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  • Orient Paper: Key Pieces of Evidence for Fraud [View article]
    Michael Anderson:
    We appear to being going in circles at this point as you repeat points that I have already responded to. We appear to have different approaches. I am focused on ONP and trying to look at the underlying facts and evidence and sound reasoning there-from. You appear focused on the people commenting on ONP and making unsupported, conclusory statements about their reputations and the quality of their work.
    For example, as you point out, Muddy Waters said some of the customers may not exist because they could not find any information concerning them. Does ONP or you have any independently verifiable information that they exist? Read ONP’s responses to Muddy Waters – they (and you) have not provided any information allowing one to contact these companies, such as their Chinese name and phone number. On the other hand, Muddy Waters provided the Chinese names and phone numbers of customer and suppliers they were able to find. ONP has not provided any contact information concerning those suppliers and customers to refute Muddy Water’s claims. Neither have you. This is the kind of information that is useful, not unsupported, conclusory statements about reputations and methods.
    For reasons like the above example, I found Muddy Water’s report to be good and ONP’s responses to be poor. I believe that I, and others, did a poor job in our original due diligence (I was originally long ONP). Now, some are backpedalling. I sold ONP and I am now short. The Company decided it needs to do an investigation. Roth Capital decided it needs to do more due diligence. Doug from sold his ONP stock after visiting ONP.
    The bottom line is I would like to focus on facts and evidence and reasoning there from concerning ONP, which is the investment decision we are discussing, rather than on periphery issues. If you have any, I would be happy to read them.
    Jul 31, 2010. 09:48 PM | Likes Like |Link to Comment
  • Orient Paper: Key Pieces of Evidence for Fraud [View article]
    Michael Anderson:
    1. You accuse me of making false statements of facts without specifying a single one. Please immediately inform me of any mistatement of fact along with proof that it is a mistatement. If I have made any mistatements, which I don't believe I have, I will correct it immediately.
    2. No other person has compe up with any negativity but only validated their own positivity - untrue. You ignore that Roth Capital has indicated they need to do additional due diligence and have suspended coverage and doug of sold his ONP stock shortly after visiting ONP.
    3. Again, my first two posts were based on ONP's representation in its SEC filings, on its website, and by its CEO as well as on the videos of ONP by the promoters of the company. The SEC filings and the videos are on the internet for anyone to see. I have the website of ONP - they changed it shortly after my article. If I mistated anything, please point it out, along with a cite to your evidence.
    4. Yes, Muddy Waters provided verifiable evidence. For example, they provided the Chinese names, addresses, phone numbers of customers and suppliers. ONP did not and has not. This is important because you cannot translate the English to Chinese without more information than just the English name. ONP and its promoters and supporters have not provided verifiable information to dispute Muddy Waters reports about customers and suppliers. Since it is ONP's customers and suppliers, that would be very easy to do if ONP's representation were true.
    Sure, Muddy Water's report, like any report, could be improved by more research, more disclosure, etc. However, Muddy Water's report is very good. Compare it to the Roth Capital, Hudson Securities, or Harbinger reports where they mostly just restate what ONP has said. They did very little to no research or investigation other than getting the information from ONP and their filings and website. Even doing that, they don't note any of the problems with ONP"s representations that I point out or other have pointed out.
    5. If ONP would just provide all the necessary evidence and information, then there would be no need for additional research by Eric Jackson and Roth Capital or anyone else. They need to do additional research because they now realize their initial research was insufficient and ONP has not provided the evidence or infomration they need. Additional research may lead them to the conclusion they were wrong.
    6. You have no basis to say that any of the doubters of ONP I reference are not credible and your provide no evidence. Furthermore, those doubters provide excellent facts and information which have not been satisfactorily responded to. I recommend that noone take my word for that or your word against that - just read the articles and the responses. The responses in general appear similar to yours - usually bereft of any facts or evidence.
    When you have facts and evidence, with supporting cites, and sound reasoning therefrom, please provide it. If you have proof that I have provided any inaccurate information, please identify it and provide it. I have attempted to be completely accurate, but if I have made any mistakes at all, I am happy to correct them.
    Thus far, you just make conclusory statements about lies without even identifying what the lies are.
    Jul 31, 2010. 04:50 PM | Likes Like |Link to Comment
  • Orient Paper: Key Pieces of Evidence for Fraud [View article]
    ONP's press release did not express any intention to hire a law firm to investigate or pursue legal claims against Muddy Waters. Instead, ONP announced an intention to hire a law firm to help it hire an accounting firm, who would then investigate the claims by Muddy Waters, which include fraud. ONP's given reason was to reassure investors, not to sue Muddy Waters. ONP had just recently raised over $23 million from investors in a capital raise. I am guessing these investors mya have raised questions after Muddy Water's report and may have been unsatisfied with the answers and may have demanded actions like this.
    I don't think it is 27-1.
    (1) ONP's board is taking Muddy Water's allegations seriously enough to intend to hire an accounting firm to investigate their claims. ONP must believe investors have doubts because it is doing this to reassure investors.
    (2) Roth Capital now claims it needs to do further due diligence and has suspended coverage, effectively withdrawing their report. Doug of sold his share of ONP shortly after the trip to ONP where he took the promotional video that he posted. Eric Jackson said that the Muddy Waters allegations cannot be dismissed out of hand and must be taken seriously and looked into.
    (3) The stock price has dropped from over $8 a share to under $5 a share - how many of the institutional investors have sold? How many did not buy in the first place because they had doubts?
    (4) A year prior to Muddy Waters, an Motley Fool article warned to stear clear of ONP. See Beware Chinese Penny Stocks, dated June 8, 2009 at
    (5) Numerous others doubt ONP. The has called ONP a fraud. Mikeyun has posted articles regarding his doubts re ONP. I have posted articles. Waldo Mushman has posted his doubts.
    Of course, why do any counting? I don't believe in determining something based on who believes something or not; or on how many others believe something or not.
    I think that if you are going to make an investment decision regarding ONP, you should do your own due diligence and research and make your own conclusions. I certainly don't believe you should take my word for anything, or anyone elses. Look at all the evidence yourself and use your own methods to make your own conclusions.
    I have done my own due diligence, which is different than Muddy Waters. Frankly, to avoid any factual disputes, I first looked at everything the company says. This was enough for me to view ONP's representations as very problematic, because I found them inconsistent. See my instablog re Questions for ONP's conference call.
    Again, to avoid factual disputes, I have reveiwed the videos put out by the promoters of ONP, Rick Pearson and Doug from the I found these videos problematic for ONP. I posted an instablog on the problems with ONP I saw in Doug's video. Doug also reported selling ONP stock shortly after the visit he took to ONP to shoot the video.
    I have continued to do a great deal of research. At this point, I don't need a single piece of information from the Muddy Water's report to reach my own conclusions.
    My point with Muddy Waters is that I found the way they did the report credible and I don't find the way ONP did their reports or responded to be credible. Muddy Waters gave detailed information, with plenty of ways for someone that didn't believe them to followup and verify whether they were telling the truth or not. In my opinion, ONP has done the opposite. Even though ONP has all the information, they give very little detail and very little information that allows one to followup and verify.
    The suppliers and customers are one example. ONP could easily have refuted Muddy Water's contentions there by providing all the information about the customers and suppliers - their names, addresses and phone numbers in English and Chinese - the contracts, contacts at these companies to verify their reports, etc. ONP did none of this. On the other hand, Muddy Waters provided the contact information. Sure, you can just provide phony information but then you are wide open to being proved wrong. If Muddy Waters were wrong, I believe we would have irrefutable, verifiable evidence by now that the names and numbers they gave were phony.
    I have spent a great deal of time researching this and have allocated the time to the tasks I thought were most fruitful. I have not called the customers and suppliers to verify myself. I amy do it in the future (I would have to have an interpreter). Frankly, I don't believe the growth and turnover that ONP reports is possible and I find it contradictory to ONP's other reports that they have stable, long term relationships with these customers and suppliers that appear to be turning over to me. I also have no reason to doubt Muddy Waters and I expected to see ONP and promoters of the stock provide conclusive evidence that these representations were false if they could. I haven't seen that.

    My point with Muddy Waters verifiable information is that my experience I have found that those who give you the kind of detail that Muddy Waters gave, with information that allowed you to verify it, tend to be telling the truth. If you don't believe it, you can follow-up and find out if it is true or not.
    I have not followed up to call the

    Have you checked the "verifications" Muddy Waters puts? Have you dialed the phone numbers? Anybody could put any random phone numbers and say, "Here is my verification."

    ONP announced that it intended to hire a law firm to work with the Audit Committe to retain a Big Four audit firm who would conduct an indpendent investigation into the issues rasied by Muddy Waters.
    Jul 31, 2010. 01:47 PM | Likes Like |Link to Comment
  • High Conviction: A Well-Managed Chinese Small Cap in High Growth Mode [View article]
    Eric Jackson:
    In one of your articles defending ONP, you stated that you confirmed "verbally" with ONP that they had the money in the bank. Did you expect ONP to admit the money wasn't in the bank if it had been embezzled? Do you feel that it satisfactory due diligence to determining whether the capital raised from investors was stolen by ONP management?
    Jul 31, 2010. 01:01 PM | 2 Likes Like |Link to Comment
  • Orient Paper: Loeb's Not the Right Firm for the Investigation [View article]
    You are confusing net profit with total revenue. Muddy Waters reported that ONP overstated revenue by 27 times, not earnings. Muddy Waters stated that ONP reported a net loss in 2008 of RMB 2,861,941.41 (about $400,000.00) in their audited PRC , as stated in the audited PRC financial results filed with a local government entity.
    If ONP was making money, why would multiple insiders be loaning it money to fund working capital? ONP reported the following loans for working capital purposes:
    (1) The CEO of ONP reported loaning money over a period of time for working capital purposes that amounted to $6,148,710 as of March 31, 2009.
    (2) On August 8, 2008 a member of the Board of Directors loaned money for working capital purposes amount to $880,200 as of March 31, 2009.
    (3) On August 5, 2008, a member of the Board of Directors loaned money to ONP for working capital purposes which amounted to $1,098,075 as of March 31, 2009.
    According to an article recommending to stear clear of ONP,
    his issue was brought up in a June 8, 2009 Motley Fool article, it is generally a torubled company that is resorting to loans from multiple insiders to fund working capital. See "Beware Chinese Penny Stocks" dated June 8, 2009, at
    ONP is the only one reporting they had positive numbers - all the other people you refer, including the analysts, were just taking those numbers as true. There have been many questions raised that cast doubt on ONP"s reports.
    Jul 31, 2010. 12:55 PM | 3 Likes Like |Link to Comment
  • Orient Paper: Loeb's Not the Right Firm for the Investigation [View article]
    On what basis to you conclude that this company is making money? I certainly cannot come to that conclusion.
    Jul 30, 2010. 08:33 PM | Likes Like |Link to Comment
  • Why Is A Paper Company Invisible In Paper Industry But Shining On Wall Street?  [View instapost]
    I found this post very helpful. International paper (IP) also has a mill in Hebei Boading. You can find it on their website or in their last 10k. Whereas ONP claims to make just the corrugated paper for a cardboard box, the IP mill makes the whole cardboard box. Not only will they make the whole cardboard box, maybe they will even deliver for you? With ONP, you can only get the corrugated paper, you have to pick it up (ONP doesn't deliver), you have to get other suppliers to provide you with the other parts for the box like the liner, and you have to assemble the box yourself. Which would you choose?
    Jul 30, 2010. 02:27 AM | Likes Like |Link to Comment
  • Orient Paper: Loeb's Not the Right Firm for the Investigation [View article]
    You expect that operation to be able to make money and not just end up going out of business?
    Jul 30, 2010. 02:18 AM | Likes Like |Link to Comment
  • Orient Paper: Key Pieces of Evidence for Fraud [View article]
    What do you mean, it is 27-1?
    My point about MW is that they often provide you the information necessary so that you can verify it yourself if you like. They provide name, addresses, phone numbers and websites
    On the other hand, ONP often does not provide such information but using more the tactics you refer to that con artists use. They often don't provide information that you can independently verify but provide some document that claim supports there point but it lacks the detail and information I would expect.
    I don't know what you mean - 27-1? Obviously, people are takling the MW allegations very seriously. The Company claims they intend to hire a law firm and Big 4 accounting to investigate and audit the company for the fraud MW claims. Roth Capital suspended coverage and indicates they need to do their own due diligence.
    Jul 29, 2010. 11:10 AM | Likes Like |Link to Comment
  • Orient Paper Inc: A misunderstood company [View instapost]
    As I stated in my post, my facts are contained in my two instablogs: (1) Orient paper Inc. (ONP): Does It Add UP? Questions for Tommorrow's Conference Call; and (2) Another Bad Video for Orient Paper, Inc. (ONP) by a Promoter of the Company?. To put your mind at rest, I rely on ONP's representations in their SEC filings, websites and from their CFO, as well as the 2 video's put out by the stock's promoters, Rick Pearson and Doug from

    User 207439:
    How does a company prerelease expected earnings when they report the need for a an audit and fraud investigation into senior management and their major analyst suspends coverage pending the fraud investigation and their own due diligence?
    The CEO may have delusions of grandeur. He announced in 2008 that they were building a 2 million square metre facility with an annual production of 1.2 million tons to produce corrugated paper, offset paper and writing paper. See www.pulpandpapercanada....
    Where is that facility? Nowhere to be found, not even ever referenced or mentioned in their SEC filings or on their website. ONP is currently not even claiming to produce a 4th of that and that volume is questioned. The claim did appear to resurface in Doug of's video. He, of course, sold his ONP stock shortly after his visit to ONP.

    ONP claims to have a production capacity of 270,000 tons per year (there are doubts about this). However, he reported in 2008 that they were going to build He was reporting in 2008 that ONP planned to build a new paper mill in the 2nd half of 2008, with an annual production of 1.2 million ton, that would be a 2 million square feet
    Jul 29, 2010. 10:14 AM | Likes Like |Link to Comment
  • Orient Paper Inc: A misunderstood company [View instapost]
    Your point that you can't confirm any company's numbers are legitimate seems to be in direct contradiction to the article's point that analysts, investors and the board of directors have confirmed the numbers are accurate.
    In a sense I can agree with you, the best you can do is do everything you can to try to show the numbers are not accurate and, if you can't, then it seems that you should have a much better chance that the numbers are at least reasonably accurate.
    however, if in the process you find plenty of evidence that the number are inaccurate, which i have done and detailed in my instablogs which I refer you to, then you should have a much better chance at being correct that the numbers are not accurate.
    I don't know much about GE, but Bank of America was certainly, in my opinion, misrepresenting their financial status, even if in an arguably legal way. Bank of America was doing something similar to Enron with off balance sheet transactions. Bank of America, like many of the big banks, created a Structured Investment Vehicle ("SIV") as a separate entity and kept it off its balance sheet, even though it was utlimately responsible for it. This was legal and accepted in the accounting profession, even by some of the most reputable, which partly to my previous expressed criticism of accountants and quotes from Charlie Munger to that affect. Ultimately, Bank of America took the SIV back onto its books - likely due to pressure from regulators. To understand the effetcs, Bank of America's fourth quater 2007 earnings fell 95% due to SIV investments. See
    My facts are contained in my two instablogs: (1) Orient paper Inc. (ONP): Does It Add UP? Questions for Tommorrow's Conference Call; and (2) Another Bad Video for Orient Paper, Inc. (ONP) by a Promoter of the Company?. To put your mind at rest, I rely on ONP's representations in their SEC filings, websites and from their CFO, as well as the 2 video's put out by the stock's promoters, Rick Pearson and Doug from
    As far as Muddy Waters representations that ONP's turnover is above industry averages, that is undisputed as far as I understand. That is from Muddy Waters, not me, so I don't need to defend it. I am willing to research it and give me you my opinion and the evidence for it if you like. It is easily independently verifiable through either industry statistics or examination of SEC filings of other paper companies, etc.
    By the way, Muddy Waters wasn't the first article suspicious of ONP. Back in June 8, 2009,a Motely Fool article entitled "Beware Penny Stocks" was highly critical of ONP. See
    Jul 29, 2010. 02:04 AM | Likes Like |Link to Comment
  • Orient Paper Inc: A misunderstood company [View instapost]
    the smoke and mirrors is all yours.
    Point B of the article above was that investors should be reassured because the Board of Directors, which Drew Pearson is a member have, have confirmed that ONP"s revenues and margins are indeed correct and accurate.
    My point is that this is a false statement and it is encouraging investors to buy or hold ONP when it should not be because it is a false statement.
    You also make statements for which you have no basis to make. There has been no representation by anyone that an audit will be done in a couple of weeks or that it will dispel all rumors. We haven't yet had a statement that a lawyer or an audit firm has actual been hired, much less any time estimate for an audit. We don't know when, or even for sure if, the audit will occur. All that we know is an expressed intention by the board of directors of ONP.
    Again, you make a statement without any support or evidence that Drew Pearson is a well established business man with an excellent track record. I have no information on this and you have presented none. He may or may not.
    What I do know is that Mr. Pearson's accounting firm has been involved with a number of chinese smallcap reverse merger companies and some appear questionable. For example, Mr. Pearson's firm was the audit firm for ORS, a "alleged" Chinese mobile phone manufacturer that appeared to me to be a pump and dump scheme. The stock was trading at a high of about $5.50 a share in 2008 and is now trading at about $.23 cents a share. Mr. Pearson's firm resigned as auditor some time beginning to middle of this year I believe.
    I can confirm that Mr. Pearson personally stated the opposite of the representation by this poster - he did not confirm that the revenue and gross margins were accurate - instead, he said lets wait to see what the results of the audit are.
    Jul 29, 2010. 01:43 AM | Likes Like |Link to Comment
  • Orient Paper Inc: A misunderstood company [View instapost]
    This author posts conclusory statements without providing a shred of facts, evidence or sound reasoning therefrom. The author further goes on to make statements that appear blatantly false.
    The author states that all of Muddywaters allegations were disproved in details but he provides nothing at all in support of that – no facts, evidence or reasoning. He just states the allegations are disproved and we are supposed to believe it without his providing any support for that point. The author calls on to falsely claim that ONP Management have released reams of documents and data – they have released a paucity of documents and data.
    The author accuses other short sellers of distort and talking down the stock for their own personal gains – but provides no facts, evidence or reasoning to support that claim. Indeed, he does not even say what alleged distorting was done. We are just supposed to except his conclusions.
    The author makes the blatantly false representations that analysts agree with ONP’s management that ONP’s numbers are accurate. I have not seen anywhere that the analysts have made such representations. Analysts do not conduct audits and accept the numbers as reported by the company. Of course, the author did not specifically identify the analysts that he was referring to and where he claims they made such representations. So that you can independently verify that I am correct, I will provide you with the analysts and their websites: (1) Roth Capital was one such analyst, website at Roth Capital have already withdrawn their report and stated they need to do further due diligence; (2) Julie Chen at Hudson Securities, website www.hudsonsecurities.c...; and (3) Brian Connell at Harbinger Research, website www.harbingerresearch..... The author is not telling you the truth – these analysts will not tell you that they can confirm that ONP’s revenue and margins are correct and accurate. They will tell you they just got the numbers from ONP. Don’t believe me or the author, just contact them and see. Get a statement from them in writing and prove me wrong. Good luck.
    I have not seen anywhere statements by any of the institutional investors will tell you that they can confirm that ONP’s revenues and margins are correct and accurate. You can find a list of 17 of the institutional investors through the wall street journal online and probably through other websites like MSN. Like the rest of us, they just got the numbers from ONP, their SEC filings. Don’t believe me or the author, pick a few at random and contact them and see. Get a statement from them in writing and prove me wrong. Again, good luck.
    The Board of Directors has not confirmed that ONP’s revenues and margins are correct and accurate. Instead, one of the first actions of the newly appointed directors, Drew Pearson and Mr. and Mrs. Wang, who are also the sole members of the recently formed audit committee, was to decide that it is necessary to investigate fraud allegations against the management by hiring a law firm to investigate and an accounting firm to do an audit. Drew Pearson is an accountant that is the head of the audit committee. Don’t believe me or the author, contact Drew Pearson and ask him if he will make a statement that he can definitely confirm that ONP’s revenues and margins are correct and accurate. Drew Pearson can be contacted through the website of his accounting firm at Get a written statement by him and prove me wrong. Once again, good luck.
    The fact that there has been no reported sales of stock by Chairman and CEO Zhenyong Liu is simply a red herring. Look at other examples. NEP’s CEO and Chairman didn’t report selling any shares of stock and the company fired him and his mother, reported that money from the bank accounts was going directly to him, reported that all the financial reports need to be restated, and is currently suspended from trading for not being late on filing its 10-Q and is on its second extension of time. I can make paint plenty of reasonable scenarios under which a CEO would know a company was a fraud and not sell stock, but so can you I imagine, so why speculate. The point is that there almost always are at least a period of time where a CEO knows a company is a fraud and doesn’t report selling his stock, so this is simply a red hearing.
    The problem with this instablog is that its point is to assert that ONP is not a fraud but it just fails to provide a single bit of evidence, facts or reasoning by which one could come to that conclusion. Contrast that with the muddy waters report at They provide you plenty of facts, evidence and reasoning and information by which you can go about independently verifying the information. Look at my instablogs, where I show the problems and inconsistencies with ONP through cites to ONP”s own representations in its SEC filings, on its websites and in the videos of ONP by the promoters of its stock.
    The hallmark of almost all frauds involves a claim that you should just believe reputable people. I suggest that you not accept what I say or what this author says but look at the evidence yourself and make your own decision. I don’t believe it will take long to get a sense that there appears to be some very serious problems with ONP’s representations, as well as the representations of this author.
    Disclosure: Short ONP
    Jul 28, 2010. 11:46 PM | Likes Like |Link to Comment
  • Orient Paper: Not All BDOs Are the Same [View article]
    you make these posts pumping the stocks but without providing any facts, evidence, or sound reasoning therefrom. I have posted instablogs showing the problems and inconsistencies with ONP based on their own representations in their SEC filings, their websites and by their CEO; and based on the videos by the two promoters, Rick Pearson and Doug from
    the company is vulnerable because of the problems with it, not because you claim that people short the stock are "psycho" without any facts, evidence or reasoning.
    Jul 28, 2010. 04:00 PM | 1 Like Like |Link to Comment
  • Orient Paper: Loeb's Not the Right Firm for the Investigation [View article]
    I am short the stock. But when one of the first actions of a newly formed audit committee, formed with new directors required by recent investors in a large capital, is to find it necessary to decide to hire a law firm and an accounting firm to determine whether management has been embezzling and comitting fraud, I do not find that a good fact. Can you recite me any time in history this has resulted in good news for the company?
    In the meantime, I would like an announcement that they have hired a law firm and what their name is (they say they decided to hire Loeb & Loeb, but Drew Bernstein said previously said they were hiring DLPiper and that didn't happen.) I would also like an announcement that they actually hired a big 4 accounting firm and their name.
    Additionally, is this an admission that the audit by their current accountants is not any good? If it is good, why not release that audit report, with all the supporting detail and backup?
    Jul 28, 2010. 03:54 PM | Likes Like |Link to Comment