Muddy Waters Initiating Coverage on TRE.TO, OTC:SNOFF – Strong Sell

Muddy Waters LLC has initiated coverage on Sino-Forest Corporation (TRE.TO, OTC:SNOFF) with a Strong Sell rating and an estimated value of < $1.00.

• Like Madoff, TRE is one of the rare frauds that is committed by an established institution. In TRE’s case, its early start as an RTO fraud, luck, and deft navigation enabled it to grow into an institution whose “quality management” consistently delivered on earnings growth.
• TRE, which was probably conceived as another short-lived Canadian-listed resources pump and dump, was aggressively committing fraud since its RTO in 1995.
• The foundation of TRE’s fraud is its convoluted structure whereby it runs most of its revenues through “authorized intermediaries” (“AI”). AIs supposedly process TRE’s tax payments, which ensures that TRE leaves its auditors far less of a paper trail.
• On the other side of its books, TRE massively exaggerates its assets. We present smoking gun evidence that TRE overstated its Yunnan timber investments by approximately $900 million.
• TRE relies on Jakko Poyry to produce reports that give it legitimacy. TRE provides fraudulent data to Poyry, which produces reports that do nothing to ensure that TRE is legitimate.
• TRE’s capital raising is a multi-billion dollar ponzi scheme, and accompanied by substantial theft.

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