"It was like a kid-in-a-candy store sort of thing," Bird says of his experience with the SAIC. "I started willy-nilly ordering and asking the credit bureau to send me everything they could get."
Bird says he amassed more than 1,000 pages -- most of it in Chinese -- then hired translators to produce English versions. He says the material confirmed his suspicions about China Sky One. The key, from Bird's point of view, was a glaring inconsistency between the income numbers that the company was reporting to U.S. authorities and corresponding or related numbers reported to China's SAIC.
China Sky One Medical had said publicly that most of its operations were executed by subsidiaries in China. Documents made public by Bird -- says he obtained them from the SAIC -- show that those subsidiaries reported revenues totaling about $3.2 million for 2008. To the SEC, the company reported total revenue for the same year at $91.8 million.
There was more. China Sky One's SEC filings indicate that in 2007, the company purchased materials from a major supplier, Harbin Yongheng Printing Ltd, in the amount of $1.75 million. Documents obtained from China by Bird indicate that Harbin Yongheng's total sales for 2007 were only about $1 million."If I believe these are accurate records, then I now have a very good indication of what the true nature of this business is, and it's nothing like what they're telling U.S. investors," Bird says. Armed with that information, Bird decided to bet against China Sky One Medical by shorting the stock. During the summer of 2009, he borrowed a hefty chunk of China Sky One Medical shares -- he won't say how many--and sold them for about $15 a share, he says. In support of that move, Bird set up waldomushman.com to distribute particularly damaging documents publicly. The name of the site is an homage to actor Steve McQueen, who used the alias Waldo Mushman to conceal his true identity when entering motocross races. By way of explanation, Bird relates that McQueen fell victim to medical quacks in Mexico before dying of cancer there in 1980. A kind of mission statement on the site makes it clear that Bird believes he's fighting against fraudulence.