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  • August 2020
  • Supplement
  • HBS Case Collection

Luckin Coffee (B): Revelations of Fraud

By: Ramon Casadesus-Masanell and Karen Elterman
  • Format:Print
  • | Language:English
  • | Pages:11
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Abstract

This case describes revelations of fraud at Luckin Coffee, beginning with an anonymous report in January 2020 and continuing with the company’s admission in April 2020 that it had inflated its revenues by 2.2 billion RMB ($310 million), almost half its reported revenue, in the last three quarters of 2019. It was later found that Luckin had arranged false transactions at many of its stores, and that it had sold tens of millions of cups of coffee (through coffee vouchers) to corporate customers with ties to Luckin chairman Charles Lu. It had also falsified supplier payments, creating a loop of fraudulent transactions that inflated both its sales and expenses.

Keywords

Fraud; Corporate Misconduct; Business Earnings; Financial Statements; Financial Condition; Stocks; Financial Management; Profit; Revenue; Price; Food; Lawfulness; Crime and Corruption; Food and Beverage Industry; Technology Industry; Asia; China

Citation

Casadesus-Masanell, Ramon, and Karen Elterman. "Luckin Coffee (B): Revelations of Fraud." Harvard Business School Supplement 721-371, August 2020.
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About The Author

Ramon Casadesus-Masanell

Strategy
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