Not so fast, said Block. In a response published as a press release, he insisted he had the right entity after all. There on the business license, for example, was the signature of the chairman of Orient Paper, Liu Zhenyong.
Two regular contributors to TheStreet's sites, Eric Jackson and Rick Pearson, have countered Block's attacks on the company. Jackson and Pearson provide commentary to TheStreet as guest contributors, like Op-Ed columnists in major newspapers. TheStreet also published Muddy Waters' commentary.
Both Pearson and Block participated in a tour of Orient Paper's production facilities about a year ago, and Pearson later posted a video of the tour. The two sides interpreted what they saw very differently. Pearson's most recent commentary published by TheStreet explains that he is still long the stock. Jackson has said he no longer owns Orient Paper shares, but continues to believe that Block's charges are false.
In an attempt to clear its name, the company launched an internal probe of its books under the auspices of its legal counsel, Loeb & Loeb, a firm that has represented many Chinese reverse-merger companies. Loeb hired a Big Four accountancy, Deloitte & Touch, to assist in an investigation of Block's allegations. On Nov. 29, the company announced that the investigation had produced a positive report, finding no evidence of fraud."Let me make it clear. Deloitte was camped out at their offices for three months!" says Crocker Coulson, Orient Paper's investor-relations representative. Coulson often takes warrants to buy stock in the Chinese companies he represents as payment for his services, though he holds no stake in ONP, he says. "There are almost no Chinese companies that could withstand that level of scrutiny." Still the crossfire goes on. "This is a self-serving whitewash," says Larry Rosen, referring to Orient Paper's announcement on the outcome of its investigation. Rosen is a New York lawyer who has built a business as a class-action attorney specializing in shareholder suits against Chinese small-cap companies hit by steep stock-price declines and attendant controversy. He has filed a suit against Orient Paper. "But we'll see," Rosen went on. "I've been proven wrong before. Occasionally it happens. But personally I don't think this press release is worth the bytes it's written with."
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