Lu Zhengyao, chairman of scandal-ridden Luckin Coffee, is likely to face criminal charges in China after authorities discovered emails in which he instructed colleagues to commit fraud, a source close to domestic regulators told Caixin.
China’s top market watchdog and Ministry of Finance have found evidence that Luckin, which is listed on the Nasdaq and seen as a domestic challenger to Starbucks, paid taxes on bogus transactions, multiple people close to the company’s internal investigation team told Caixin.
In early April, Luckin admitted to inflating sales by around RMB 2.2 billion ($310.7 million) through fabricated transactions for the final three quarters of last year. The case triggered a wave of backlash from American regulators and politicians against US-listed Chinese companies, many of which do not grant US audit regulators access to their audit working papers.
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