Alfred Little Delivers Letter to China Integrated Energy's Independent Board Members

   The full text of the letter follows:

   March 29, 2011

   Independent Members of the Board of Directors

   China Integrated Energy, Inc.

   Dongxin Century Square, 7th Floor

   Hi-Tech Development District

   Xi'an, Shaanxi Province

   People's Republic of China

   Attention:      Larry Goldman, Director and Audit Committee Chairman

                        Wenbing Christopher Wang, Director

                        Junrong Guo, Director

   VIA FACSIMILE AND EMAIL

   Gentlemen:

   Yesterday I published excerpts from a report prepared by the International Financial Research & Analysis Group ("IFRA") as well as time-lapse video surveillance records of China Integrated Energy ("CBEH" or "the Company") management conducting an investor tour of the Company's 150,000-ton biodiesel Tongchuan production facility on March 10, 2011.  Four months of surveillance shows no meaningful production at the plant that management has publicly described as operating at 100% of capacity.  If this were true, the plant would require seventeen (17) thirty-ton tanker delivery trucks each day to deliver raw materials and ship out finished biodiesel product.  In four months the record shows only six tanker trucks entering the facility, five of which appeared on the morning of the investor tour and departed immediately thereafter.

   This matter obviously requires the Board's immediate attention and I am pleased to see that the Audit Committee has authorized an independent investigation into the allegations against management.  But I am surprised to see the Company immediately denied all the allegations against it since the video evidence, alone, is believed to provide proof that there has been no meaningful biodiesel production at the Tongchuan facility, which management claims is one of the largest in China.  The video evidence is easily and immediately verifiable.  Today I will post another series of videos showing further proof of no production activity at the Tongchuan facility from March 1st to 8th, 2011.  This is in addition to the videos from February 10th to 19th already posted.  

   Furthermore, as soon as the Board engages a legal firm to conduct the independent investigation, I will immediately provide the investigators access to all the video evidence in my possession to assist them in quickly verifying the absence of any meaningful production at CBEH's biodiesel facilities.

   In the meantime, the Independent Directors should consider a simple way they themselves can easily verify biodiesel production:  Obtain the facility's closed circuit video security surveillance of the entry gate and count the capacity of tanker trucks entering the facility to confirm whether approximately 250 tons of biodiesel is being shipped out, on average, each day as needed for the plant to operate at 100% of capacity.  This simple inspection could be achieved in an afternoon visit to the facility and would immediately verify the total lack of historical production.

   More importantly, the Board should quickly take action to protect the remaining cash on the Company's books.  This may be difficult since CBEH only controls the operating company, Xi'an Baorun Industrial ("Baorun") through a management agreement. Nevertheless it is the duty of the Board at this point to "lock down" the cash in Baorun's accounts, since Chinese State Administration of Industry and Commerce ("SAIC") reports clearly show Baorun has funneled U.S. investor money to friends and relatives of Baorun Chairman Gao Xincheng, who failed to disclose at least two large related party transactions involving his son in the Company's most recent 10-K filing.  

For further reference, a summary of the IFRA report is available here:

http://labemp.files.wordpress.com/2011/03/time-lapse-video-shows-china-integrated-energy-defrauded-investors.pdf

A selection of IFRA's surveillance videos are available here:

http://vimeo.com/channels/CBEH

Sincerely,

Alfred Little