Two executives have been indicted for orchestrating a securities fraud scheme that bilked American investors out of more than $100 million through manipulated trades of a Chinese technology company’s stock.
The scheme targeted retail investors through coordinated social media campaigns and fake transactions, highlighting vulnerabilities in how foreign companies access U.S. markets.
Lai Kui Sen, co-CEO of Ostin Technology Group Co. Ltd. (OST), and financial advisor Yan Zhao face multiple fraud charges following an investigation that has already resulted in nearly $10 million in seized assets. Zhao also goes by the aliases Hank Shi and Hank Shu.
OST, a Cayman Islands company with Chinese operations, claims to manufacture display modules for electronics and automotive displays. The company trades on NASDAQ despite its complex foreign ownership structure.
According to the indictment unsealed Thursday in Virginia federal court, the defendants provided 15 co-conspirators with tens of millions of OST shares through sham transactions between April and June 2025. In one transaction, conspirators received more than 70 million shares without paying anything.
The scheme’s timing was precise. On April 15, 2025 — the same day select investors received their first batch of discounted shares — a fraudulent campaign began inflating OST’s stock price.
Conspirators impersonated real investment advisors and promoted the stock on social media to create false buying momentum. Meanwhile, Zhao and Sen helped certain investors open brokerage accounts and orchestrated massive sell-offs.
The pump-and-dump netted approximately $110 million in profits for the conspirators. When the scheme collapsed on June 26, 2025, OST lost over $950 million in market value — more than 94% of its worth.
“The defendants targeted American retail investors through a predatory pump and dump scheme to take advantage of the artificial inflation of the price of OST shares,” said Acting Assistant Attorney General Matthew R. Galeotti. “Today’s charges show the Criminal Division’s focus on aggressively protecting Americans from foreign actors seeking to exploit U.S. markets.”
U.S. Attorney Erik S. Siebert emphasized accountability: “Anyone who picks the pockets of American investors in violation of the law will be aggressively prosecuted.”
The defendants face serious prison time if convicted. Wire fraud and conspiracy charges carry 20-year maximum sentences, while securities fraud under Title 18 could result in 25 years.
“Securities fraud by foreign actors not only exploits fair investment practices, but also defrauds American investors and harms U.S. markets,” said FBI Assistant Director Jose A. Perez.
The case emerged from a referral by the Financial Industry Regulatory Authority’s market surveillance unit. The FBI and SEC Inspector General’s office led the investigation, with prosecutors from the Justice Department’s Fraud Section and Eastern District of Virginia handling the case.
SEC Inspector General Kevin Muhlendorf warned against false filings: “The SEC-OIG will relentlessly investigate individuals who submit false filings with the SEC.”
The indictment serves as a reminder that all defendants are presumed innocent until proven guilty in court.