Allegations pertinent to the ABAT Defendants' motion to dismissPlaintiffs allege that Fu, with the help
Wan and the Auditor Defendants, used ABAT toenrich himself by artificially inflating the company's value through false earnings reports andthen diverting money to himself through a series
related party transactions.While the allegations
the Complaint are diffuse, it appears that plaintiffs included intheir pleading many facts that are merely evidentiary; I say this because, in their opposition tothe ABA T Defendants' motion to dismiss, Plaintiffs address only four specificmisrepresentations made in the course
this alleged scheme to support their securities fraudclaims. As I can sustain the Complaint against a motion to dismiss by discussing only two
those four purported misrepresentations, I need not reach, and do not discuss, whether the othermisrepresentations are adequately pleaded. No one should assume that, by not reaching them, Ihave thrown them out
the case; I have not.
Plaintiffs allege that ABAT grossly overstated its revenue and operating margins in aseries
publicly filed documents. (See Compl.
34.)In particular, the Complaint details ABAT's reported financial results as reflected in eachquarterly 10-Q, and each annual I 0-K, issued during the Class Period, many
which weresigned by Defendants Fu and Wan, and several press releases that trumpeted these earnings toinvestors.
34-61.) For example, the annual SEC reports indicated revenues increasingfrom $31M in 2007, to
2009, with net income increasing from $11M to $25M over thesame period. (Id.
64.)Plaintiffs allege that these statements were false and misleading because they grosslyoverstated the actual revenue and profits ABAT earned during the Class Period. (Id.
Case 1:11-cv-02279-CM Document 90 Filed 08/29/12 Page 3 of 40