Francine McKenna is an investigative reporter who focuses her writings on the auditing profession. She blogs at re: The Auditors, and also writes for financial publications such as Forbes, The Financial Times, American Banker, and more.

In February, Ms. McKenna wrote about the auditors of AgFeed, a Chinese company involved in an elaborate accounting fraud. In March 2014, the Securities and Exchange Commission charged the company and its top executives with fraud:

With the bulk of its hog production operations in China, the executives used a variety of methods to inflate revenue from 2008 to mid-2011, including fake invoices for the sale of feed and purported sales of hogs that didn’t really exist.  They later tried to cover up their actions by saying the fake hogs died.  Because fatter hogs bring higher market prices, they also inflated the weights of actual hogs sold and correspondingly inflated the sales revenues for those hogs. 

The SEC also charged a company executive and a company director in the U.S. with scheming to avoid or delay disclosure of the accounting fraud once they learned about it in 2011 while engaged in efforts to raise capital for expansion and acquisitions.  The director, K. Ivan (Van) Gothner, was chair of AgFeed’s audit committee.  He sought advice from a former director and company advisor who responded in e-mail communications that there was “not just smoke but fire” and recommended that AgFeed hire professional investigators guided by outside legal counsel.  However, Gothner ignored the recommendation and internalized the situation while false financial reporting continued.

Ms. McKenna reported that Goldman Parks Kurland Mohidin LLP was the CPA firm that provided accounting services to AgFeed from at least 2007 to November 2010. McGladrey & Pullen LLP then became the auditor of record for that rest of the period of the alleged fraud. She then mentioned Benjamin Wey:

That raises the question: How could McGladrey, and especially Goldman, be the principal auditor of AgFeed, signing the opinion in the US when a material portion of the revenue and assets, and the work done to audit them, is in China? And why did Goldman have two smaller firms in China splitting the work?

From the second amended complaint:

Goldman also provided accounting services to at least three other companies associated with Chinese stock promoter Tianbing “Benjamin” Wey (“Wey”), whose New York Global Group (“NYGG”) was closely affiliated with AgFeed during the Class Period. Furthermore, Goldman engagement partner Mohidin, through his prior firm, Kabani & Co, provided accounting services to at least eight other Wey-promoted stocks. Goldman was responsible for auditing AgFeed’s books and records, and falsely certified that its 2008 and 2009 annual financial statements filed with the SEC conformed with GAAP.

In addition to its own alliance with Wey, Goldman retained third-party Chinese accounting firms Beijing Ever Trust CPAs Co., Ltd. (BETL) and Beijing AnShun International CPAs Co., Ltd. (AnShun) to do what it needed done on the ground in China. The second amended class action complaint alleges BETL and Anshun were also under Wey’s influence. BETL and Anshun worked out of the same Chinese office building as Wey. The complaint also says BETL shared a computer server with Wey’s NYGG. BETL and AnShun were the go-to firms for field work on audits of Wey-promoted companies and, therefore, the go-to China firms of Kabani and Goldman at Mohidin’s direction. Working for Mohidin was the primary source of BETL and Anshun revenues, according to the complaint.

Chinese stock promoter Tianbing “Benjamin” Wey took issue with being mentioned in Ms. McKenna’s article, and emailed his threats to her. Essentially, Ms. McKenna reported that Wey had close releationships with Ahmed Mohidin (partner in Goldman firm) and several AgFeed officers and directors.

The AgFeed class action lawsuit discussed by Ms. McKenna notes:

65. Before the Class Period, AgFeed was expressly warned by its investor relations firm regarding Wey, but did not disclose the warning to investors and did not investigate the possibility of Wey’s misconduct with respect to AgFeed. Specifically, Dixon Chen (“Chen”) of Global Consulting Group warned executives at AgFeed to distance themselves from Wey.

66. In a February 4, 2008 e-mail from Chen to AgFeed’s executives, including Defendant Yan, Chen stated that “[m]any people wonder why [Wey] is not in jail for what he did to investors two years ago.” Chen also warned that Wey’s promotion of AgFeed “exposed the company to liability.”31

31 Subsequently, Wey sued the maker of these statements for defamation. However, in an opinion dated May 23, 2011, Justice Sherwood of the New York State Supreme Court  determined that the allegedly defamatory statements were substantially true.

Benjamin Wey’s threatening email to Ms. McKenna included:

If you do not have any factual basis for your statements, I consider it libel and please take immediate actions to correct the mistake. It would go a long way towards your redemption. I am not your enemy. Please do not create a hostile environment for yourself. It is not necessary. It is up to you to remove your slanderous statement before April 3, 2014

This is the SEC complaint against individuals involved in AgFeed: As you can read through the materials on the SEC’s website, neither Benjamin Wey nor New York Global Group is a party to the SEC complaint. ??If would not agree to immediately remove all and any contents associated with Benjamin Wey or New York Global Group, please address the following questions since you will prominently featured, every day, in yoru(SIC) face, 360 days a year:

3. What is your relationship with a Roddy Boyd, a close friend of Dune Lawrence? As exposed in this article:

4. It was known that you have close friendship with con man Jon Carnes and the Jon Carnes crime family, and you have abetted his fraud. Is it true?

5. What is your relationship with Dune Lawrence? What is the basis for your statement that: “Dune Lawrence of Bloomberg wrote an excellent expose on Agfeed last Dec-ember.” Have you been involved in AgFeed in any way? What is your factual basis for calling it an “excellent expose? What independent fact checking that you have done in deriving such a conclusion?

6. Dune Lawrence has not written a single positive article about china. You rely on a chinese university for compensation. Could you explain why a fair person would not have written a single piece positive about China? You live in Beijng, apparently you have some positive views towards China. Can you explain Dune Lawrence’s odd behavior?

7. Do the President of Beijing University and the Dean of Guanghua school, whom I know, endorse your obvious anti-China stance? I would like to put their positions on the record, either through us or through Xinhua. Your comments could with a more colorful story. ??I am not your enemy. I am here to seek the truth. I am helping you correct your statement in your own blot. Our publication deadline is April 3, 2014. If you like reading this article, we can work on more, for you and about you:

If you do not remove the false contents, have your lawyers call me. I am asking to be fair, truthful and do the right thing.

Ms. McKenna is not the only writer to be threatened by Benjamin Wey. She reports that Professor Paul Gillis, author of the China Accounting Blog, was also threatened by Mr. Wey.

A number of journalists are writing about Benjamin Wey, including Roddy Boyd at the Southern Investigative Reporting Foundation, David Barboza at the New York Times,  and John Carney at CNBC.

My question is this: What is Mr. Wey trying to hide?

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