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Editor's note: On May 11, Sino Clean Energy published information on its website in response to questions raised in the article below (see here). On May 12, a second Seeking Alpha contributor examined Mr. Little's evidence and the company's, and drew his own conclusions (here).

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On May 3rd, Sino Clean Energy (NASDAQ: SCEI) Chairman Baowen Ren published a letter to shareholders in which he attempted to rebut four months of video surveillance of SCEI’s three coal water slurry fuel (CWSF) factories that showed little or no production. At the core of Ren’s rebuttal were 10 days of his own security camera videos from SCEI’s Tongchuan plant, spanning April 20th – 29th.

I spent last week conducting a thorough analysis of Ren’s videos and uncovered two absolute proofs they were filmed sometime after the dates he claimed. My findings detailed in this report prove beyond any reasonable doubt that the production activity in Ren’s films was staged.

First Proof: Ren Installed the Security Camera After the Fact

IFRA surveillance of SCEI’s Tongchuan facility began in January and continued up until April 26th. Ren claims his videos were shot by his security camera and time-stamped from April 20th – 29th. Did Ren really have a security camera installed on those dates? It is certainly not visible in any of the IFRA surveillance footage through April 26th.

The following time-lapse still was taken on April 26th at 7:45am:

Zooming in on the factory itself, there is no sign of a security camera:

From these pictures and dozens more in the IFRA archive I reviewed I questioned whether Ren’s camera even existed. So to find the truth I sent one of my investigators to secretly photograph the factory on May 7th to get a closer look. To my surprise, the investigator found a large security camera attached to the buiding as shown below:

Here is a close up of Ren’s new security camera (the wire connecting the camera is also visible):

Since Ren's security camera does not appear in any of the IFRA images, he did not install the camera until sometime after 4/26 and probably after 4/28, the date I published my first report (link here). Therefore his production videos from 4/20-4/29 could not possibly have been filmed on the dates he claimed since he had no camera set up on those dates. Why then should anyone believe his videos are real?

A sample screen shot from Ren’s April 23rd video is below:

You can tell from the angle of the camera that this video was filmed from the new security camera attached to the building as seen in my May 7th image. However, on April 23rd no such camera existed. This video and the other videos must be fake.

Second Proof: Most of Ren’s Videos Were Filmed in the Rain. What Rain?

This is easy to prove. Let’s start with easiest video to debunk, the 4/23 14:08 camera 1 video, a still from which is shown above. The ground is all wet. The same soaked scenery is apparent in the 4/23 08:55 camera 1 video that morning. Why was it raining in Ren’s videos? April 23rd was a bright and sunny day in Tongchuan without a drop of rain according to the official record of the Tongchuan City Meteorological Bureau (interview transcript here and recording of the call here). IFRA’s surveillance video of the bright and sunny April 23rd (linked here) showed no rain. No trucks appeared either. The Tongchuan plant again showed little or no signs of production.

In fact the weather bureau staff reported absolutely no rain in Tongchuan after 4pm on April 20th until 8am on May 1st when it rained until 8pm. If Ren’s videos are really from April 20th – 29th, a period in which Tongchuan received no rain, why is there rain in 14 of his videos? (the table below includes links to Ren’s videos I uploaded Vimeo to make viewing easier)

Date

Time Period

Ren’s Video Weather

Official Weather

Vimeo Link

4/20/2011

21:07:34 - 21:15:44

Light Rain

Rain only to 4pm

video link

4/20/2011

23:40:00 - 23:51:05

Rainy

Dry

video link

4/21/2011

21:42:52- 21:45

Rainy

Dry

video link

4/21/2011

23:51:35 - 24:00

Rainy

Dry

video link

4/22/2011

0:00:00 - 0:02:00

Rainy

Dry

video link

4/22/2011

5:48:05 - 05:58

Dry*

Dry

video link

4/23/2011

0:12:56 - 0:15:16

Light Rain

Dry

video link

4/23/2011

08:55:00 - 09:00:48

Ground wet

Dry

video link

4/23/2011

14:08:24 - 14:14:34

Rainy

Dry

video link

4/26/2011

20:15:58 - 20:21:39

Rainy

Dry

video link

4/26/2011

23:50:52 - 23:53:47

Rainy

Dry

video link

4/27/2011

22:43:36 - 22:45:28

Rainy

Dry

video link

4/28/2011

03:15:49 - 03:22:50

Rainy

Dry

video link

4/29/2011

00:06:03 - 00:12:40

Rainy

Dry

video link

* After heavy rain at 12:00am the ground was completely dry at 05:48am

Another serious inconsistency in the time sequence is the fact that the ground was dry at 5:48am on April 22nd following heavy rain at midnight (April 22nd Midnight and April 22nd 05:48am). It is impossible for the ground to dry out that fast during the night!

Together the evidence proves Ren’s videos were not filmed during the dry April 20-29th period as claimed. I believe the only possible conclusion is that sometime after April 29th (the date in China he read my first report) Ren set up a security camera at the Tongchuan factory, rented some trucks and staged production activities for the new camera in an attempt to “debunk” IFRA’s surveillance record to get SCEI’s stock price higher. Ren’s rainy videos were thus filmed on May 1st, when it rained from 8am to 8pm. The rest of Ren’s videos may have been filmed a day earlier or a day after, but definitely not during the April 20th – 29th period as he claims.

Further analysis of the videos:

IFRA’s video analyst notes that there appear to really be only 2 CWSF tankers in most of the videos. In the 4/23 14:08 camera 1 video these two tankers appear to drive in circles onto the scale. The 1st, 3rd, and 5th tankers are the same truck. The 2nd and 4th tankers are the same truck. Loop the video for yourself a couple times and you can easily verify this.

In addition to filming the weigh station, IFRA’s camera captures images of the factory, itself. IFRA’s surveillance videos spanning January to April show the factory is always dark at night, a fact verified by IFRA’s team at the beginning of the project.

During the first few weeks of observing the Tongchuan plant in January, IFRA field agents determined the plant’s operating hours were 8am (when workers first showed up) to around 6:30pm (when workers went home). After dark the factory is just that, dark. No lights can be seen coming from the factory and no trucks pass through the scales. IFRA let its cameras run until around 10pm in January and February and midnight in March and April.

In addition to the rainy weather proof that Ren’s videos were fabricated, a comparison of two of Ren’s night videos that appear to show production activity inside the plant are contradicted by IFRA’s videos from the same time showing the plant was dark. Compare Ren’s 4/21/11 21:42 Camera 2 and 4/26/11 20:15 Camera 2 to IFRA’s April 21st and April 26th videos. Ren’s videos appear to show production inside a lighted factory at night. IFRA’s videos show darkness inside factory during the same times, each night.

Similarly, Ren’s following videos showing tankers being weighed on the scales are contradicted by IFRA’s videos from the same time showing no tankers passing through the scales:

All the facts I’ve shared in this report support my conclusion that Ren fabricated his production videos. I believe IFRA’s surveillance videos remain the gold standard of proof that SCEI produced little or no CWSF during four months of observation.

I encourage investors to check out 73 days of IFRA’s video surveillance I uploaded to my SCEI Vimeo Channel.

Source: Evidence Proves SCEI Chairman Fabricated Production Videos