An indictment was unsealed yesterday in the Eastern District of Virginia charging two men with orchestrating a securities fraud scheme utilising Ostin Technology Group Co. Ltd. (OST) stock to target American retail investors.
The charged scheme netted over $100 million for the defendants and their co-conspirators, who siphoned OST shares in non-bona fide securities transactions and then dumped their stock amidst a coordinated social media campaign to pump OST’s share price from April to June 2025.
The Department of Justice has already seized nearly $10 million in assets from co-conspirators’ accounts.
“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 of the Justice Department’s Criminal Division.
According to the indictment, Lai Kui Sen is the co-CEO of OST, and Yan Zhao, who goes by the aliases Hank Shi and Hank Shu, among others, is a financial advisor.
OST is a Cayman Islands company with its principal operations in China, which claims to be a manufacturer of display modules used in consumer electronics, commercial LCD displays, and automotive displays. OST is publicly traded on NASDAQ and operated, at one point, with a variable interest entity (VIE) investment structure, which Chinese companies often use.
According to the indictment, Sen, Zhao, and others allegedly engaged in a complex scheme to first provide a group of fifteen co-conspirators with tens of millions of OST shares through two non-bona fide securities transactions. In one of these transactions, these co-conspirators paid nothing to OST for more than 70 million OST shares.
The indictment alleges that, on April 15, 2025, the same day that the select investors received their first tranche of heavily discounted OST shares, a fraudulent campaign began to artificially inflate the price and trading volume of the OST stock.
This included promoting the stock by impersonating real investment advisors, among others, promoting the stock on social media, and creating a false impression of market-wide buying momentum.
To capitalise on OST’s artificial price inflation and harm the victim investors, Zhao and Sen facilitated the opening of brokerage accounts for select investors. They orchestrated the sale of shares they had received at heavily discounted or no remuneration. These sales generated substantial profits of more than $110 million.
Ultimately, according to the indictment, unwitting investors suffered significant losses when, on June 26, 2025, OST lost over $950 million in market capitalisation, representing over 94% of its value.
“Protecting the integrity of our financial markets remains a top priority,” said U.S. Attorney Erik S. Siebert for the Eastern District of Virginia. “Anyone who picks the pockets of American investors in violation of the law will be aggressively prosecuted. The Department of Justice has established whistleblower programs to encourage corporations and individuals to come forward with timely information regarding misconduct and criminal behaviour. Failing to do so invites serious consequences.”
Securities fraud by foreign actors not only exploits fair investment practices but also defrauds American investors and harms U.S. markets, said Assistant Director Jose A. Perez of the FBI’s Criminal Investigative Division.
Both defendants are charged with conspiracy to commit securities fraud and wire fraud, as well as securities fraud and wire fraud. If convicted, the defendants face a maximum penalty of 20 years in prison for conspiracy and wire fraud, 25 years in prison for Title 18 securities fraud, and 20 years in prison for Title 15 securities fraud.
