How to Detect Potential Chinese Stock Frauds

By Xuan's Global Perspective:It received much media attention when Muddy Waters cracked down a once 5 billion USD business – Sino-Forest Corporation (SNOFF.PK). Nevertheless, Sino-Forest was not the only one. Citron Research has also spotted 18 Chinese stock frauds so far. According to Citron, “13 have suffered losses of 50% to 100%, and 2 are halted, a total of 15 with losses we would deem catastrophic.”
As a retail investor without much access to and expertise in Chinese capital markets, what are the red flags to look for in order to screen out the potentially fraud Chinese companies?
Investor's Business Daily summarized 6 Rules of Sucessful Investing in Chinese ADRs a while ago. The article doesn't seem to be very practical if we apply the rules to Longtop Financial (LFT), or Sino-Forest Corp, along with others.
As an investor who's been following and researching Chinese stocks, I have come up with my ownComplete Story »