China Energy Savings Technology was engaged in the manufacturing and sales of advanced technology energy-saving products in the PRC. Its shares were suspended in Feb 2006.
Controlling shareholder Chiu and Co Sec Sim formed China Energy through transactions with a Nevada shell corporation called Rim Holdings, Inc. and a British Virgin Islands holding company called Starway Management Limited. The defendants caused China Energy to purchase Starway at an excessive price to facilitate the issuance of large quantities of China Energy shares to entities controlled by Chiu; caused China Energy to obtain a Nasdaq national market system listing by artificially creating a shareholder base and falsely representing to Nasdaq that the company had met its minimum shareholder requirement; issued false press releases concerning China Energy’s NMS listing; created artificial demand for China Energy stock by engaging in manipulative trading and entering into secret deals to give free China Energy stock to shareholders willing to purchase China Energy in the open market; and concealed the fact that Chiu controlled both the company and the company’s public float.
Both were found guilty in their absence.
US District Court: Class Action Complaint, 9 May 2006
China Energy Savings: Annual Report Sep 2005