The U.S. Department of Justice announced charges against two men accused of orchestrating a securities fraud scheme that netted over $100 million by targeting American retail investors through manipulation of Ostin Technology Group Co. Ltd. (OST) stock.
An indictment unsealed in the Eastern District of Virginia charges Lai Kui Sen, co-CEO of OST, and Yan Zhao, also known as Hank Shi and Hank Shu, with conspiracy to commit securities fraud and wire fraud. The scheme operated from April to June 2025, prosecutors said.
The defendants allegedly provided 15 co-conspirators with tens of millions of OST shares through fraudulent transactions, including more than 70 million shares obtained for no payment.
They then orchestrated a coordinated social media campaign to artificially inflate OST’s share price while the co-conspirators dumped their holdings.
“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.
OST is a Cayman Islands-incorporated company with operations in China that claimed to manufacture display modules for consumer electronics and automotive displays.
The company trades on NASDAQ using a variable interest entity structure common among Chinese firms.
According to prosecutors, the fraudulent campaign began on April 15, 2025, the same day select investors received heavily discounted OST shares.
The scheme included impersonating real investment advisors and creating false impressions of market-wide buying momentum on social media platforms.
The manipulation ended June 26, 2025, when OST lost over $950 million in market capitalization, representing more than 94 percent of its value, causing significant losses for unwitting investors.
The Justice Department has seized nearly $10 million in assets from co-conspirators’ accounts. If convicted, defendants face maximum penalties of 20 to 25 years in prison, depending on the charges.
The FBI and SEC Office of Inspector General investigated the case, with assistance from FINRA’s Market Abuse Group.