT GOTS NO FENG SHUI!!! YTOU DONTS GOT NO JAPANESE STEEL!!!!

        • SpawnTaviousJackson

          wow! What a small, petty person he is.

        • awb

          Bring back Spartacus. Ban Engleman.

      • JohnEngelman

        One firm charged with fraud is not an indictment against an entire nation.

        • Alexandra1973

          It goes to show, though, that Orientals are far from perfect.

          That’s the thing about race realism…you are aware of the good, the bad, and the ugly about each race. One of our faults as Whites is that we’re altruistic to a fault.

          • JohnEngelman

            Average IQ is easy to document. So are rates of crime and illegitimacy. Orientals look good as far as these qualities are concerned.

            How does one measure altruism? Where are the surveys? Where are the statistics?

            Since the time of Confucius and Lao Tse over two thousand years ago Chinese culture has valued harmony. Harmony requires altruism. Western culture has been individualistic and competitive. Competition rewards selfishness.

            Ayn Rand has only been popular in the United States. Her philosophy applauds selfishness, and condemns altruism.

          • Alexandra1973

            Ayn Rand was also a Rothschild mistress.

            I’m not denying that Orientals have a lower crime rate, I’m just saying they have their share of bad apples like any other group.

            That being said, they should stay in their own nations. You can’t have two or more races within the same borders and have harmony, just doesn’t work.

          • JohnEngelman

            The only Americans who have the right to complain about immigrants not staying in their own nations are American Indians.

            Orientals who came here legally have as much right to be here as you do.

          • Alexandra1973

            We could have set aside a few states for Amerinds, we didn’t necessarily have to go “sea to shining sea.” They have their lands, we have ours, everyone’s happy.

            Besides, my understanding is Amerinds crossed the Bering Strait, so they’re from Asia to begin with.

            Also take into account that there was once a supercontinent (the notion is even supported by the Bible), so we’re all from the same land anyway, it’s a matter of having borders and having one race within a set of borders.

            As far as Whites being “immigrants,” well, since there was no established nation before 1776 here, we colonized. You can’t immigrate to a land that’s not an established nation. A few of my ancestors were among the founders of Hartford, CT. A tiny percentage of my ancestors were Amerinds.

          • Frank Morris

            Now you want to blame corruption on Objectivism? That’s a real reach, even for you.

          • SpawnTaviousJackson

            HE DONTS GOT NO PANCAKE MIX!!!!!

          • JohnEngelman

            I was responding to a comment that suggested that whites are more altruistic than Orientals.

          • Alexandra1973

            When have Orientals taken it upon themselves to “uplift” blacks? That’s what I was talking about.

          • JohnEngelman

            I have never heard of an “Oriental liberal guilt complex.” That may have something to do with it.

            When immigrants move to the United States they learn, often from experience, that blacks have a very high crime rate. They do not feel guilty about this. They feel anger and contempt.

          • Alexandra1973

            All the more reason to just stay home, then they don’t have to put up with our multiculturalism.

          • SpawnTaviousJackson

            You aints gots no PANCAKE MIX!!!!!!!!

  • I read a comment by a high Chinese government official recently, bemoaning the fact that EVERYONE in the country is corrupt, dishonest, a cheater, liar, etc. At my former university, the Chinese were worshipped due to an Illuminati Chinese businessman donating $1,000,000 (with big strings attached–they had to spend it to promote China locally in San Antonio). We’re just staring to learn that Nixon’s trip to China opened a pandora’s box that may have unleashed demons from Hell upon the US.

    • AndrewInterrupted

      The Chinese have been robbing the U.S. defense industry blind for the last two decades.

      They are number ONE on the U.S. defense and industrial espionage threat list.

      And see if you can guess what country is number TWO on that threat list?

      ISRAEL

      …..hmmmm

      • SoulInvictus

        Noooo! (this is my shocked face).
        But with those higher IQ’s, why would China and Israel need to steal high tech from white countries?
        *cough cough*
        Yup.

        • AndrewInterrupted

          ” (this is my shocked face) ” <:-D

      • Romulus

        Gee, no surprise there Andy! Any tentative alliance on the right with the tribe should be approached with extreme caution.
        Their chameleon camouflage is so good, you just can’t tell what their motives are.

      • SpawnTaviousJackson

        why are they stealing OUR technology? I thought they were superior to us?

  • Medizin

    Isn’t it time we stop dealing with China? Tainted foods, cyberspying, immigrant workers stealing technical specs, and toxic jerky treats linked to more than 1,000 dog deaths in the U.S. announced today.

    • jane johnson

      Years back it was toxic drywall and lead paint on children’s toys. I expect to hear that GM’s faulty ignition switches were made there, as well. And don’t even get me started on their currency manipulation.

      • Medizin

        It leads one to think they are intentionally trying to kill us…and our dogs.

        • IstvanIN

          Which is weird since they find dogs very tasty.

      • Let’s not forget Chinese infant formula with cyanuric acid, melamine, ammeline and ammelide plastics in it. There was also wheat, rice and corn gluten and protein that were contaminated with the same adulterants, in some cases over 100 times the legal limit. In August 2009, the FDA warned US pharmaceutical manufactures about contaminated Chinese drug components. In April 2007, Chinese officials briefly refused FDA requests to inspect suspect facilities in China, stonewalling until the end of that month.

        Since environmental protection in China is a first-order catastrophe, it would never occur to me to eat anything that came out of a Chinese river or lake. When I was last at Wal Mart, and grabbed a package of frozen crawdads, I looked at the label on a hunch: “Product of China”. I put it right back.

        Then there’s the issue of counterfeit goods: everything from vehicle parts to electronics components to designer clothing, and this counterfeiting accounts for 8% of China’s GDP. About the only relatively minor issue in Chinese counterfeiting is medication. Only 6% of the world’s fake drugs come from China, while according to the European Commission, 75% originate in India. Much of this is exported to other Third World countries, such as Nigeria, where fake anti-malarial medication is seriously hampering control efforts.

        • DucLap

          Even imported Chinese pet food was found to be toxic.

  • none of your business

    Accusing China of vast business spying, the United States charged five military officials on Monday with hacking into U.S. companies to steal vital trade secrets in a case intensifying already-rising tensions between the international economic giants.

    The Chinese targeted big-name American makers of nuclear and solar technology, stealing confidential business information, sensitive trade secrets and internal communications for competitive advantage, according to a grand jury indictment that the Justice Department said should be a national “wake-up call” about cyber intrusions.
    The alleged targets were Alcoa World Alumina, Westinghouse Electric Co., Allegheny Technologies, U.S. Steel Corp., the United Steelworkers Union and SolarWorld. The indictment, which includes charges of trade-secret theft and economic espionage, was issued in Pittsburgh, where most of the companies are based.
    China denied it all. In a statement, the Foreign Ministry said the charges were based on “fabricated facts” and would jeopardize China-U.S. “cooperation and mutual trust.”

    • SoulInvictus

      If the end result of all this is that relations between the US and China sour, it’s a win win for us. American manufacturing could get rebuilt, more class mobility for the white working class, widespread economic boost… and the Chinese get screwed out of American tech and retail. Works for me.

      • SlizzardAjeosshi

        Just a note there: many people are worried about the “empty towns in China”, well, as an almost insider, let me say i deem very unlikely that the country will collapse because of some bogus real estate speculation.

        First of all they didn’t waste any of the “cash they’ve made off of us” on such projects: China has negligible foreign debt and most of these scams were the result of the local quantitative easing.

        State-owned banks lending, or raising cash, to projects carried out by other state-owned entities or quasi-public ones. It’s basically yuan the left hand gave to the right hand: when the whole sordid affair goes south, all they have to do is print some more and get the party rolling again. At the most the CNY will weaken a little bit and inflation will pick up a few basis points here and there.

        Now the productivity of the country is growing fast but salaries are rising even faster, altough the difference is not macroscopic: in 10 years you might have a structural crisis indeed. Right now ? It’s not gonna happen: the investments to climb up a couple of notches on the added value chain have been already laid down in the last decade and they’re now coming online.

        Now we just have to push them to accept diversity immigrants and they’re sunk too.

        You got a tough pitch there

        • SoulInvictus

          “very unlikely that the country will collapse because of some bogus real estate speculation.”
          I’ve seen great youtube vids on their real estate fumbles. The simple fact is central planning is horrible for that sort of thing.
          And the sheer number of empty living spaces because the wealthy have little else to invest their money in, and few people that can afford the prices, is mind boggling.

          Renewed American industry/manufacturing, whatever the cause, would kick the legs out from under the Chinese economy.
          We’d no longer be dependent on them as a lender, nor as our proxy factory. When your biggest customer kicks their addiction to your cheap crap, you’re screwed.

          “all they have to do is print some more and get the party rolling again.”
          That hasn’t worked out very well for us. And if relations sour, we won’t be nearly as inclined to extend loans to the commies as they have been to us. If the worms turns that way, with the looming elderly population they have ahead of them, then China is in for interesting times and the world will sort itself back to proper order. Assuming they don’t just say screw it and start invading nearby countries.

          • SlizzardAjeosshi

            I’ve seen great youtube vids on their real estate fumbles. The simple
            fact is central planning is horrible for that sort of thing

            Nothing in Asia is built to last, this kind of real estate frenzies, followed by disastrous crisis, have been going on since the 80’s: they had one structural RE crisis in the late 80’s, in the mid to late 90’s, in the mid 00’s and probably it’s unfolding now. What they do is tear down, bail and move on. This time the bailout might be a only partial

            Renewed American industry/manufacturing, whatever the cause, would kick the legs out from under the Chinese economy.
            We’d
            no longer be dependent on them as a lender, nor as our proxy factory.
            When your biggest customer kicks their addiction to your cheap crap,
            you’re screwed.

            Yes and No, with that i mean yes of course America has to rebuild their manufacturing, that’s a MUST. The no part is the Chinese dependance on foreign trade: that’s a pre-2008 paradigm. Check out their stats, exports in China account now for a lower slice of GDP than in many Central European nations.

            They DO rely a lot on foreign technology but it is relatively easy to acquire, these theft stories are colorful and make for great headlines but reality is even sadder. Later if you guys want (i don’t wanna bore people but i generally prefer to talk about what i know) i can write a note about how tech transfers to China actually happen: it’s mostly legal and it mostly has to do with the prospect of getting a slice of the local consumer market, the real growth story now.

            Assuming they don’t just say screw it and start invading nearby countries

            That’s very possible: they are drunk on power, sometimes verging on delirium.

          • SoulInvictus

            “The no part is the Chinese dependance on foreign trade: that’s a
            pre-2008 paradigm. Check out their stats, exports in China account now
            for a lower slice of GDP than in many Central European nations.”

            Well, comparing China’s 27% of GDP to say, Greece’s 27% of GDP, isn’t exactly apples to apples.
            And China is at exactly the same level as 2009, so I don’t get the pre-2008 paradigm. Down only a couple of points from the 29% of the past few years, which is probably directly related to the crummy US economy.
            (http://data.worldbankDOTorg/indicator/NE.EXP.GNFS.ZS)
            Flip the US 14% with that Chinese 27-29%, or at least revert the majority of WalMart shelf items to US rather than Chinese manufacture, and our respective economies invert to our favor.

            “That’s very possible: they are drunk on power, sometimes verging on delirium.”
            Part of me wants to see just what they could do, in that disaster/Red Dawn movie kind of way.

          • SlizzardAjeosshi

            I forgot: i know i am strongly contrarian to the consensus on this issue, but i think that in this current age, with giant leaps in robotic productivity looming ahead, having an older, possibly shrinking population, provided you didn’t establish an expensive safety net for the elders, might actually be a plus.

            I admit though this is a fringe view

        • A speculative boom in real estate was in large part responsible for the current US recession.

  • none of your business

    China has 3,000 front operating in the US that are nothing but fronts for espionage according to the FBI.

  • So CAL Snowman

    Silly Chinese, only American Jewry is allowed to commit fraud on Wall Street.

  • HJ11

    On topic, generally, but slightly off point: Have you noticed that Asian immigration is increasing by leaps and bounds? I don’t think it’s an accident. I think, and I wrote this years ago, that those who want to blend all humanity together into a Tan Everyman are simply playing at population genetics almost as though they are mixing paints. “Hmmm, the U.S. is too White. Let’s add some Black Africans. Okay, now some Brown Latinos. Now it’s time to add some Yellow Asians to the mix. Soon there will be no pure Whites left and the world will be a wonderful place just as John Lennon imagined.” Yes, they’re nuts and they’re trying to wipe Whites out first, because we’re seen as the major opposition to a fully blended Tan Everyman.

    • Einsatzgrenadier

      Turning the US into a dumping ground for third world colonizers might lead to a mixed race Latin American-style paradise. However, we must consider why the people of Latin America became so racially hybridized. First of all, the Spanish and Portuguese conquistadors brought few women with them, forcing them to breed with the local Indian women and black African slaves. Secondly, the conquistadors established a caste system based on skin color, where the only path to socioeconomic mobility was through racial intermarriage or “whitening.” In order to diffuse racial tensions, the white and near-white elites of Latin America promoted certain race-based ideologies that portrayed miscegenation as liberation from race prejudice and forged new racial identities by emphasizing the biological kinship between subject population and rulers, such as “racial democracy,” “todos nosostros somos indios,” “crisol de razas” &c.

      None of these elements characterize the multiracialist social engineering project as engaged in by our transnational western elites. They embrace an ideology known as multiculturalism, which encourages the imported minorities to retain their cultural and ethnic differences, allowing them to physically segregate themselves from the mainstream population. Multiculturalism provides a significant ideological barrier to race mixing. The majority of the evidence suggests that whites in Europe and America will probably not miscegenate themselves out of existence, but will probably retain their racial purity as they are reduced to a small minority in an increasingly racially balkanized society, one torn apart by racial and religious hatreds. This will probably erupt into an all-out Balkan-style race war with most whites seriously considering the possibility of their genocide for the first time in Euro-American history.

  • IstvanIN

    The Chinese are not our friends, that sums it up.

    • SpawnTaviousJackson

      NBO, not at all, they have had writers in china calling for the genocide of all whites in the us and the westernized chinese that are here.

  • Magician

    “Local Chi…….”

    ENGELMANNNNNN!!!!!!!!

    • AndrewInterrupted

      I snapped a picture of his girlfriend at the last AmRen conference when
      she was b!tching about him. I forget exactly what the criticism was about.
      .

      • SoulInvictus

        Shortcomings.

      • Alexandra1973

        That’s not very nice!

        (Good thing I wasn’t drinking my Mountain Dew while reading it or you’d have owed me a new monitor!)

      • JohnEngelman

        Crude, very crude, but to be expected.

        She is beautiful, though.

  • none of your business

    Englemann and the monitors won’t post this as an article so I’ll try it as a comment and maybe the asianphiles will let is stay.

    Amnesty is being driven, among others, by big businesses claiming they cannot hire enough high-tech professionals. These are (or posture as) major donors to members of Congress. So these businesses are twisting arms on Capitol Hill. The compromise is that Democrats get amnesty for illegal aliens if business gets more high-tech foreign workers. However, in fact, there is no shortage of high-tech professionals in the USA. Businesses do not need immigration reform.

    On August 30, 2013, the Institute of Electrical and Electronics Engineers published a review of this question in its journal Spectrum, titled “The STEM Crisis Is a Myth.” “STEM” jobs are those in science, technology, engineering, and mathematics.

    The IEEE reports: “Every year U.S. schools grant more STEM degrees than there are available jobs. When you factor in H-1B visa holders, existing STEM degree holders, and the like, it’s hard to make a case that there’s a STEM labor shortage.” The IEEE describes itself as the world’s largest professional association dedicated to advancing technological innovation and excellence in science and engineering for the benefit of humanity.

    The IEEE article continues to the effect that “there are more STEM workers than suitable jobs. One study found, for example, that wages for U.S. workers in computer and math fields have largely stagnated since 2000. Even as the Great Recession slowly recedes, STEM workers at every stage of the career pipeline, from freshly minted grads to mid- and late-career Ph.D.s, still struggle to find employment as many companies, including Boeing, IBM, and Symantec, continue to lay off thousands of STEM workers.”

    The Washington Post reported on April 24, 2013, in “Study: There may not be a shortage of American STEM graduates after all,”

    • Medizin

      “The compromise is that Democrats get amnesty for illegal aliens if business gets more high-tech foreign workers.”

      And businesses want high-tech foreign workers because they accept lower salaries…and Americans get no salary.

      Sounds right coming from the minds of our corrupt politicians.

    • JohnEngelman

      If it was up to me that article would be posted on American Renaissance. It confirms what I have been saying here.

  • NotYouNotSure

    Just a quick question for the nationalists who would like to see China collapse, if that were to happen how is that going to help the cause of whites ? All it would lead to would be millions of Chinese (and people from other countries affected by the fallout) to come to America.

    • SpawnTaviousJackson

      They would not make it all the way across the pacific. That is one long swim and there are sharks in the water.

    • JohnEngelman

      My hope for mainland China is that the country adopts a democratic government, and find a non coercive way of controlling population growth.

      The Japanese have a democratic government. The population is declining without any policy by the government at all. The Japanese economy is not doing as well as it did during the 1980’s, but it is still doing well. Large numbers of Japanese are not immigrating to the United States.

  • neshobanakni

    Investing in a Chinese or Russian company is a sucker’s game. They don’t play by any of the rules followed by the rest of the world’s businesses.