The China Hustle

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And so let us start

a long march... together.

Not in lockstep

but on different roads

leading to the same goal.

The goal of building

a world structure

of peace and justice,

in which all may stand together

with equal dignity.

First of all,

our markets are already open

to China.

This agreement

will open China's market to us.

I would call our relationship with China

very positive... and complex.

The free market is the greatest force

for economic progress

in human history.

I will make a great deal

and lots of great deals

for the American people.

Believe me!

What is capitalism?

Is it an economic system?

Or is it an apparatus

that we can use

to make more money

for ourselves

and take more money

from others?

I think, at its heart,

it rewards those who work hard,

but it also rewards

those who...

are willing to...

take advantage of others.

There are no good guys

in this story...

including me.

- Yeah, yeah, that's good.

- Okay...

What's your earliest memory

from childhood?

- That's a trick question.

- Is it?

I... was not expecting it.

I don't know what my earliest

memory from childhood was.

I imagine I was two years old

and I was busting

a fraud somewhere.

This is Dan David.

The first time I met him,

we had a couple of drinks

at a TGI Fridays

in Penn Station,

and he told me

an almost unbelievable story.

Before the dust had settled

on the economic collapse

of 2008,

Wall Street had already

figured out a new way

to package garbage as gold.

They were engineering

an enormous fraud

that spanned the globe.

But this time,

the lies at the center

of the scam were

100 percent legal.

This time,

the crime was based in China.

Dan's part

of the story begins here,

far from Wall Street.

The small investment shop

he ran with his partner Maj

had just been crushed

by the stock market crash.

Three o'clock. What's goin' on?

People who had hedge funds

in 2008

closed their funds

and started a new fund.

- Chris, you got anything?

- Finishing working on

what I'm working on now.

I'm just gonna...

We decided right away

we weren't gonna do that.

We were gonna make everybody

their money back.

They needed big gains,

quickly.

But with the whole

Western world

on the brink

of another depression,

prospects seemed bleak.

It wasn't hopeless

everywhere, though.

The people in the know

steered Dan to China.

It was this exploding market.

It was the only market

that people actually

were confident

would go up, was China.

This is gonna be

the largest economy in the world.

Let's invest in it now.

It blew my mind 'cause

it was so completely different

from what I thought

it would be it was booming.

There were certain

cities, you'd go one time,

and you'd go a year later

again, and suddenly there'd be

a whole new shopping district

that didn't exist last time.

Very dynamic.

Gold rush.

There was almost no company

that you could invest in

in 2009 that was China-based

that you would lose money on.

For an American

set of eyes looking at this,

you were just like,

"Well, my gosh,

"China really is

this golden land

of rapid economic growth."

I really thought,

"Well, jeez, you know,

"the American century

is over now.

This is it."

Everyone wanted

a piece of China.

There was just one problem,

foreigners like Dan

couldn't invest directly

in Chinese markets.

That's where the small

California bank

Roth Capital came in.

Roth found a niche

that the big banks

had overlooked,

taking small Chinese companies

and listing them directly

on U.S. stock exchanges.

Now Dan and others like him

could participate

in the Chinese

economic miracle,

and the bank's

young salesmen had the chance

to make a killing

with the right pitch.

Hey, Jed,

how are you doing today?

Great, what do you got?

Well, we're working

on this new company.

Would you like to hear

about a transaction?

Two days go by. Five days go by.

Do you have

any interest in this?

This is what we feel

the company's capacity

can go to

after this acquisition.

These are fully registered

securities.

What do you want to do?

If they did have interest,

they would come back to you.

Yes. Yes.

Yeah, I'm interested.

$2 million worth.

Put me in for that.

Okay, great.

And that would be it.

I tried to make myself

be in the flow.

Think of a running river.

21 million bucks?

That's a pretty good fee.

- So let's say this is--

- I'm worried, though.

I'm worried that the numbers

don't hold up from China.

Well, I never got asked that.

No one ever asked that.

Roth is a second, third-tier

boutique investment bank

from California.

Someone else had described it

as a frat house.

Roth Capital would get

behind small companies

and push them out

into the market.

They definitely were

heating up 2010, 2011.

Roth was well known

for doing China deals

at a time when we were looking.

We went to a couple

of Roth conferences.

It was a good time.

Roth Capital Partners

has been organizing conferences

for years in Orange County, California.

This has got to be

the best conference in America.

Company after company you

may have never heard of before

makes pitches

to people with money.

And their business model

was kind of simplicity itself.

They'd have

a three-day extravaganza--

100, 150 companies--

and these CEOs would be saying,

"For these six or seven

or eight or ten reasons,

we think we're gonna grow

revenues 75 percent next year."

China has gone,

in the last few years,

from interesting to important.

And then it turns

into entertainment time.

Snoop Dogg, Billy Idol,

dancers,

ice sculptures,

Trojan theme night, buses,

trains, planes--

and then baijiu,

which looks like motor oil

in a can.

You drank and you drank.

You ganbei,

you cheers to somebody,

and then they have

to cheers to somebody else,

and it goes on and on and on.

The Chinese wanted to see

what kind of a person

you were,

and some of them felt like

the more drunk you got,

the more of your natural persona

would come out.

The master of ceremonies

at these conferences

was often the bank's

stage-diving chairman,

Byron Roth.

I wanna rock and roll

All night

Get him up!

And party every day,

I wanna rock and roll

You know, this is a guy

who started out

in the commodities business

when he was 16 years old.

His dad had a feedlot business,

and they'd bid on cows at

auctions and stuff like that.

I mean, this is not

an unsophisticated man.

We just do things that are--

that are different.

And that's kind of

the way we are

as an investment banking firm.

For Byron Roth

and Matt and Dan,

it was time to party.

Between 2006 and 2011,

Roth hosted over a dozen

conferences and raised

billions for Chinese companies.

Byron, get over here. I want a hug.

Whoo!

Narrator:

Roth wasn't the only bank

cashing in on the China boom.

In New York, a small operator

named Rodman & Renshaw

ran investment conferences

with a slightly different feel,

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