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  "docSlug": "69cc18cfe079",
  "documentTitle": "NQ Mobile (NQ)",
  "authorId": "51_Muddy_Waters",
  "authorName": "Carson C. Block",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2013-10-24 00:00:00",
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  "notes": "This is a text-heavy research note slide detailing the methodology of identifying fraud in Chinese companies listed in the US.",
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      "text": "In the case of a US-listed public company, the fraudulent books form the basis for the SEC financials. Therefore, fraudulent SAIC financials tell us that SEC financials are also fraudulent.",
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      "text": "Certain of NQ's tax disclosures and accounting are significant indicia of fraud and fraudulent SAIC financials. (These misses also evidence a sloppy audit - see NQ's Filings Make Clear that PwC's Audits Were Sloppy.)",
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      "text": "China frauds tend to claim tax preferences for which they are not eligible. One staple of audits in China is tax payment documentation. Frauds can forge payment documentation, but motivated auditors can spot forged tax payment docs.",
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      "kind": "paragraph",
      "text": "Bungled tax treatment is common in China frauds. Accounting for a fraud is much harder than accounting for a legitimate business. Business accounting is a largely rote exercise - accountants are merely documenting historical facts.",
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      "kind": "paragraph",
      "text": "Of course we know that NQ's financials are fraudulent from having observed the Yidatong fraud, customers' inability to pay through NQ's payment portal, NQ's miniscule prepaid card sales, and the barely-existent position NQ occupies in the China market.",
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      "text": "NQ's SAIC financial statements largely match those in its SEC filings; however, NQ's SAIC financials are fraudulent. This means that NQ's SEC filing financials are also fraudulent.",
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      "text": "Chinese media called NQ's SAIC financials into question the day before NQ's IPO. The 21st Century Business Herald published an article titled 'Netqin investigation, the night prior to public listing - inflated sales proceeds.'",
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      "kind": "quote",
      "text": "“Netqin investigation, the night prior to public listing - inflated sales proceeds,” 21st Century Business Herald, March 26, 2011. — 21st Century Business Herald; “Conversely, building a successful fraud is much easier than building a successful business.” — Muddy Waters",
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      "text": "53 'Netqin investigation, the night prior to public listing - inflated sales proceeds,' 21st Century Business Herald, March 26, 2011. 54 Conversely, building a successful fraud is much easier than building a successful business.",
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      "text": "NQ's SAIC Financials are Fraudulent, Leading to Fraudulent SEC Financials",
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