U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22837 / October 9, 2013
Securities and Exchange Commission v. Lee Chi Ling, et al., Civil Action No. 13-CV-5364 (E.D.N.Y.) (Korman, J)
SEC Files Fraud Charges Against Lee Chi Ling and Perfect Genius Limited for Their Roles in a Wide-Ranging Stock Manipulation Scheme
The Securities and Exchange Commission filed an action related to an elaborate stock manipulation scheme involving shares of China Energy Savings Technology, Inc. against Lee Chi Ling, as a defendant, and Perfect Genius Limited, as a relief defendant. The fraudulent scheme was orchestrated by Chiu Wing Chui, Lai Fun Sim, Jun Tang Zhao (together, the Chiu Group), Lee, and others acting in concert. As discussed below, Chiu, Sim, Zhao, and others were previously charged and found liable for fraud for their roles in the scheme.
The Commission's complaint, filed on September 26, 2013 in the Eastern District of New York, alleges that Lee played a crucial role in the illegal scheme. According to the Complaint, Lee or entities that she controlled, including Perfect Genius, furthered the fraud by: (i) receiving shares of China Energy directed to her by the Chiu Group; (ii) selling some of those shares to profit from artificially high prices created by transactions directed by the Chiu Group and their dissemination of false and misleading information about China Energy to investors and the public; and (iii) acting as nominees, along with a number of other entities, which concealed the illegal trading in the shares of China Energy and masked the Chiu Group's control of China Energy.
In its complaint, the Commission alleges that Lee violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(a) and (c) thereunder, and Sections 17(a)(1) and (3) of the Securities Act of 1933; and seeks disgorgement and prejudgment interest. The Commission also names Perfect Genius as a relief defendant, seeking the return of ill-gotten gains from the sales of China Energy securities in an account that Lee opened in the name of that entity for the purpose of furthering the scheme and holding the resulting illicit proceeds.
SEC v. Lee is the latest in a series of enforcement actions brought by the Commission concerning the China Energy fraud: