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CEO of Dissolved E-Waste Recycling Company Hit with Securities Suit

The former CEO of a dissolved e-waste recycling company, GR Supply Chain Management Inc. ("GR"), has been accused by the company's investors of violating "virtually every" securities law. According to the shareholders, CEO, Zhiyu Luo ("Luo"), allegedly sold GR's inventory for his own personal profit and dissolved the company without any shareholder approval.

Luo led shareholders to believe GR's financial projections were positive and that business was picking up. According to the suit, Luo exhibited suspicious business behavior when he allegedly refused to refund a customer who claimed he received fewer products with poorer quality than what was agreed upon. Luo also directed family members to sell the company's inventory on eBay for his own financial gain.

Furthermore, Luo never registered the securities of Xixiang Yang, Liling Liu, and Qiqi Xu, which collectively contributed over $500,000, accounting for a 100 percent of GR's capital investments. Luo never held a shareholder meeting, sent shareholders their stock certificates, or provided them with the company's certificate of incorporation or bylaws.

In 2015, investors made a written demand to review its books and records. However, GR failed to furnish all requested documents and some documents were flawed, such as a blank corporate minutes and bylaws document and a profit and loss statement with numerous accounting issues. The unprofessional reports fed into the shareholders' suspicions, and led them to believe Luo had manipulated the documents to hide his looting of GR's accounts and inventory. Shortly after the shareholders' investigation, Luo dissolved GR and caused three investors to lose the entirety of their investments. The case is pending in the United States District Court for the Southern District of New York.

The legal team at SFMS has significant experience litigating securities matters. If you have any questions regarding this subject or this posting, please contact Nick Lussier (nlussier@sfmslaw.com) or Chiharu Sekino (csekino@sfmslaw.com). We can also be reached toll-free at (866) 540-5505.

Shepherd, Finkelman, Miller & Shah, LLP is a law firm with offices in California, Connecticut, Florida, New Jersey, New York, and Pennsylvania. SFMS is an active member of Integrated Advisory Group (www.iaginternational.org), which provides us with the ability to provide our clients with access to excellent legal and accounting resources throughout the globe. For more information about our firm, please visit us at www.sfmslaw.com.

SOURCES

Mannion, Cara. "Investors Allege CEO Broke 'Virtually Every' Securities Law." Law360. Last modified on April 11, 2017.

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