This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

L.A. Firm's China Ventures Turn Sour (Pt. 2)

Stocks in this article: NIVCILCDMCELM

Every quarter, the company controller at China Electric's headquarters in Shenzhen would send to Fong in California the documents with which he would prepare the period's financial results, according to Fong.

The profit-and-loss figures contained in those documents "always make sense," he says.

He also says: "Every time I go to the factory in China , everyone is busy, it's full of workers." He said he initially agreed to join China Electric's board partly because Roth Capital underwrote the company's first public offering of shares, along with WestPark. "I thought, 'Roth must have done enough due diligence,'" Fong says. "If someone did good due diligence, my risk of going on the board should be low."

Fong planned to leave for Shenzhen this week, he said, in an attempt to sort out the crisis, alongside a special committee of the board's independent directors, formed to investigate the potential irregularities highlighted by MaloneBailey. (Fong spoke with TheStreet late last week.)

Fong himself has been involved with Chinese reverse-merger companies for nearly a decade. His bio lists a master's degree in accounting from the University of Illinois, and time spent as a CPA at Deloitte, Ernst & Young and KPMG. He was once an RTO promoter, helping Chinese entrepreneurs gain listings in the U.S. One of his clients was Fuqi International, recently delisted by Nasdaq and kicked to the Pink Sheets after an accounting scandal and amid a long-standing SEC probe. Fong, who took a job at Fuqi not long after it gained its listing here, said he resigned his post in 2008 after growing "uncomfortable" with the company's financial reporting. He says he gave up options to buy some 600,000 Fuqi shares. "Of the entire Fuqi management team, I was the only person with U.S. experience. My family is here; everyone is a U.S. citizen except me." He added, "If the company blows up, I'd be the only person in trouble. That's why I resigned."

RTO Innovator

WestPark, founded by Richard Rappaport in 1999, serves as a one-stop shop for small Chinese businesses looking to tap American capital markets. The firm says that it and its founders have taken "close to 20" Chinese companies public in the U.S. over the last 20 years. According to its Web site, the firm has offices in Beijing, Shanghai, Hong Kong and Taipei. From those offices, it shops the mainland for suitable companies to bring public in the U.S.

2 of 4

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,827.75 +12.81 0.07%
S&P 500 2,072.83 +5.80 0.28%
NASDAQ 4,787.3170 +29.0650 0.61%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs