Thursday, July 10, 2014
Inquirer Daily News

PA-based China fraud-watchers in spotlight

A report by GeoInvesting of Skippack helped stall trading in Longwei Petroleum

PA-based China fraud-watchers in spotlight

Dan David, cofounder of Skippack-based GeoInvesting LLC, has been tracking Chinese firms listed on New York stock exchanges -- and exposing what he says are phony sales, sham transactions and investor ripoffs -- since the China stock boom of the late 2000s.

He cites examples like Sino Forest, which exaggerated its timber holdings, and China MediaExpress Holdings, which exaggerated sales, before they were delisted by Western exchanges; also Puda Coal and poultry-raiser Yuhe International, whose values fell to pennies per share after GeoInvesting published reports questioning their narrative and financial statements. Yuhe faces an SEC complaint. These companies cost Western shareholders millions -- while investors who bet they'd fall made money.

GeoInvesting's latest report targeted New York Stock Exchange-listed Longwei Petroleum Co., whose U.S. investors include the California state pension fund  In a 38-page report last week, GeoInvesting published what it said was time-lapse camera images showing weed-grown train tracks and idle storage terminals at sites Longwei officials told investors were handling large volumes of fuel. "LPH stock in our opinion is virtually worthless, completely un-investable and should be immediately delisted," according to the report.

Longwei responded with a statement alleging GeoInvesting comitted " errors of facts, misleading speculations and malicious interpretations of events." But trading in the shares stopped and has not resumed. Longwei chief financial office Michael Toups did not immediately respond to an email; his voice mail was unable to accept messages because it was full, according to a recorded response.

David is one of several China stock-watchers featured in an ABC News investigative report scheduled to air tonight.  ABC quotes U.S. Securities and Exchange Commission Chair Mary Schapiro complaining that China Vice Premier Wang Qishan and other senior officials have refused her requests to cooperate with investigating alleged financial fraud by China-based, U.S.-listed companies.

David and partner Majed Soueidan say they employ 15 at GeoInvesting, including investigators in China. 

Joseph N. DiStefano
About this blog

PhillyDeals posts raw drafts and updates of Joseph N. DiStefano's columns and stories about Philly-area finance, investment, commercial real estate, tech, hiring and public spending, which he's been writing since 1989, mostly for the Philadelphia Inquirer.

DiStefano studied economics, history and a little engineering at Penn, taught writing at St. Joe's, and has written the book Comcasted, more than a thousand columns, and thousands of articles, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
Business Videos:
Also on Philly.com:
Stay Connected