THREAD: The definitive story on #luckincoffee. My monthslong investigation into $LK's books and public records details how the onetime highflying $Sbux slayer fabricated transactions. via @wsj https://www.wsj.com/articles/behind-the-fall-of-chinas-luckin-coffee-a-network-of-fake-buyers-and-a-fictitious-employee-11590682336?mod=hp_lead_pos5

It's a long read but it will be worth ur time. $LK primarily faked sales and expenses with companies connected to chairman Charles Lu, $CAR, Ucar, a fictitious employee called Lynn Liang. These companies bought large volumes of coffee vouchers that could be redeemed for coffees.

These orders sometimes came at wee hours. No coffees were actually made or sold. They also made over $140m payments to fake suppliers, some of them also linked to Lu's classmate Wang Baiyin. CEO Qian personally approved or saw to these payments, which led to her firing.

The fictitious employee working in procurement processed more than $140m payments in the space of several months, which would be a lot of work for an actual person.

h/t to @muddywatersre for releasing the report that started the unraveling of $LK misdeeds. The actual fabrications were not what the report described though.

Beyond the surreal fact about the fictitious employee, one thing that shocked me during the reporting was the CFO didn't actually oversee finance and treasury then. Says so much about $LK's internal controls.

The fabrication of sales began in April 2019, one month before $Lk's blockbuster
@Nasdaq
debut. Behind the glitzy bellringing ceremony n banquet was some $Lk staffers tirelessly engineering transactions that later kept the stock high and allowed them to raise even more than IPO