Two men have been indicted in the Eastern District of Virginia for allegedly orchestrating a securities fraud scheme involving Ostin Technology Group Co. Ltd. (OST) stock. The indictment, unsealed yesterday, accuses Lai Kui Sen, co-CEO of OST, and Yan Zhao, a financial advisor also known as Hank Shi and Hank Shu, of targeting American retail investors through fraudulent transactions and coordinated social media campaigns to inflate OST’s share price between April and June 2025.
According to the indictment, Sen and Zhao, along with their co-conspirators, arranged for tens of millions of OST shares to be transferred in non-bona fide securities transactions. In one instance, more than 70 million shares were given to co-conspirators without payment. On April 15, when select investors received discounted shares, a campaign began to promote OST stock using impersonated investment advisors and misleading social media activity to create false market momentum.
The U.S. Department of Justice has seized nearly $10 million from accounts linked to the alleged scheme. Prosecutors say the defendants facilitated brokerage account openings for select investors who then sold their shares at inflated prices, resulting in profits exceeding $110 million for those involved. When the stock price collapsed on June 26—losing over 94% of its value—investors reportedly lost more than $950 million in market capitalization.
“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.”
“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.”
“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.”
“The defendants allegedly concocted a scheme that distorted the price of OST stock, costing investors tens of millions of dollars,” said Reid Davis, Special Agent in Charge of the FBI Washington Field Office’s Criminal Division. “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.”
“The SEC-Office of Inspector General (SEC-OIG) will relentlessly investigate individuals who submit false filings with the SEC,” said Inspector General Kevin Muhlendorf of the SEC. “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.”
If convicted on all counts—including conspiracy to commit securities fraud and wire fraud—Zhao and Sen face maximum penalties ranging from 20 years per count up to 25 years for Title 18 securities fraud charges.
The case was investigated by both FBI agents and SEC-OIG staff members with support from FINRA’s Surveillance and Market Intelligence – Market Abuse Group.
Assistant U.S. Attorney Avi Panth for the Eastern District of Virginia and Trial Attorney Kashan K. Pathan are prosecuting.
An indictment is an accusation; defendants are presumed innocent until proven guilty.
