Mark Cuban took down a name I follow. I have no idea who's right. The company fought back with a share repurchase today. I don't have time evebn to read this now- let's put this in the ET system for easy reference, it could turn into an interesting trade at some point. here's the bear case> China Fire & Security Group Inc. Huiwen Liu is part owner of a natural food store in the Vancouver suburbs. The business has only a few employees and is sandwiched between a sex shop and a clinic for drug addicts. According to Securities and Exchange Commission filings, Liu also is sole shareholder of an offshore investment company that got 10.1 percent of China Fire & Security Group Inc. (Nasdaq: CFSG) when it went public through a reverse merger in 2006. Natural food store in Richmond BCThat offshore company, Worldtime Investment Advisors Ltd., notified the SEC on Dec. 4 that it planned to sell 600,000 of its 2.58 million China Fire shares, for estimated proceeds of $9.6 million. The business address listed for Liu in Worldtimeâs initial disclosure form corresponded to her food store. The unlikely scenario of a shop owner in Canada holding more than $30 million of stock in a little-known Chinese manufacturer, through an investment company in the British Virgin Islands, was just one of the reasons that Sharesleuth decided to take a closer look. The quintupling of China Fire & Securityâs share price in the 12 months following the reverse merger also got our attention. So did the companyâs murky ownership and the mounting casualties among other âhotâ Chinese stocks that have gained listings on U.S. exchanges through reverse mergers. Sharesleuthâs investigation turned up questions about transparency and disclosure at China Fire, which has headquarters in Beijing and makes fire detection and protection systems for steel mills, oil refineries and other industrial customers. For starters, we found that Huiwen Liu is the sister-in-law of China Fireâs chief executive officer, Bin âBrianââ Lin â a fact not mentioned in any SEC filing. Sharesleuth also found that China Fireâs merger partner, UniPro Financial Services Inc., was one of three shells packaged by the same group of American financiers and middlemen, some of whom have previously been connected to stock manipulation schemes. Given that information, investors thinking about buying shares of China Fire might want to seek more information on the true identity of its major shareholders. Lin told Sharesleuth that his sister-in-law was simply a nominee for other owners who live in China and didnât want to register their names. But SEC filings donât reflect that. They state clearly that Liu is the beneficial owner of the shares, via Worldtime, and declare that Liu knows of no one else with the right to proceeds from their sale. Three more British Virgin Islands entities that got blocks of stock when China Fire merged into UniPro in October 2006 have reported plans to sell 1.5 million shares. They projected their proceeds at $19.8 million. China Fireâs SEC filings have not identified the people behind those entities, or explained how they originally acquired their stakes, each of which fell below the 5 percent threshold that triggers more detailed disclosure. Based on China Fireâs account of the reverse merger deal, those shareholders would have been Linâs fellow owners of the fire-protection business. Lin said he helped arrange the stock sales at the suggestion of China Fireâs investment bankers, who wanted to get more shares into public circulation so that institutional buyers could take positions in the company. That may be true. But the effect was that certain unidentified parties appear to have sold tens of millions of dollars in stock at the same time that China Fireâs executives were issuing consistently positive statements about the companyâs prospects. Lin said no one associated with China Fire knowingly violated any SEC rules or engaged in any impropriety. He said that he had not received any money from the share sales, nor had China Fireâs chairman, Gangjin Li, or members of their families. He added that the money from Worldtimeâs stock sales were still in that companyâs bank account. Lin said China Fireâs lawyers told the company it did not have to disclose Huiwen Liuâs relationship in its filings because she was not an immediate blood relative, such as a father, mother or child. However, the attorney who represented China Fire in the reverse merger deal told Sharesleuth that he gave no such advice. China Fireâs stock rose from $3.25 a share the day of the reverse merger to a high of $18.10 on Nov. 1, 2007. At its peak, the company had a market value of nearly $500 million. The companyâs stock closed at $8.76 a share, off $1.56, on Monday. Sharesleuth also discovered that the sole American on China Fireâs board of directors, Gene Michael Bennett, does not have the law degree that he claimed. And contrary to what China Fire said in its press release announcing his appointment, he is not a Certified Public Accountant and has not been licensed as one in the United States for many years. Bennett heads China Fireâs audit committee, which is responsible for overseeing financial reporting, internal controls and transactions between the company and its officers, directors and affiliates. Sharesleuth turned up the American reverse-merger network in the course of another investigation, the results of which we will publish in the coming months. We decided to post this story first because at least two brokerages have issued buy recommendations on China Fireâs stock and we think that anyone considering an investment in the company might benefit from the additional information. Disclosure: Mark Cuban, the majority member of Sharesleuth.com LLC, has a short position in the shares of China Fire. Chris Carey, editor of Sharesleuth.com, does not invest in individual stocks and has no position in China Fire.