Luckin sinks after WSJ finds fake employee processed $140M in payments

Luckin Coffee (LK) shares are falling after a Wall Street Journal investigation found a network of fake buyers and a made-up employee help drive the company's growth. Luckin sold vouchers redeemable for tens of millions of cups of coffee to companies that had ties to its chairman and controlling shareholder, Charles Lu, Jing Yang of Wall Street Journal reports, citing internal documents and public records reviewed by the paper. Their purchases helped the company book sharply higher revenue than its coffee shops produced, says Yang. Other internal documents showed a procurement employee called Lynn Liang processing more than $140M of payments for raw materials such as juice, delivery and human-resources services, Yang reports. Liang was fictitious, people familiar with Luckin's business told the Journal. The paper traced back Luckin's deception to before its initial public offering on the Nasdaq Stock Market just a year ago. Shares of Luckin Coffee are down 18%, or 48c, to $2.11 in afternoon trading. Reference Link