It is very well known in Chinese fraud cases that fraudsters operate in carefully constructed networks, ranging from everyday company transactions to share price manipulators.
The red flags were numerous and very clear, however without a PCOAB inspection of the audit papers, a fraud is hard to prove, and a private investigation very lengthy and expensive. Obviously Geo finally decided the cost would be worthwhile.
Fraud cases such as Sino Forest went on for years with many of the checks mentioned in previous posts, but in the end it was a fraud.
As for the auditor, it is a small unknown US offshoot based in Hong Kong-if you go to its website it only has one native Mandarin speaker amongst its primary staff. I seriously doubt their ability to properly verify anything.
There are many other things but the message is that the warning signs were there, and at the end of the day it seems that the paid pumpers did a better job at duping investors in to disbelieving those who were sending out the warnings.
I do hope people are able to recover their losses, and that the SEC conducts a thorough investigation.
