Tianbing “Benjamin” Wey, the head of New York Global Group, a firm that functions as a sort of Grand Central Terminal for Chinese companies, appears to be a big fan of the concept of vertical integration.

In the language of business this implies that a corporation’s various subsidiaries are united in one large supply chain to deliver a product to market. That’s exactly what Wey does, except that instead of an automobile, New York Global helps bring Chinese reverse mergers to the U.S. investor.

The results have put a goodly amount of change in Wey’s pocket.

Investors in Wey sponsored and advised companies have done less well though. As matters would have it, his deals have systematically collapsed in price under the weight of claims of poor governance, self-dealing and outright fraud.

Wey strikes a colorful figure, a well-dressed Sino Donald Trump type (in whose building at 40 Wall Street New York Global Group has an office) whose parody like press releases unapologetically promote both himself and the promise of closer U.S.-China ties via Wall Street. The reality is more mundane, however. A background full of regulatory intrigue–including a subtle but effective surname change to Wey from Wei and the placement of New York Global’s ownership in his wife’s name–and old-fashioned stock promotion puts Wey closer to Robert Brennan than Trump.

Describing what Wey does is no easy task and that’s probably because both the companies and Wey want it like that.

Perhaps the best way of putting it is that his New York Global group acts like a supermarket for a certain kind of Chinese company seeking access to the deep and liquid U.S. capital markets without the messy disclosures that serve as red flags for cautious investors. So Wey and his team shepherd them thru the reverse merger process: He finds a corporate shell, helps with attorney selection, raises some money through an initial PIPEs deal, promotes the stock and, most importantly, has an auditor lined up. He presumably gets a handsome slice of equity but tracking his trades has proven difficult.

Above all however, the one constant in Wey’s “success” is his use of an accountant named Ahmed Mohidin.

A former partner of Kabani & Co., a firm whose work the Public Company Accounting Board memorably savaged in this report, Mohidin–starting in February 2004 with Wey’s first deal–has been the lead audit partner in all of Wey’s deals. It is a lineup worthy of pause; outside of Harbin Electric and Deer Consumer Products, both of which have their own well-documented controversies, Wey’s deals have become graveyards of investor capital. [In disclosure, it should be noted that Deer is suing the author of the report linked above.]

A buried key to the Wey-Mohidin relationship–both at Kabani and at his current firm, Goldman, Kurland Mohidin–are a pair of small Chinese accountancies, Ever Trust CPA Co. Ltd. and Beijing AnShun International CPA Co. Ltd.

These firms fill a crucial role in the Chinese reverse-merger continuum since firms like Kabani don’t have Chinese offices (despite having a roster of China-based clients.) In theory, the small firms do the crucial scutwork for the audit, such as verifying contracts, counting inventory and reconciling account balances at banks. In reality, however, they did the work enabling Kabani to sign off on the Wey-promoted companies’ consistently fantastic earnings just as the Chinese reverse merger market exploded. [Practically put, the notion that two accounting firms, one based in the U.S., and each with under two dozen employees could adequately audit fast-growing companies with hundreds of millions of dollars in revenue is difficult to conceive.]

The numbers were so otherworldly that most analysts and investors–to say nothing of the media–forgot that many of these annual reports were treading on the outer limits of rationality. Household appliance maker Deer Consumer Products grew revenues 400% between 2008 and 2010 and reported operating margins of 21%, hundreds–and occasionally thousands–of basis points higher than even its Chinese competitors. Bodisen Biotech, a fertilizer manufacturer, reported operating margins of 31% for 2006 and grew revenues just under 50% at a time when its rivals were happy to grow at a tenth of that rate. [Bodisen has paid for its “growth,” having been delisted from the American Stock Exchange for a host of reasons, some relating to nondisclosure of payments made to Wey.]

Unsurprisingly, Wey’s stocks soon attracted a cult-following of short-sellers, investigative reporters and bloggers whose efforts in drawing attention to dubious governance and implausible accounting led to an eventual stock-price collapse for many of them.

The chart below shows the fleeting glory–and lasting pain–upon corporate stock prices in companies where Wey played a role in bringing them to the U.S. markets. In many cases, when Wey exited and new auditors were obtained, their miraculous revenue growth levels suddenly slowed down.

Click here to see a chart of Wey’s clients and how they’ve fared.

That these small accounting firms found it easy to sign off on astonishing financial figures is not surprising since it appears they were literally created for that purpose.

To start: Ever Trust’s May 2006 application to the Public Company Accounting Oversight Board, Ever Trust only “Played or expect[ed] to play a substantial role in audit[ing]” Bodisen Biotech, China Natural Gas and China Housing and Land. Kabani deals all, Ever Trust noted only that it “Assist[ed] [Kabani] in some areas.”

The first appearance of Ever Trust in a U.S. filing occurs in May of 2007 in a letter from the Securities and Exchange Commission to Wey’s client AgFeed Industries that noted, among other things, whether it was “appropriate” for Goldman Parks, “an auditor located in Tarzana, California,” to audit Chinese corporate books. In reply, Agfeed argued that Ever Trust’s services were necessary and equivalent to other accounting firm’s as its “International Department” chief was a seven-year veteran of public accounting and a graduate of Canada’s York University with a Delaware CPA license. [AgFeed just announced it is forming a special board committee to investigate its Chinese accounting practices.]

The small accountancies came to have a lot in common.

For example, in a filing from China Recycling Energy (a company Wey had no role in) answering questions from the SEC over whether Goldman Parks could effectively audit from a suburb of Los Angeles, the company said that Beijing Anshun International’s “International Department” had been, “In substance, [Goldman’s] office in China” for the previous four years. The chief of Anshun’s International Department, the company noted, went to York University and was a Delaware-registered CPA.

The connection between the “International Department” chiefs becomes a little more clear when their PCAOB applications are looked at closely. The signer of Ever Trust’s form, Xuefei “Nancy” Na, is also the signer of Beijing Anshun’s application and holds a Delaware CPA license. The phone numbers of the two firms are the same as Na’s.

Finally, Na told The Financial Investigator she graduated from York University.

Ms. Na’s signatures weren’t the only similarity. In August 2008, as the Chinese reverse merger market began its tear, the accountancies also shared the same building address in Beijing: HeQiao Building, 8A Guanghua Road in the Chaoyang District. As matters would have it, that’s also the address of Benjamin Wei’s Beijing office.

Despite listing their office number as Suite A310 in the filings, Beijing Anshun, per an August 2008 photo below of the lobby directory in its lobby, was based in Suite 509, right next door to several Wey-controlled business as the translation below indicates.

502 Fubon Life Insurance- Beijing Representative Office

503 American New York Global Capital- Beijing Representative Office

504-507 Tianjin NYGC International Capital Consultants

508 China Due Diligence

509 Beijing Anshun International Accountant Business Office

510A Napier Overseas Development Ltd

511A Singapore Linong Agrolex Beijing Representative Office

511B Shanghai Minzhao Jishuanji Tech Company – Beijing Subsidiary Company

512A Beijing Dingjiachuangxin Investment Advising Company

But additional photos inside the He Qiao building taken on the same day in August 2008 show Ever Trust’s name on the door of Suite 509, rather than Anshun’s.

Translation: Beijing Ever Trust Fair Accounting Business Office Company

A business card collected the same day from an employee inside Suite 509 also says Ever Trust:

Ms. Na told The Financial Investigator that she was unsure about the issue of location since she had left Ever Trust at the end of 2007 to build her own business with Anshun. She did not answer follow up questions about the proximity of the offices to Wey’s New York Global Group or why the two different accounting firms, out of all the companies in the building, would be confused for one another.

Wey’s New York offices were contacted repeatedly for this article over the past month, mostly by phone but several times via E-mail. None of the detailed messages were returned. His publicists at 5WPR, though not shy in referencing Wey’s role as a client, did not return a phone call or E-mail seeking comment on his behalf. Oddly, shortly before Wey’s publicist lamented his reticence to discuss his work, Wey put out a press release praising himself for his work.

Ahmed Mohidin did not return several phone calls and an E-mail seeking comment.

The offices next to Ever Trust/Anshun are another Wey controlled company, China Due Diligence, whose Chinese language website has a link to the Garner Group International, whose Chairman, former Hempstead, N.Y. Mayor James Garner, sat on the board of Wey and Kabani client China Natural Gas. Garner wound up suing the company in 2008 because, he claimed, they pressured him to resign and retaliated against his request for allegedly materially incorrect SEC filings to be fixed.

[Wey recruited several board members for his client companies from the ranks of retired American mid-sized city mayors, probably because in China, the position of Mayor is politically powerful. Garner, in addition to China Energy, served alongside former Lynn, Mass. Mayor Patrick McManus on the Bodisen board. McManus, before he died suddenly in 2009, also served on the Harbin board. Also serving on the Harbin board is David Gatton, who was executive director of the U.S. Conference of Mayors.]

The coincidences continue. Wey’s New York Global offices have side doors opening directly into the Anshun/Ever Trust offices. They also, one visitor to both offices told The Financial Investigator, apparently share a computer server.

It is a perfect symmetry of disclosure failures since investors never were informed of the interlocking relationships between the auditors and Wey–who was almost certainly their largest source of revenue–as well as the physical proximity to Wey’s operation.

Maybe a better word for the methodology Wey and New York Global Group used to bring his group of troubled and troubling companies to the U.S. and its investors is “rig.”


5 Responses to “How They Did It: The Continuing Adventures of Benjamin Wey In The U.S. Capital Markets”

  1. Aaron on September 30th, 2011 2:05 am

    BOOM hard-hitting on-the-ground research like always

  2. D J on September 30th, 2011 2:21 am

    Great detective work and findings. Shows the world how shady these tiny auditors such as GMK, Kabani are. I won’t be surprised if Ben Wey (or any of its RTO clients mentioned in here) jumps out and cries for defamation like they always do. Where is the SEC when all the records and personnel of such US-based auditors of RTO frauds can be easily subpoenaed?

  3. Leland Montgomery on September 30th, 2011 3:25 pm

    Excellent work, Roddy, thanks for keeping this issue alive and blazing a path for what we can only hope will be SEC follow-up.

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