An indictment unsealed in the Eastern District of Virginia charges two men, Lai Kui Sen and Yan Zhao, with conducting a securities fraud scheme involving Ostin Technology Group Co. Ltd. (OST) stock. The scheme allegedly generated more than $100 million for the defendants and their associates by distributing OST shares through non-bona fide transactions and then selling them during a coordinated campaign to artificially inflate the share price between April and June 2025. Nearly $10 million in assets has been seized from accounts linked to co-conspirators.
“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. “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.”
U.S. Attorney Erik S. Siebert for the Eastern District of Virginia stated, “Protecting the integrity of our financial markets remains a top priority. 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.”
“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. “Today’s charges demonstrate the FBI’s continued commitment, alongside our partners, to combatting financial crime and bringing perpetrators to justice.”
Inspector General Kevin Muhlendorf from SEC-OIG added, “The SEC-Office of Inspector General (SEC-OIG) will relentlessly investigate individuals who submit false filings with the SEC,” noting that “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, Lai Kui Sen served as co-CEO at OST while Yan Zhao—also known as Hank Shi or Hank Shu—acted as a financial advisor for OST, which operates primarily out of China but is incorporated in Cayman Islands and traded on NASDAQ.
Prosecutors allege that Sen, Zhao, and others transferred tens of millions of OST shares via two non-genuine securities transactions—one involved over 70 million shares transferred without payment—and began an orchestrated campaign on April 15, 2025 using social media tactics such as impersonating investment advisors to inflate interest in OST stock.
It is further alleged that select investors were provided brokerage accounts so they could sell discounted or free shares into this artificially inflated market environment—generating more than $110 million in profits for those involved while other investors incurred major losses when OST lost more than $950 million in market capitalization on June 26, 2025.
Both men are charged with conspiracy to commit securities fraud and wire fraud; if convicted they face up to 20 years’ imprisonment for conspiracy or wire fraud counts each; Title 18 securities fraud carries up to 25 years; Title 15 securities fraud carries up to 20 years.
The case was investigated by both FBI and SEC-OIG with support from FINRA’s Surveillance & Market Intelligence – Market Abuse Group.
Trial Attorney Kashan K. Pathan (Criminal Division Fraud Section) together with Assistant U.S. Attorney Avi Panth (Eastern District Virginia) are leading prosecution efforts.
Potential victims can find further information at https://www.justice.gov/criminal/criminal-vns/case/united-states-v-yan-zhao-and-lai-kui-sen.
All parties are presumed innocent until proven guilty beyond reasonable doubt in court.
