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  "docSlug": "0900eea60013",
  "documentTitle": "New Oriental Education & Technology Group (EDU)",
  "authorId": "51_Muddy_Waters",
  "authorName": "Carson Block",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2012-07-18 00:00:00",
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  "notes": "This is a research note from a short-seller report (likely Muddy Waters or similar) alleging accounting fraud.",
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      "kind": "callout",
      "text": "EDU is a For Profit, but has Submitted Financials to its PRC Regulator, and Likely to Deloitte, that Claim Otherwise. These Financials are Fraudulent.",
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      "kind": "paragraph",
      "text": "EDU's PRC financials for its Beijing operation (the “BJ Operation”) are fraudulent because they claim an impossible tax treatment. The BJ Operation receives an exemption from corporate income tax (known as enterprise income tax, or “EIT”). However, the BJ Operation really has no such EIT exemption.",
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      "text": "EDU is a For Profit, but has Submitted Financials to its PRC Regulator, and Likely to Deloitte, that Claim Otherwise. These Financials are Fraudulent.",
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      "kind": "paragraph",
      "text": "To understand why the BJ Operation's financials are most likely fraudulent, one has to understand the legal framework for the for-profit education industry in China.",
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      "kind": "paragraph",
      "text": "EDU's Beijing operation submitted financial statements to its PRC regulator that are highly likely to be fraudulent. It is probable that these financials contaminated EDU's U.S. filings.",
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      "kind": "source-note",
      "text": "12 In RMB. 13 According to a June 2012 investor conversation with Louis Hsieh. The other significant city is Shanghai.",
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      "text": "II. Sharpen the Pencils, Cook the Books, No More Investors’ Dirty Looks",
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      "text": "Legal and tax framework applicable to EDU and the BJ Operation",
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