SBUX - Luckin Chairman Resigns From Car Inc. as Fraud Probe Continues
Can it get any worse for Charles Lu and Luckin Coffee (NASDAQ: LK)? Probably, but as the Luckin accounting probe escalates, so do Lu's woes.
Lu's investment firm, UCAR, which is the parent company of Luckin, already sold off its total stake in Car Inc., China's largest car rental company, amid falling share price due to the Luckin accounting fraud scandal. In a statement to the Hong Kong stock exchange on Wednesday, Lu said he was resigning as chairman of Car Inc. to devote more time to UCAR responsibilities.
The original allegations stated that Luckin falsified and inflated its earnings. According to a report by The Wall Street Journal, the company sold vouchers to companies that did business with Luckin, and that appeared to increase earnings. Chinese news agency Caixin reported that according to unidentified insiders, Lu gave Luckin employees the green light to go ahead with the false reporting. Lu still heads Luckin and UCAR.