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  "documentTitle": "Orient Paper Inc. (ONP)",
  "authorId": "51_Muddy_Waters",
  "authorName": "Carson C. Block",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2010-06-28 00:00:00",
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  "notes": "The text describes a 'Potemkin village' scenario regarding production facilities.",
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      "text": "More than anything, HBOP’s plant struck us as the late 20th century factory equivalent of a Potemkin village in that it is more for show than for production.",
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      "text": "During the tour, once we demonstrated knowledge of production equipment and processes, the pace of the tour sped up considerably. We were admonished to move along a number of times, and Chairman Liu appeared to call several managers to observe Sean Regan (our manufacturing expert) while he was lagging behind to closely inspect equipment.",
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      "text": "Our on site due diligence confirmed our thesis that the company is nowhere near the scale that it claims to be. On our visit, we saw a very small operation that appeared to be formerly government owned, and probably privatized for very little money. More than anything, HBOP’s plant struck us as the late 20th century factory equivalent of a Potemkin village in that it is more for show than for production.",
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      "text": "The medium-grade white writing paper production line was operating. The second line we saw, for corrugating medium, may not have been actually producing paper. Right after walking into the workshop,",
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      "text": "We initially approached ONP as a possible Strong Buy. However, certain red flags quickly emerged that made us suspect that there was some level of graft occurring at ONP. We accept that even many “well managed” companies in the China context often have some level of internal corruption, so we were willing to accept a thesis that there is a strong underlying business with some investor money being skimmed. Once we commenced our in depth review of SEC filings though (we have read literally every SEC filing – including all exhibits – multiple times), we saw strong indications that the company was largely a fraud.",
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      "text": "Prior to visiting HBOP, we had requested, and received confirmation, that we would see all production lines and the digital photo paper production assets. Instead, our visit only included a ninety-minute tour of an unknown portion of the legacy HBOP assets, a two-hour lunch, and an unproductive one hour meeting at an office building nowhere near HBOP’s production facility (but that we would later learn is supposedly next to the acquired – yet unseen – digital photo paper production lines).56",
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      "text": "HBOP claims to have six legacy paper production lines,57 but despite our prior agreement to see all lines, it showed us only two – one for medium-grade white writing paper and one for corrugating medium. The equipment is clearly dated, and in our opinion is from the mid-1990s at newest.",
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