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<\/div>\n<\/p>\nThe head of Luckin Coffee<\/a> Inc. knew or should have known about the accounting misconduct at the Beijing-based java chain, The Wall Street Journal reported<\/a>.<\/p>\n An internal report has concluded that Charles Lu, Luckin’s co-founder and chairman, is responsible for fabricated transactions that inflated the Chinese coffee chain’s sales last year, a source told the newspaper.<\/p>\n The report also revealed Lu failed to fully cooperate with the investigation, the source said.<\/p>\n Last week, Luckin <\/a>completed the investigation that blamed the company’s former CEO and chief operating officer for inflating the embattled Chinese java giant’s revenue and expenses by hundreds of millions of dollars.<\/p>\n<\/div>\n China’s Starbucks<\/a> competitor said former CEO Jenny Zhiya Qian and former chief operating officer Jian Liu and some employees reporting to them took part in a scheme which $300 million in phony coffee sales<\/a> were put on Luckin’s ledgers in 2019 while the chain’s nearly $190 million in expenses were inflated, the Journal reported. They were fired in May.<\/p>\n The probe was conducted by a panel of Luckin’s board of directors with help from law firm Kirkland & Ellis LLP. It found evidence Lu had knowledge of certain related-party transactions that weren’t properly disclosed, the source told the WSJ.<\/p>\n Lu denied the report in an email to the paper.<\/p>\n “Rumor! Not true!” he said.<\/p>\n A Luckin Coffee spokesman declined to comment.<\/p>\n The three-year-old startup rival to Starbucks Corp. in China was listed on the Nasdaq Stock Market<\/a> last year. Just 11 months later, Luckin announced more than $300 million of its 2019 sales were fabricated.<\/p>\n Since then, its market capitalization has fallen below $1 billion, from more than $12 billion in January, the newspaper reported.<\/p>\n Last week, Luckin said sales were inflated from April 2019 through the fourth quarter.<\/p>\n The company didn’t detail Lu’s role in the scheme, but said directors proposed to remove him at a board meeting last week based on “documentary and other evidence identified in the Internal Investigation and its assessment of [his] degree of cooperation in the Internal Investigation.”<\/p>\n The investigation was launched in April after Luckin’s board of directors was notified of potentially fabricated transactions<\/a> that inflated estimated revenues by more than $300 million.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n Tags:<\/b> Pymnts<\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"\nSee Campaign: <\/strong>https:\/\/www.pymnts.com\/personnel\/2020\/luckin-coffee-execs-fired-after-fraud-probe\/<\/a>
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The head of Luckin Coffee Inc. knew or should have known about the accounting misconduct at the Beijing-based java chain, The Wall Street Journal reported. An internal report has concluded that Charles Lu, Luckin’s co-founder and chairman, is responsible for fabricated transactions that inflated the Chinese coffee chain’s sales last year, a source told the newspaper. The report … Continue reading Probe Claims Luckin Coffee Chair May Have Known Of Discrepancies<\/span><\/a> Continue Reading