LOS ANGELES, April 2, 2012 /PRNewswire/ -- Fuqi International Inc. (symbol FUQI.PK) is a Chinese jewelry company that came to the United States capital markets in 2007 through a Reverse Take-over (RTO). But unlike many other RTO's Fuqi had big names promoting the stock, the likes of Oppenheimer, William Blair and SG Cowen. They raised $150M from two stock offerings. Since raising the money the company has gone the road of many of its peer group in the China Small Cap space. They have not filed a financial statement in over 3 years, they were delisted from NASDAQ, they have a new CEO & CFO, they have not held an AGM as required by law and the SEC is investigating. The company released news in March of 2011 that money was embezzled. Since the news in March, the company press releases have been insignificant.
A disgruntled investor, Michael Patrick Kelly, controlling member, Airgead Clann, LLC of Thousand Oaks, California, filed suit in California Superior Court in April of 2011: the presiding Judge was Craig D Karlan in Santa Monica California. Mr. Kelly accused the Independent Directors of Breach of Fiduciary Duty, Negligence and Fraud. In what would appear to be a slam dunk case, the judge shocked onlookers by throwing the case out of court without so much as a word of testimony or a document produced by the directors. Karlan ruled the Plaintiff did not adequately plead fraud despite all the obvious evidence to the contrary. One can only wonder what the Judge was thinking.
Michael Patrick Kelly of
Thousand Oaks California, took a rather unique approach to dealing with directors of what appears to be another fraudulent Chinese Small Cap Company. He flushed out the independent directors. He called on them where they live, knocked on their doors and took statements. He converted an otherwise fruitless derivative action into a direct action. Astounded by the result Mr. Kelly commented, "I will keep the pressure on. Our society must let board directors know they are not untouchable. Everyone knows that derivative actions do not work because the path is simply silly – asking the board to sue themselves. We must make the cases personal. Occupy Wall Street is on to something. Take the movement to the houses of the Wall Street rich cats. Picket their neighborhoods, knock on their doors. Shine the light of shame on them. But then find a judge with integrity and common sense. I will appeal this ludicrous court decision."