Does this sound familiar?
Eerily topical, since Chinese VIE LGHS has also given up filing with the US regulators:
"China chicanery
IPO scheme results in raid on CFO’s home
By KAJA WHITEHOUSE
Last Updated: 7:25 AM, April 19, 2013
Posted: 12:13 AM, April 19, 2013
EXCLUSIVE
US Marshals raided a Brooklyn home this week, looking for books and records of a China-based cable company accused of stiffing its shareholders, The Post has learned.
At the same time, a team of agents, lawyers and forensic accountants descended on the Wall Street offices of Taylor Rafferty, an investor relations firm that has worked with the cable company, ZST Digital Networks, since its US IPO in 2009, sources said.
The hunt was for paperwork and computer files in an attempt to locate ZST assets, sources said.
Investor Peter Deutsch, a Westchester wine mogul, has pressed judges in Delaware and Manhattan for access to the records in an attempt to recover $32.3 million he claims he lost because of ZST’s improper actions.
Westchester wine importer Peter Deutsch (above) is on the trail of his $32.3 million investment in a Chinese cable outfit, which has spurred raids of an exec’s Brooklyn home (bottom) and the offices of an investor-relations firm on Wall Street.
Patrick McMullan, Anne Wermiel, Stefan Jeremiah
Westchester wine importer Peter Deutsch (above) is on the trail of his $32.3 million investment in a Chinese cable outfit, which has spurred raids of an exec’s Brooklyn home (bottom) and the offices of an investor-relations firm on Wall Street.
Deutsch is one of many shareholder victims of China-based companies that IPO in the US but then “go dark” by parting ways with their accountants or simply refusing to file financial reports.
As a result, shares of the company tank and shareholders lose. In some instances, the companies buy up the shares at severely reduced prices and go private.
Raids to recover assets are rare but could become a remedy for burned investors who follow Deutsch’s lead.
The wine importer got Judge J. Travis Laster of the Delaware Chancery Court to sign an order in March allowing him to seize assets through a court-appointed receiver.
ZST said it would only allow Deutsch access to the records in its offices — in China.
Deutsch had another idea.
On Tuesday, Deutsch asked Manhattan federal court Judge Robert Patterson for permission to search the Gravesend home of ZST CFO Henry Ngan as well as the offices of Taylor Rafferty.
The judge quickly agreed.
ZST, a cable systems company, went public in the US at $8 a share in 2009 at a time when US investors were hungry for small Chinese growth companies.
By 2010, ZST’s shares jumped to more than $11 and the company boasted lofty investors, including hedge fund Renaissance Technologies and $257 billion California Public Employees’ Retirement System.
The gravy train quickly ended, however, and in 2012, ZST “voluntarily” delisted from the Nasdaq. It has barely been heard from since.
ZST, which was once worth $92 million, now trades on the pink sheets at $1.30 a share.
Deutsch, CEO of White Plains, NY, wine distributor, W.J. Deutsch & Sons, with the dogged determination of his lawyer, David Graff, wasn’t going to settle for that.
A spokesman for Taylor Rafferty called the late-night raid “unexpected,” but told The Post they complied with the judge’s orders.
Ngan, also on the board of the publicly traded beverage company Nutrastar, could not be reached for comment.
For Deutsch, the next step appears to be an international treasure hunt for ZST’s assets.
“We are leaving no stone unturned,” said Rob Seiden, the receiver who has been tasked with locating ZST’s assets for Deutsch. Seiden, president of Confidential Security and Investigation, said ZST is still “actively in business and operating in China.”
kwhitehouse@nypost.com"
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