![]() It was a multi-billion dollar fraud enabled by the simple failure of two agencies to share numbers (among other things). It was often so simple that, as some of the people profiled in The China Hustle discovered, all one had to do to discover it was to compare the numbers in the companies’ Chinese filings, in which they risked jail time and worse for lying, and thus told the truth, to their American filings, in which they could lie without consequence, which they inflated accordingly. Done correctly, everyone on the inside could get their bonuses before the bottom dropped out, extracting money from anyone still holding the paper when the truth came out. The simple part was that once the companies were listed, they essentially just invented wildly inflated growth and earnings numbers, and collected money from investors eager to get in on the action. The trick was to merge a Chinese company with a defunct American one that was already listed, which could then be brought to the market without the usual audits that accompany an IPO (initial public offering). Rothstein’s film investigates the world of the “reverse-merger,” a type of financial fraud that became big business in the wake of the financial crisis, when investors were looking to Chinese companies to become the next bull market. ![]() Like a lot of white-collar crime, the fraud depicted in The China Hustle, a new documentary directed by Jed Rothstein and produced by Alex Gibney, is outwardly complex, but the basic act is simple.
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