bradford86 Monday, 02/07/11 02:58:14 AM Re: None Post # of 34447 I figured i'd put this in here --- i tried to see if there were any incentives for CCME to be a fraud.... and the fraud story just doesnt make sense given the associations and liabilities. well, I hope these guys are legit [Glen] 12:31am i'm pretty sure they are. [Friend] 12:34am it really looks like there is a strong case against them though, are you going to short the stock? or load up? [Glen] 12:34am have you read the case against them? [Friend] 12:35am yea i did, the muddy waters seemed suspicious but the first one sounded pretty legit [Glen] 12:35am how so? you say the citron sounded legit? http://citronresearch.com/ [Friend] 12:36am yea, they were basing it on how the numbers seemed too good to be true based on their cap ex and so on but why did they reverse merger thats a question that i'm wondering but the stuff abt the company being nonexistenent is clearly bull [Glen] 12:38am at the time, the global markets had crashed [Friend] 12:38am it exists and is operational i see that make sense well, i've been watching it, interesting to see how it plays out now that there's an investigation on it... even if they fudged a little it wont be good [Glen] 12:40am how would they fudge? that's the question. if you look at the incentives and all if the company is lying management personally is screwed. just fyi. they lose everything. that's how it's structured. [Friend] 12:41am i dont know, but its happened [Glen] 12:42am what's happened? [Friend] 12:43am 'pump and dump' [Glen] 12:44am how do you figure? which way? [Friend] 12:44am it has hapened to other companies, thats what i meant [Glen] 12:44am this is true but. look at the volume. [Friend] 12:44am ok, [Glen] 12:44am pumps and dumps screw people at the top lol the volume on this one doesnt make sense look, i have no idea what i'm talking about i'm just guessing [Friend] 12:45am well, the management could have bought alot on the side, privately... the 1.5 mil the cfo invested could have been purely symbolic small price to pay i dont know either but we'll find out soon i guess i want it to be legit i'll invest all i have right now [Glen] 12:47am lol [Friend] 12:47am deal of the century [Glen] 12:47am all i know is that from everything i read the fraud argument has been debunked but i still hear rumors of fraud. so who knows i'm open to the idea you should know that i'm stressing out about a lot of this stuff because i have found fraud in china that nobody else really has talked about and i'm doing my best to avoid owning fraud but as far as i can tell, ccme is real. if it was a fraud. my arguement is as follows. the people saying they are fraud.. would have a better argument. right now, their argument in fact is in my opinion made up by them lol [Friend] 12:52am you're right it is still up in the air but their opinion cant manifest into trust truth* if the investigation indeed shows that the books are legit then youre back in the money but if theres the slightest bit wrong then its really bad [Glen] 12:55am the thing is. star is on the board of directors deloitte and touch is auditing the books and my latest feedback is things are fine [Friend] 12:55am ok who is star? [Glen] 12:56am star investments [Friend] 12:56am i see [Glen] 12:57am http://www.cvstarrco.com/cv/starrinvestments/ [Friend] 12:59am CCME seemed like last company to seem like they would be a fraud [Glen] 1:00am well. if you look at their numbers the numbers are pure in terms of they aren't hiding positive cash flows from operations [Friend] 1:00am of course, theyre being accused of overstating the numbers [Glen] 1:01am well. the thing is. if the cash balance is real then i would argue that it's impossible they are overstating their numbers. [Friend] 1:02am yea someone said that some chinese companies have taken out short term loans to appear like they have the balance but they paid out a dividend that interesting [Glen] 1:02am they haven't paid the dividend yet. but i've heard that too. In addition, for so long as Starr owns at least 3% of the Company’s Common Stock on a fully-diluted and as-converted basis, Starr will have the right to purchase a pro rata portion of any additional shares of capital stock proposed to be issued by the Company, and will have the right to join certain stockholders in their sale of capital stock of the Company on a pro rata basis, in each case in proportion to Starr’s then current percentage of ownership of the issued and outstanding shares of Common Stock, on a fully diluted, as-converted basis. As long as Starr owns at least 3% of the issued and outstanding shares of Common Stock, on a fully diluted, as-converted basis, it will also have the right to require certain stockholders to purchase its Preferred Stock and the Common Stock held by Starr or issued upon the conversion of Preferred Stock or exercise of the Purchased Warrants upon the occurrence of the Company’s failure to achieve audited consolidated net profits (“ACNP”) for 2009, 2010 or 2011 are less than $42 million, $55 million and $70 million, respectively (each, a “Profits Target”) or to fulfill certain of its obligations under the Purchase Agreement. The Performance Adjustment Amount payable in any of 2009, 2010 or 2011 will be a fraction of $343,462,957 which is proportionate to the amount by which the Company’s ACNP in such year falls short of the then applicable Profits Target. The Performance Adjustment Amounts will be payable in cash or stock, but only to the extent such stock, together with the shares of Common Stock acquired or acquirable as a result of Starr’s ownership of the Preferred Stock, the Purchased Warrants and the Transferred Shares, will not exceed 19.9% of the total number of shares of Common Stock of the Company issued and outstanding as of the date of the Purchase Agreement. In the event that the stockholders subject to the obligation to purchase Starr’s shares under the put right or to obligations under the performance-based adjustment provisions do not comply therewith, Starr will have the right to require such stockholders to sell up to all of the Companys’ capital stock directly or indirectly held by them to a third party pursuant to a managed sale process. The message is too long. sent you a message [Friend] 1:10am yup, thats significant it relly does seem more genuine than not doesnt ge tmuch better than that [Glen] 1:11am well .. basically if the company is lying [Friend] 1:11am they owe starr alot haha [Glen] 1:11am lol yeah [Friend] 1:11am but i think even if it turns out its all real the issue would be the 'image' of the company its going to be a while [Glen] 1:12am i dont know. [Friend] 1:12am before investors have faith in it [Glen] 1:12am things happen faster than you'd expect. [Friend] 1:12am i hope so [Glen] 1:13am i'm trying to figure out if they can lie their way through it all and still make money lol [Friend] 1:13am they were quite aggressive with this profit guarantee [Glen] 1:14am right now the fully diluted share count is 38M there are 14M in earn-out shares 52M shares total fully diluted [Friend] 1:15am was this agreement from 09? [Glen] 1:15am from way back i'm just trying to figure out how it could be a fraud. the earn out shares are 15M shares [Friend] 1:16am ok [Glen] 1:16am cheng zheng owns 13M [Friend] 1:16am the CEO? [Glen] 1:16am he's the ceo [Friend] 1:17am haha [Glen] 1:17am Cheng Zheng, the sole shareholder of HKMDF at the date of dividend declaration. so he gets the earn-out shares. [Friend] 1:17am he's not having a very good chinese new year i see... dude idk i'm gonna wait on the outcome but [Glen] 1:18am lol he doesnt care. if the company is real and they are making money [Friend] 1:18am did you see someone dump big time before the report come out? [Glen] 1:18am he gets an additional 14M shares look i'm trying to figure out if there is incentive for him to lie. he currently owns 13.2M shares [Friend] 1:19am insider syndicate [Glen] 1:19am he'd get another 14M shares [Friend] 1:19am there could be incentive [Glen] 1:19am 27.2M shares [Friend] 1:19am anythings possible [Glen] 1:19am lol [Friend] 1:19am oh i see [Glen] 1:19am the market value of his shares is currently less than what he'd owe starr if he was lying [Friend] 1:20am so why would he want useless shares exactly haa, yea it is a mystery [Glen] 1:20am it's just understanding incentives so basically [Friend] 1:21am maybe they expected to be able to get away with it for long enough to be able to sell out [Glen] 1:21am based on my calculations if the ceo is lying he loses everything if he's not lying he makes a lot of money starr got involved and picked the outside auditor who hangs out at ccme's office. dude. this looks real to me. [Friend] 1:22am yup [Glen] 1:22am more real than i thought. previously. [Friend] 1:22am haha [Glen] 1:22am seriously. [Friend] 1:22am yea, i'm leaning towards real [Glen] 1:23am i think i'm willing to bet large on this. [Friend] 1:23am the video with the chinese dude was enough for me but i need to know they're absolutely clean because now theres a microspcope [Glen] 1:23am look, i've identified frauds i'll tell you one, call me [Friend] 1:24am haha, why wont you type it here ? nvm [Glen] 1:28am lol oh the name of the company? maybe. lol so if ccme is a fraud and it drops to $5 and their audited financials bounce lets see. the ceo would owe starr roughly $6 in share stock price he owns roughly 20M shares [Friend] 1:30am the company would, they would just declare bankruptcy [Glen] 1:30am out of a total of 50 so.. no dude. this stuff is put to death in china. just fyi. [Friend] 1:31am oh shti [Glen] 1:31am yeah. so.. here's the question would you bet your life on a business? that's ridiculous. [Friend] 1:32am ui wouldnt load up though [Glen] 1:32am also the company would be worth less than $5 if it was fraud everyone would murder sell the cash balance is $169M here's the problem. if he can keep up the fraud to 2012 lol then he keeps it all baby so lets calculate what he keeps 25M shares roughly so let's see if he is a SCAM and he has banks loaning him money to run this scam. and he's got $169M on loan now +$130M on loan next year +$31M for Q42010 that's $330M and he has 25M shares he needs a share price of at least 13.2 and the issue is he needs to sell 25M shares at $13.2 average and.. i think it would be very difficult to sell half your company at that price [Friend] 1:36am the loans i assume are so short term that they just need to be in there for the auditors to see [Glen] 1:36am without people figuring out it's a fraud well there's another problem it's my understanding that when you pick up DTT they are always randomly checking on things and that various research firms have all independently confirmed cash balances at random times and delotte is in and out of the office all the time lol [Friend] 1:37am i see [Glen] 1:37am like most blue chip companies have offices for their auditors built into their HQ it's not like they just glance at the numbers once a year. they actually review the 10-Q's annually Starr is on the board of directors checking shit out monthly dude, running a scam like this for 3 years to try to sell half your company into the market lol that's the fraud argument as i see it. straight up. [Friend] 1:39am i dont know if he was relying on selling his own shares [Glen] 1:39am ok listen.. if these are bank loans he is getting from a bank. [Friend] 1:39am someone could have been loading up outside yup [Glen] 1:39am he needs to pay them off so.. i guess he would have the cash from the bank to give back. [Friend] 1:40am he doesnt need to spend it yea we'll see [Glen] 1:40am but then again... if he is lying... and his audits dont check he gets taken down so basically he is betting that his audits check so i'm curious how he knows the cfo let's look. [Friend] 1:42am the cfo would have to be in on it too [Glen] 1:42am http://www.ccme.tv/eng/about/management.php yeah but the thing is. if you run a fraud. you can't keep the money. lol dont forget that. Jacky, Wai Kei Lam, Chief Financial Officer and Executive Director Mr. Lam has served as Chief Financial Officer since May 2009. He is experienced in public company accounting and is primarily in charge of CCME's strategic planning, finance and accounting related matters. Prior to joining CCME, he spent over eight years in PricewaterhouseCoopers Hong Kong. He also served as an accounting supervisor in a multinational company and was employed by a local audit firm before joining PricewaterhouseCoopers Hong Kong. He received his bachelor degree of business administration in accounting from Hong Kong University of Science and Technology in 1996 and a masters degree in financial engineering from the City University of Hong Kong in 2004. He is also a member of the Hong Kong Institute of Certified Public Accountants. jacky is from hong kong [Friend] 1:43am wow he's a cpa theres no way i dont believe its a fraud [Glen] 1:44am how does being a cpa do anything? [Friend] 1:44am he could lose his license [Glen] 1:44am lol so? [Friend] 1:44am he was from pwc [Glen] 1:44am you dont need a license if you're rich. [Friend] 1:44am haha, no its about the type of person its alot of work getting there [Glen] 1:45am 8+ years at PwC you're right. [Friend] 1:45am you dont become a cpa just to commit a massive fraud [Glen] 1:45am that's true. what are your thoughts? [Friend] 1:46am I think citron might have shorted the stock [Glen] 1:46am well no duh [Friend] 1:46am and the released the report but the numbers might not be a lie [Glen] 1:47am which numbers? [Friend] 1:47am ccme's reported statement [Glen] 1:47am their 10-Q's and 10-K's? [Friend] 1:47am but overstated possibly in some minor way yea [Glen] 1:47am look see.. i just don't see it. [Friend] 1:48am its not likely that this is a massive fraud but [Glen] 1:48am look, the way you defraud lots of investors is to take their money and run. it's easy to do. make shit up overstate numbers sell shares take money and run you absolutely NEVER write in agreements that hold you liable for up to $350M and let them choose the auditor [Friend] 1:49am i dont think the market sentiment is going to let the price go back up to 20, within the next few months [Glen] 1:49am that's perfectly fine with me [Friend] 1:49am people are scared [Glen] 1:49am also fine. i dont care. [Friend] 1:50am thats good [Glen] 1:50am this is real to me as of this conversation i just wanted to prove to myself that the fraud didnt make sense. [Friend] 1:50am but just be careful, anything is possible sometimes even if it doesnt make sense [Glen] 1:51am i guess. if this was a fraud ok another angle if this was a fraud and his objective was to take the money and run he's already taken all the money he's going to get. in terms of Starr's investment. he's not going to be doing any offerings anytime soon. if he tried, people would be like WTF, you have so much cash.. no. and so, the only way to do this is to hold out get your earnout shares and try to sell but, i just think that he's way to tied into this fraud. like --- companies overstate their numbers all the time. it's easy i know how to do it and i can't find any evidence that this is what they are doing if it's a short term bank loan find me a bank that will short term loan me $200K i mean $200M to deceive auditors to deceive everyone [Friend] 1:53am haha youre right not even in china i dont think [Glen] 1:54am dude, the bottom line is that if he has a friend that's a billionaire i know of no billionaires that would try to deceive investors by building a company and putting in money for the next 2 years and having the risk of losing $350,000,000 for a potential payout of $500,000,000 also.. that kind of activity would go down in the record books as the baddest ass billionaire [Friend] 1:55am hahaha! [Glen] 1:58am so yeah. this is what i just learned tonight is there any other possible way ccme could be a fraud? like, enron was a fraud. saytam was a fraud [Friend] 1:59am but you could see it in the books with enron - in hindsight [Glen] 1:59am yes. [Friend] 1:59am with this it looks clean the cash is there [Glen] 1:59am saytam's an interesting story. http://blog.geoinvesting.com/?p=462 How else do we explain the fact that PricewaterhouseCoopers, one of the world’s largest accountancy firms, missed a systematic US$1 billion fraud at Satyam, the Indian information technology outsourcing giant, for as long as seven years? lol Satyam’s bogus accounts ahhh. they had multiple accounts. In Singapore, Oriental Century requested a suspension of its shares after KPMG contacted the company’s chief financial officer on March 9, 2009, saying that it had difficulties seeking the reconfirmation of the bank balance and that there were doubts about the authenticity of a bank confirmation received earlier by KPMG. lol here's another point. you act as if with all these fraud accusations out there right now that deloitte, and starr investments aren't going to make 100% beyond a reasonable doubt that the cash is real? [Friend] 2:01am of course, they arent stupid [Glen] 2:02am accuse them of short term overnight loans? unlikely in this case. [Friend] 2:02am i'm curious to know what happened with the other chinese fraud's [Glen] 2:02am which ones? i know of a lot of them i'm involved in a few right now i'm personally not committing fraud. but i own fraudulant companies that i intend to sell. [Friend] 2:03am yup, but this doesnt fit in to any of those categoried>? [Glen] 2:03am hahaha hell no. not even close. these other companies had 2 share structures or were way smaller and just stopped reporting and were otcbb and people were resigning left and right and you had shitty auditors [Friend] 2:04am assholes [Glen] 2:04am and were doing all sorts of shenanigans so.. what's interesting is i'm making the conclusion that ccme is not a fraud because the incentive for them to be committing fraud just really isn't there. but, you know -- i could be wrong cctr was a fraud i study all sorts of frauds. just so i know what to look for. another thing to note is that their auditor is DTT hong knog hong kong and not DTT china it's like world class education vs 3rd world education [Friend] 2:06am yea i agree theres a huge diff [Glen] 2:07am is there anything we could be missing? jacky checks. auditor checks starr checks ceo loses everything if he's somehow coordinating a fraud fraud accusations don't make sense to me. [Friend] 2:08am not outright fraud.. 1-3% chance and i'm taking your word for the overstating [Glen] 2:08am if they were to overstate their income they'd have to hide it somewhere on the balance sheet. [Friend] 2:09am i see [Glen] 2:09am in 2008 their shareholder equity was 34M liabilities 14M cash 29M assets 49M their last 10Q: liabilities 37M cash 169M assets 220M equity 183M 169-29=140M cash change [Friend] 2:10am yea, the cash is there so even that seems unlikely [Glen] 2:11am equity change is 149M and their liabilities rose 18M income tax payable +7M hmm, i think starr gave them some more money too. [Friend] 2:13am abt 9 m? how hmm theres no way [Glen] 2:13am they paid $17M in dividends. that's probably it anyway the bottom line is if they are overstating their revenues by even 2x you wouldn't see 90% of their net income go to cash lol [Friend] 2:14am i agree yea if the cash is there its there trusting that the auditors did their job i think is what it comes down to which [Glen] 2:15am not only that [Friend] 2:15am and also the lack of incentive to cheat [Glen] 2:15am lol. cheating works if you are trying to raise money but, this is like.. way to early to start cheating you dont start cheating from day 1 you have to start cheating a few years down the line and then you get creative about hiding it [Friend] 2:16am haha yea [Glen] 2:16am Regarding the Starr's January 2010 investment, people have to remember Starr received Preferred Shares, which have a priority over Common Shares if the company is liquidated. This means that they have a priority to the cash. lol that's funny too. if the company is liquidated starr gets priority to the cash http://messages.finance.yahoo.com/Stocks_(A_to_Z)/Stocks_C/threadview?m=te&bn=101061&tid=54438&mid=54438&tof=2&frt=2#54438 so basically starr insulated itself and said, fine.. we'll do this deal with you as long as you let us hold your balls in this vice grip [Friend] 2:18am haha, yea and there seemed to be no other prferential treatment beside the warrants thats kinda weird [Glen] 2:18am here's another thing worst case scenerio the ceo can't let this fraud come public so it's got to continue for at least 12 more months [Friend] 2:19am why is that? [Glen] 2:19am he loses everything in 12 months, he could get something out of it but right now he is set to lose everything if the numbers are lies here's another note when companies change cfo's and auditors that's a red flag and frequently they get rid of ones that wont do their bidding in china like, if they ask questions [Friend] 2:21am haha wow seriously [Glen] 2:21am yeah i called the guy this weekend and was like.. i have news to tell you this thing is a fraud. you did the right thing they are lying but alas ccme is real lets buy some more of that shit. lol [Friend] 2:22am you're in virgina now right? [Glen] 2:22am yeah [Friend] 2:22am thats tight, i'm gonna hot the sack, wake up for opening bell i'll tlak to you later dude [Glen] 2:23am cya.