A British Virgin Islands holding company Starway Management Limited and a Nevada shell corporation Rim Holdings, Inc. are involved in the transactions through which China Energy Savings Technology, Inc. and the company’s undisclosed control person, Chiu Wing Chiu, with the assistance of the company’s Corporate Secretary, devised a wide-ranging stock manipulation scheme. The action against China Energy was filed in the beginning of December by the Securities and Exchange Commission which alleged fraudulent obtaining Nasdaq National Market System (NMS) listing by the company, artificial inflation of China Energy’s stock price, and selling millions of company shares into the US capital markets. So, the case involved classic ‘pump and dump’ shares scheme, an offshore BVI company Starway Management Limited, and the use of false identities.
Other participants of the scheme were the company’s former purported Chairman and CEO Sun Li, a former company employee, and major shareholder of China Energy â€“ New Solomon Consultants. The scheme resulted in China Energy winning a listing on Nasdaq last year.
The scheme was comprised of four stages and started in 2004 with the acquisition by Hong Kong-based Mr. Chiu and Ms Sim of a Nevada shell company, later renamed as China Energy. Then China Energy acquired a BVI holding company Starway Management whose sole asset was a Chinese company manufacturing energy-related products. By the Commission’s complaint, the defendants caused China Energy to purchase the BVI-domiciled company at an excessive price, in order to facilitate the issuance of large quantities of China Energy shares to entities controlled by Chiu. To file a listing application with Nasdaq, Mr. Chiu also hired a middleman to obtain the names and addresses of individuals to receive free China Energy stock.
Then, Mr Chiu and others artificially inflated the value of China Energy’s stock by generating false deals to give the appearance of “real market activity” in company shares.
The Commission alleged the defendants in reaping tens of millions of dollars, and is going to acknowledge the assistance afforded by the Hong Kong Securities and Futures Commission in this matter. The Commission investigation is continuing.