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]
i'm pretty sure they are. [Friend]
it really looks like there is a strong case against them though, are you going to short the stock?
or load up? [Glen]
have you read the case against them? [Friend]
yea i did, the muddy waters seemed suspicious
but the first one sounded pretty legit [Glen]
you say the citron sounded legit? http://citronresearch.com/ [Friend]
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]
at the time, the global markets had crashed [Friend]
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]
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.
they lose everything.
that's how it's structured. [Friend]
i dont know,
but its happened [Glen]
what's happened? [Friend]
'pump and dump' [Glen]
how do you figure?
which way? [Friend]
it has hapened to other companies, thats what i meant [Glen]
this is true
but. look at the volume. [Friend]
pumps and dumps
screw people at the top
the volume on this one doesnt make sense
look, i have no idea what i'm talking about
i'm just guessing [Friend]
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]
deal of the century [Glen]
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
it is still up in the air
but their opinion cant manifest into trust
if the investigation indeed shows that the books are legit then youre back in the money
but if theres the slightest bit wrong
its really bad [Glen]
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]
who is star? [Glen]
star investments [Friend]
i see [Glen]
12:57am http://www.cvstarrco.com/cv/starrinvestments/ [Friend]
CCME seemed like last company to seem like they would be a fraud [Glen]
if you look at their numbers
the numbers are pure
in terms of they aren't hiding positive cash flows from operations [Friend]
of course, theyre being accused of overstating the numbers [Glen]
the thing is.
if the cash balance is real
then i would argue that it's impossible they are overstating their numbers. [Friend]
yea someone said that some chinese companies have taken out short term loans
to appear like they have the balance
they paid out a dividend
that interesting [Glen]
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]
yup, thats significant
it relly does seem more genuine than not
doesnt ge tmuch better than that [Glen]
if the company is lying [Friend]
they owe starr alot
lol yeah [Friend]
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]
i dont know. [Friend]
before investors have faith in it [Glen]
things happen faster than you'd expect. [Friend]
i hope so [Glen]
i'm trying to figure out if they can lie their way through it all and still make money lol [Friend]
they were quite aggressive with this profit guarantee [Glen]
the fully diluted share count is 38M
there are 14M in earn-out shares
52M shares total fully diluted [Friend]
was this agreement from 09? [Glen]
from way back
i'm just trying to figure out how it could be a fraud.
the earn out shares are 15M shares [Friend]
cheng zheng owns 13M [Friend]
the CEO? [Glen]
he's the ceo [Friend]
Cheng Zheng, the sole shareholder of HKMDF at the date of dividend declaration.
so he gets the earn-out shares. [Friend]
he's not having a very good chinese new year
i'm gonna wait on the outcome
he doesnt care.
if the company is real
and they are making money [Friend]
did you see someone dump big time before the report come out? [Glen]
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]
insider syndicate [Glen]
he'd get another 14M shares [Friend]
there could be incentive [Glen]
27.2M shares [Friend]
anythings possible [Glen]
oh i see [Glen]
the market value of his shares is currently less than what he'd owe starr if he was lying [Friend]
so why would he want useless shares
haa, yea it is a mystery [Glen]
it's just understanding incentives
so basically [Friend]
maybe they expected to be able to get away with it for long enough
to be able to sell out [Glen]
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.
this looks real to me. [Friend]
more real than i thought.
yea, i'm leaning towards real [Glen]
i think i'm willing to bet large on this. [Friend]
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]
look, i've identified frauds
i'll tell you one, call me [Friend]
haha, why wont you type it here
oh the name of the company?
so if ccme is a fraud
and it drops to $5
and their audited financials bounce
the ceo would owe starr
roughly $6 in share stock price
he owns roughly 20M shares [Friend]
the company would, they would just declare bankruptcy [Glen]
out of a total of 50
this stuff is put to death in china.
just fyi. [Friend]
oh shti [Glen]
so.. here's the question
would you bet your life on a business?
that's ridiculous. [Friend]
ui wouldnt load up though [Glen]
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
then he keeps it all baby
so lets calculate what he keeps
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
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
i think it would be very difficult to sell half your company
at that price [Friend]
the loans i assume are so short term that they just need to be in there for the auditors to see [Glen]
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
i see [Glen]
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
that's the fraud argument as i see it. straight up. [Friend]
i dont know if he was relying on selling his own shares [Glen]
if these are bank loans he is getting from a bank. [Friend]
someone could have been loading up outside
he needs to pay them off
i guess he would have the cash from the bank
to give back. [Friend]
he doesnt need to spend it
we'll see [Glen]
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]
the cfo would have to be in on it too [Glen]
yeah but the thing is.
if you run a fraud.
you can't keep the money.
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]
he's a cpa
theres no way
i dont believe its a fraud [Glen]
how does being a cpa do anything? [Friend]
he could lose his license [Glen]
lol so? [Friend]
he was from pwc [Glen]
you dont need a license if you're rich. [Friend]
no its about
the type of person
its alot of work getting there [Glen]
8+ years at PwC
you're right. [Friend]
you dont become a cpa just to commit a massive fraud [Glen]
what are your thoughts? [Friend]
I think citron might have shorted the stock [Glen]
well no duh [Friend]
and the released the report
the numbers might not be a lie [Glen]
which numbers? [Friend]
ccme's reported statement [Glen]
their 10-Q's and 10-K's? [Friend]
but overstated possibly in some minor way
i just don't see it. [Friend]
its not likely that this is a massive fraud
look, the way you defraud lots of investors
is to take their money and run.
it's easy to do.
make shit up
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]
i dont think the market sentiment is going to let the price go back up to 20, within the next few months [Glen]
that's perfectly fine with me [Friend]
people are scared [Glen]
i dont care. [Friend]
thats good [Glen]
this is real to me as of this conversation
i just wanted to prove to myself
that the fraud didnt make sense. [Friend]
but just be careful, anything is possible
sometimes even if it doesnt make sense [Glen]
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.
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
to deceive auditors
to deceive everyone [Friend]
haha youre right
not even in china i dont think [Glen]
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
that kind of activity
would go down in the record books
as the baddest ass billionaire [Friend]
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]
but you could see it in the books with enron - in hindsight [Glen]
with this it looks clean
the cash is there [Glen]
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?
Satyam’s bogus accounts
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]
of course, they arent stupid [Glen]
accuse them of short term overnight loans?
unlikely in this case. [Friend]
i'm curious to know what happened with the other chinese fraud's [Glen]
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]
yup, but this doesnt fit in to any of those categoried>? [Glen]
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]
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
and not DTT china
it's like world class education vs 3rd world education [Friend]
yea i agree
theres a huge diff [Glen]
is there anything we could be missing?
ceo loses everything if he's somehow coordinating a fraud
fraud accusations don't make sense to me. [Friend]
not outright fraud.. 1-3% chance
and i'm taking your word for the overstating [Glen]
if they were to overstate their income
they'd have to hide it somewhere on the balance sheet. [Friend]
i see [Glen]
their shareholder equity was 34M
their last 10Q:
169-29=140M cash change [Friend]
yea, the cash is there
so even that seems unlikely [Glen]
equity change is 149M
and their liabilities rose 18M
income tax payable +7M
hmm, i think starr gave them some more money too. [Friend]
abt 9 m?
theres no way [Glen]
they paid $17M in dividends.
that's probably it
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
if the cash is there
trusting that the auditors did their job i think is what it comes down to
not only that [Friend]
and also the lack of incentive to cheat [Glen]
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]
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.
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
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]
haha, yea and there seemed to be no other prferential treatment beside the warrants
thats kinda weird [Glen]
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]
why is that? [Glen]
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]
wow seriously [Glen]
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
ccme is real
lets buy some more of that shit.
you're in virgina now right? [Glen]
i'm gonna hot the sack, wake up for opening bell
i'll tlak to you later dude [Glen]