An indictment was unsealed in the Eastern District of Virginia charging Lai Kui Sen, co-CEO of Ostin Technology Group Co. Ltd. (OST), and financial advisor Yan Zhao with orchestrating a securities fraud scheme that targeted American retail investors. The scheme allegedly involved using OST stock to generate over $100 million for the defendants and their co-conspirators through non-bona fide securities transactions and a coordinated social media campaign to artificially inflate OST’s share price between April and June 2025.
The Department of Justice has seized nearly $10 million in assets from accounts connected to the co-conspirators.
“Protecting the integrity of our financial markets remains a top priority,” said Erik S. Siebert, U.S. Attorney 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 behavior. Failing to do so invites serious consequences.”
Acting Assistant Attorney General Matthew R. Galeotti commented, “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. Today’s charges show the Criminal Division’s focus on aggressively protecting Americans from foreign actors seeking to exploit U.S. markets. Through the hard work of our prosecutors and law enforcement partners, we will continue to act quickly to seize the proceeds of these crimes and mitigate losses for victims.”
Assistant Director Jose A. Perez of the FBI’s Criminal Investigative Division stated, “Securities fraud by foreign actors not only exploits fair investment practices, but also defrauds American investors and harms U.S. markets. Today’s charges demonstrate the FBI’s continued commitment, alongside our partners, to combatting financial crime and bringing perpetrators to justice.”
Reid Davis, Special Agent in Charge at the FBI Washington Field Office's Criminal Division added, "The defendants allegedly concocted a scheme that distorted the price of OST stock, costing investors tens of millions of dollars," he said. "Today's indictment should serve as a warning to fraudsters: If you seek to manipulate U.S. markets for personal gain, the FBI will pursue you even if you're operating halfway around the world."
Inspector General Kevin Muhlendorf from SEC-OIG noted, “The SEC-Office of Inspector General (SEC-OIG) will relentlessly investigate individuals who submit false filings with the SEC,” he said. “Comprehensive investigative oversight to protect investors, the global markets, and the operational integrity of the SEC’s programs, systems, and operations is a top priority for our office.”
According to court documents, OST is based in Cayman Islands with main operations in China and claims it manufactures display modules used in electronics including LCD displays for commercial use as well as automotive displays; it is publicly traded on NASDAQ.
Sen and Zhao are accused along with others of distributing tens of millions OST shares among fifteen co-conspirators via two securities transactions—one transaction involved over 70 million shares given without payment—and then launching an online campaign impersonating investment advisors while promoting buying momentum on social media platforms.
Authorities allege that brokerage accounts were opened by select investors who sold discounted or free shares during this period; these sales generated profits exceeding $110 million before unwitting investors suffered losses when OST lost more than 94% ($950 million) in market capitalization on June 26.
Both men face charges including conspiracy to commit securities fraud and wire fraud; each count carries significant prison time if convicted: up to 20 years for conspiracy/wire fraud charges under Title 18/Title 15 statutes respectively—and up to 25 years for Title 18 securities fraud violations.
The investigation was conducted by both FBI agents and SEC-OIG staff with support from FINRA’s Surveillance & Market Intelligence – Market Abuse Group which referred this matter.
Assistant U.S. Attorney Avi Panth (Eastern District VA) along with Trial Attorney Kashan K Pathan (Criminal Division Fraud Section) are prosecuting this case.
An indictment is an accusation; all defendants are presumed innocent until proven guilty.
