Red Flags Consulting LLC
Please note this list took a very long time to compile and is provided to you free of charge. Red Flags Consulting will appreciate your reference if you use it. Thank you.
For a company to appear on these lists, at least one of the following events must have occurred:
a) There was/is a government/regulatory investigation or action that cited accounting irregularities or serious liquidity problems.
b) The company was unable or unwilling to satisfactorily respond to questions from government regulators or stock exchange listing panels about its accounting practices or liquidity position.
c) The company's external auditor resigned and/or cited accounting irregularities or an inability to complete a satisfactory audit.
d) The company announced independently that there were accounting irregularities in its reported filings.
e) The company announced serious liquidity issues that were unexpected and/or not obviously apparent from its reported filings.
United States of America
A-Power Generation Systems Ltd. (Auditor resignation after its inability to verify certain business transactions)
Advance Battery Technologies Inc. (Undisclosed related party ownership of substantial and expensive acquisition)
Agria Corporation (Consolidating a joint venture/VIE at the time of its IPO without properly securing contracts with the management of the consolidated business)
American Oriental Bioengineering. (Undisclosed sale of a subsidiary to an SOE and not collecting the related disposal proceeds, continuing to record this sold subsidiary as owned and earning revenue post the sale, defaulting on convertible bond payments)
AutoChina International(Pump scheme designed to create a false market and increased liquidity in the shares so the company could obtain loans on favorable terms using its shares as a pledge)
Bodisen Biotech (Improper disclosure of consultancy fees, inability to meet stock exchange disclosure requirements)
China Century Dragon Media(False bank cash balances, fake customer account receivables)
China Changjiang Mining & New Energy Co Ltd(Auditor resignation citing inaccuracies in the company's reported filings and withdraws audit opinion for historic financial statements)
China Digital Media Corporation (Pump & dump scheme - issuing unrestricted shares to related parties for consulting services, publishing false positive press releases to pump the stock price, then dumping the unrestricted shares via multiple nominee accounts)
China Education Alliance Inc.
China Electric Motors(Auditor resignation citing discrepancies/falsification of bank statements)
China Energy Corporation(Incomplete elimination of inter-company sales and purchases between coal mining and trading divisions leading to inventory overstatement, incorrect calculation of government subsidies included in the revenue)
China Energy Savings Technology Inc (Pump & dump scheme - artificially inflated stock price, related parties given unearned free stock to sell in the market. Inability to verify customer contracts, premature revenue recognition, incorrect EPS calculation)
(China Expert Technology Inc.)*
China Holdings Inc(Filing financial statements and falsely claiming that they were fully audited, claiming the auditor was dismissed when in fact it had resigned, claiming there were no disagreements with the auditor at the time of its resignation)
China Infrastructure Investment Corp (Continued use of ex-CFO's signature to sign off quarterly and audited annual filings despite the CFO having resigned and stopped working some months before)
China Integrated Energy (Acquisitions involving undisclosed related third parties, resignation of auditor due to inability to complete the audit)
China Intelligent Lighting & Electronics Inc. (Diversion of public offering proceeds/misappropriation of cash, false bank cash balances, fake account receivables)
China Media Express
China Medical Technologies Ltd
China Mobility Solutions Inc (Pump & dump scheme - issuing unrestricted shares to related parties for consulting services, publishing false positive press releases to pump the stock price, then dumping the unrestricted shares via multiple nominee accounts)
China Natural Gas Inc. (Undisclosed loans to related parties for real estate projects, false advance supplier prepayments)
China North East Petroleum Holdings Ltd (Misappropriation of cash to undisclosed related parties)
China Organic Agriculture Inc (Recording a Notes Payable debt forgiveness as income when the debt never originally existed, not separating out the results of a disposed subsidiary, treating the sale of an subsidiary as a single transaction instead of installments)
China Shenghuo Pharmaceutical Holdings Inc(Recording of unpaid account receivables as paid, understating bad debt allowance)
China Sky One Medical(Fictitious sales to overseas customers)
China Valves Technology Inc (Undisclosed related parties and over payment in acquisitions, VAT payment discrepancies)
China Water & Drinks (Acquired by Heckmann Corporation in 2008, subsequent discovery of fictitious customers and round tripping that inflated revenue and profitability)
China World Trade Corporation (Pump & dump scheme - issuing unrestricted shares to related parties for consulting services, publishing false positive press releases to pump the stock price, then dumping the unrestricted shares via multiple nominee accounts)
Deer Consumer Products Inc.(False disclosures about a manufacturing facility's operational status, inability of auditor to verify suppliers, misappropriation of cash via bogus consulting contracts)
Duoyuan Global Water
Fuqi International (Understating cost of sales, undisclosed transfers of cash in and out of the company)
Fuwei Films Holdings
GC China Turbine Inc(Fake accounts receivable using a counterfeit chop)
Gigamedia Ltd (Misappropriation of a VIE subsidiary's assets by a company director)
Heli Electronics Corp(Fake bank cash balances, fake account receivables, fake customers)
HQ Sustainable Maritime
Keyuan Petrochemicals Inc (Undisclosed related party transactions, undisclosed off balance sheet slush fund)
Longtop Financial Technologies Ltd
NIVS IntelliMedia Technology Group Inc. (Diversion of public offering proceeds/misappropriation of cash, false bank cash balances, fake account receivables)
Powder River Petroleum Int'l Inc (Conveyed guaranteed returns in oil field working interests to investors in Asia that were booked as revenue instead of loans, false ownership of oil assets, booked guaranteed payments in excess of oil revenue as pre-paid production payments)
Physical Property Holdings Inc (Pump & dump scheme - issuing unrestricted shares to related parties for consulting services, publishing false positive press releases to pump the stock price, then dumping the unrestricted shares via multiple nominee accounts)
Qiao Xing Mobile Communication Co. Ltd (Auditor unable to access appropriate documents to complete audit)
Qiao Xing Universal Resources Inc (Undisclosed related party asset transactions, misappropriation of company cash)
Score One Inc (Pump & dump scheme - issuing unrestricted shares to related parties for consulting services, publishing false positive press releases to pump the stock price, then dumping the unrestricted shares via multiple nominee accounts)
SearchMedia Holdings Ltd (Accumulating substantial account receivables that were uncollectable and booking these as revenue instead of increasing the bad debt charge)
SinoTech Energy Ltd. (Overstatement of asset values, false asset purchases, misappropriation of company cash)
Tongxin International Ltd
Universal Travel Group
Wonder Auto Technology
Wowjoints Holdings Ltd (Accelerating and recognizing revenues on projects by inputting costs that had not yet occurred using the percentage of completion method, underestimating bad debt charges from very substantial delinquent account receivables)
Worldwide Biotech and Pharmaceuticals Inc (Pump & dump scheme - issuing unrestricted shares to related parties for consulting services, publishing false positive press releases to pump the stock price, then dumping these shares via multiple nominee accounts)
Yuhe International ZST Digital Networks(Auditor resignation due to it being unable to complete audit, specifically unable to verify bank cash balances)
* Denotes absence of publicly announced auditor resignation or regulator citings related to accounting irregularities but did have a stock exchange delisting due to inaccurate audited filings.
** Dual listed on both the HKEx and the NYSE.
Pan Asia Mining
Zungui Haixi Corporation
Asia Aluminum Holdings Ltd (Sudden bankruptcy)
Boshiwa International Holding Ltd
China Forestry Holdings Co Ltd
Chaoda Modern Agriculture Holdings (To be confirmed)
China Metal Recycling Holdings Ltd
China Public Procurement Ltd (Announcing very substantial deals with SOE's and government organizations when these deals had never taken place and in some cases the customer never existed)
Climax International Company Ltd (Use of fake supplier contract to missappropriate funds, misappropriation of loan proceeds)
Daqing Dairy Holdings Ltd
EganaGoldpfeil Holdings Ltd.
Extrawell Pharmaceutical Holdings Ltd (Non-disclosure of related persons in acquisitions)
Peace Mark Holdings Ltd.
Warderly International Holdings Ltd
Yueshou Environmental Holdings Ltd(Fabrication of letters of credit from a subsidiary to obtain bank loans that were deposited in to personal bank accounts)
* Dual listed on both the HKEx and the NYSE
Guangdong Kelon Electrical Holdings Co Ltd
Hainan Minyuan Modern Agricultural Development
Hubei Lantian Stock
Macat Optics & Electronics Co. Ltd
Accord Customer Care Solutions (ACCS)
Asia Pacific Breweries
Jurong Technologies Industrial
Sino Environment Technologies.
Olympus Corporation (Round tripping, hiding substantial losses)
Disclaimer: Red Flags Consulting LLC and/or its officers accept no responsibility for loss or damages related to this list whatsoever and in any form, including its completeness, accuracy, description, use or misuse by third parties, and reputation or financial impact. We reserve the right to update or change this list's content or its constituent qualifications at our own discretion and at any time. Companies that appear on this list have been subject to various forms of accounting irregularities, restatements, fraud, financial misstatements or bankruptcy as declared either by themselves or alleged by their respective auditors, government regulators, or stock exchange listing panels; these declarations or allegations are historic, may not necessarily be current, and are not made by Red Flags Consulting LLC or by its officers. The accompanying description of these declarations or allegations may not be complete or accurate. In some cases the information gained to describe these declarations or allegations has been obtained from litigation releases against the company's auditors and their specific audit of that company instead of litigation releases directly against that company itself. Some companies are known by more than one name, or have changed their name. Users of this list are advised to conduct their own verification of the companies and description included in this list.