Hong Kong Businessman Indicted for Alleged Role in ‘Ramp-and-Dump’ Stock Scheme
Udumbara
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A Hong Kong businessman has been indicted for his alleged role in a scheme that deceived investors into buying Nasdaq-listed shares of a Chinese company, causing them to suffer significant losses when the stock later collapsed in a sudden selloff, the Department of Justice announced on Nov. 14.
Su Guanhua, 37, who uses the alias “Michael Su,” was the managing director and marketing director of a Hong Kong-based financial service company called Rhino Consulting Business Service. He is accused of filing fraudulent documents with the U.S. Securities and Exchange Commission (SEC) to run what is called a “ramp-and-dump” scheme, a form of stock manipulation in which perpetrators inflate a stock’s price before selling their artificially boosted shares for a profit, leaving unsuspecting investors with steep losses.
“The Criminal Division is fully committed to stopping foreign actors who victimize American retail investors. Under my leadership, the Criminal Division will aggressively investigate and prosecute criminals who steal the hard-earned savings of U.S. citizens through fraud and deceit,” he said.
Two of the companies identified were Bluesky Eagle Capital Management and Wisdom Capital Management Group. According to the indictment, the information submitted to the SEC about Bluesky Eagle contained several “untrue statements,” including claiming that the firm’s principal place of business was in New York, that it was a public reporting company, and that it managed $10 million in private fund assets.
The two companies became central to the ramp-and-dump scheme that lasted from January 2024 to April 2024, prosecutors said, with fake websites set up portraying the companies as “legitimate investment advisor enterprises.” Coconspirators then took up false identities on the websites and the messaging app WhatsApp as financial advisors, according to the indictment.
In WhatsApp chat, coconspirators allegedly promised potential investors returns of 300 to 500 percent by investing in the NASDAQ-listed company, and promised that they would “fully compensate” for any losses, according to the indictment.
The company’s stock rose sharply from $8.46 on April 1, 2024, to $52.21 on April 16, 2024, while daily trading volume averaged about 1.3 million shares, prosecutors said. Then, the next day, the stock collapsed, closing at $5.99 with trading volume surging to about 14.5 million shares.
“Following the collapse in price, the Blueskey Eagle WhatsApp chat administrators attempted to retarget victims and told investors that they would provide a different investment that would recoup losses,” the indictment reads. “Specifically, potential investors were instructed that if they held the next recommended stock for three trading days, they would receive an additional investment that would result in 80% profit.”
As investors suffered steep losses, conspirators allegedly earned “as much as $211 million” through foreign-based brokerage accounts by selling the company’s stock, according to the indictment.
Su is charged with conspiracy to commit securities fraud, making material misstatements in a report filed with the SEC, and false statements, according to the Department of Justice. He faces a maximum of five years’ imprisonment for each count.
The Epoch Times could not reach Su’s lawyers for comment.
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