The China Hustle: Scam 2.0 for the Wall Street larcenists post-2008

By Jim Slotek

Rating: A (for Angry)

The best documentaries have impromptu dramatic moments. There’s a doozy in The China Hustle, Jed Rothstein’s doc about how Wall Street – having taken no moral lesson from the ‘08 crash – moved on to the sale of worthless Chinese stocks.

In it, retired Gen. Wesley Clark, the former Democratic presidential aspirant, realizes that what was under scrutiny was his role as the CEO of Rodman & Renshaw, a financial company that cost retirees their pension money with ultimately fraudulent Chinese stock offerings.

“I don’t want to be in this film!” he suddenly announces, reaching for his lavalier mike.


Too late for Gen. Clark, and too late for a lot of people. Rothstein, whose film includes Alex Gibney and Mark Cuban as executive producers, tells a story that begs to be made into a feature film a la The Big Short. If anything, it contains even more drama – including a Chinese whistle blower who ended up in jail for two years without charges.

In fact, The China Hustle is practically a seamless sequel to The Big Short. And it should make you just as angry, if not more, at the fox-in-the-henhouse scenario of the U.S. stock market.

Seems the ‘08 calamity left surviving financial firms looking for a way to get back on their feet. And China was it. Everybody was excited about the economic activity nearly two billion people could generate. But foreigners weren’t allowed to invest directly in the Chinese market. So a couple of companies simultaneously stumbled on a ten-figure loophole.

R&S, and an unruly California company called Roth Capital Partners, realized that a Chinese company could merge with an American shell company that was still listed on stock exchanges. The tactic was called a “reverse merger.”

Trouble was, there was virtually no oversight on those Chinese companies. It is, incredibly, not against the law in China to cheat foreigners outside the country. And there was basically no way for regulators to access hard numbers via the Chinese government.

So, hundreds of billions of dollars of American investment in the Chinese economy became a scam based on trust and, not surprisingly, on abuse of that trust.

But wait, there’s more. Eventually some of those financial geniuses figured out they were being conned (there’s a great scene of one of The China Hustle’s central figures, Dan David, checking out a Chinese paper company supposedly worth $100 million, that’s basically an empty building with an acre of old cardboard on its property). And rather than report the crime directly to authorities (which couldn’t be punished anyway), they decided to “short” the stock, making as much money on its plunge when the bad news became public, as they did for selling its shares in the first place.

And this is still going on. Hence the anger that burns in Rothstein’s narrative.

There are interesting shades to the tale. Roth is a self-described “frat-house,” whose sales conferences feature truckloads of liquor and celebrity performers like Snoop Dogg and Billy Idol (and whose main whistleblower, a party-animal named Matthew Wiechert, wears a mullet) . R&S plays more upscale, with paid appearances by the likes of Bill Clinton and Henry Kissinger. But they both sold the same snake oil.

The China Hustle really finds its sense of outrage when we follow its moral compass David (who, granted, is still making money by taking down the Chinese companies he’s shorted) to his beleaguered hometown of Flint, Michigan, a city he feels was destroyed by corporations that made promises and lied.

And then it finds a handful of seniors, each of whom lost at least $100,000 of their retirement money to Roth.

It reminds us that these tales of incalculable malfeasance come with a real human cost. Average people suffer while the 1% double-dip because they can.

The China Shuffle. Directed by Joe Rothstein. Starring Gen. Wesley Clark, Dan David, Matthew Wiechert. Opens Friday, March 30 in Toronto and Vancouver.