DOJ Recovers $214M From Investment Fraud Scheme
The Justice Department is working to compensate victims of a $214 million investment fraud in which schemers impersonated U.S.-based financial advisors to deceive investors.
In what Assistant Attorney General A. Tyson Duva called “a coordinated act of both social and market manipulation,” seven individuals started a “pump-and-dump” scheme, promising significant returns for investors in Chinese Liberation Education Holdings, which claimed to offer educational services in China and was incorporated in the Cayman Islands.
However, unlike other DOJ fraud cases, investigators were able to “successfully recover victims’ hard-earned money before it disappeared into overseas bank accounts,” according to FBI Chicago Field Office Special Agent in Charge Douglas DePodesta.
“This elaborate fraud scheme boasting bogus profit potentials has caused extensive harm to unsuspecting Americans,” DePodesta said.
According to the original indictment and other court filings, the seven individuals at the heart of the case were based in Malaysia and Taiwan but posed as U.S.-based investment advisors on social media and messaging platforms, claiming to be based in Chicago, among other locations.
Starting in January 2025, the seven defendants reached out to investors about purchasing CLEU stock while posing as advisors. Still, they didn’t disclose they’d all received shares of CLEU stock directly from the company before it went public on Nasdaq in late January. CLEU claimed the total outstanding CLEU shares for sale were about 29 million, but in reality, that number was much higher due to the undisclosed stock.
However, the misleading promotion caused the listed stock price to jump after it went public, at which point the schemesters sold the shares they held under the guise of being advisors, making millions in the process.
According to the indictment, shortly after going public, CLEU’s SEC filing accurately reported the number of outstanding CLEU shares, including those sold by the schemesters. After the actual number was revealed, the share price dropped by about 99%, leading investors to lose almost their entire investments.
The defendants were initially charged in March 2025, with warrants issued for their arrest. They are still not in custody.
In May of last year, the U.S. Attorney’s Office obtained forfeiture of about $214 million in proceeds from the scheme. As of this week, the funds are ready to be disbursed to victims. (The DOJ tasked Kroll Settlement Administration with serving as the remission administrator.)