DOJ Seizes $214 Million From Alleged Chinese Stock Scheme

The U.S. Attorney’s Office, Northern District of Illinois, seized $214 million in an ongoing case alleging that seven people defrauded investors by manipulating shares of China Liberal Education Holdings, Ltd. (CLEU), which can now be returned to victims.
According to prosecutors, the defendants engaged in a “pump and dump” scheme wherein individuals in China posed as investment advisers based in the United States and made misleading promotions of CLEU stock, causing share prices to artificially rise before the defendants dumped their stock on the market.
Prosecutors allege the defendants profited significantly at the expense of defrauded investors. A court document shows that amounts between $18 million and $72 million were seized from individual defendants’ accounts.
CLEU was traded on the Nasdaq stock exchange. In SEC filings, CLEU stated it was a Cayman Islands-incorporated company with a mission to “provide China’s students with the tools to excel in a global environment.” It operated through subsidiaries in China.
The complaint filed by prosecutors seeking forfeiture of funds gave examples of alleged victims, who said they were contracted through WhatsApp messages after clicking on Facebook advertisements, and advised by individuals claiming to be investment advisers to buy CLEU stock within a specific window of time.
FBI special agent in charge of the Chicago field office Douglas DePodesta said in a statement that in this case, law enforcement and government officials were able to “successfully recover victims’ hard-earned money before it disappeared into overseas bank accounts.”
“This elaborate fraud scheme boasting bogus profit potentials has caused extensive harm to unsuspecting Americans,” he said.
The lawmakers are asking for SEC investigations into these companies, under the suspicion that many already do not meet listing requirements and should be removed under existing law.
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