The China Hustle (R)
The upshot: In the 2000s, a wave of Chinese companies began appearing on the U.S. financial exchanges through a process of "reverse mergers," which found the Chinese companies merging with defunct American ones. This shell-company maneuver allowed these new companies to sell stock without being subjected to the usual scrutiny that comes with a public offering. Chinese law does not punish its citizens for lying to foreign investors, so executives at a company worth $10 million could file with our Securities and Exchange Commission as one worth $100 million.
Rothstein's star, here, is Dan David, the co-founder of GEOInvesting. David made bank in exposing the fraudulent financial statements of these companies, in gathering evidence that these firms are wildly overvalued. We see him attempting to get the attention of lawmakers on the Senate Finance Committee, and he insists that American banks and auditors not only don't want to know about which companies are frauds -- some have threatened legal action against him. Rothstein mines drama from the investigations and lays bare several comically bald examples of fraud.