Is Sino-Forest Chinese for Ponzi?

Without outright calling Sino-Forest

a ponzi scheme, Muddy Waters' report on the Chinese timber company calls into question whether or not Sino-Forest is up to no good. The report,

, notes that accounting firm Ernst & Young “has been unable to complete its review of TRE's (Sino-Forest's foreign ticker) Q1 numbers.” The ensuing report lays out why accountants state-side have been unable to square some of Sino-Forest's numbers with reality. Most troublesome is a business model that involves third-parties unnecessarily stepping up in the supply chain, introducing risk, fraud and tax evasion issues. For its part, Sino-Forest cannot verify whether or not the suppliers are actually paying taxes on goods. It also cannot verify that the company is abiding by replanting agreements, leading some to question whether Sino is at risk of losing future timber-cutting permits. Amid the bad news, Sino-Forest is down 12% on the day, and no end to the bleeding appears to be in sight.