(Yicai Global) July 2 – China’s Luckin Coffee discovered the inflation of its net income by about CNY2.1 billion (USD300 million) last year via an internal investigation. The coffee chain operator’s former Chief Executive Jenny Qian, ex-Chief Operating Officer Liu Jian, and some of staffers reporting to them took part in the counterfeiting of transactions, it found.

The board of directors dismissed both executives, the Chinese company the US Nasdaq Stock Market is soon to strike from its board said in a statement yesterday.

Xiamen-based Luckin has basically completed the procedures of its internal investigation and its special committee determined that the forged transactions started popping up in April last year. The firm puffed [net] revenue by CNY250 million (USD35.39 million) in the second quarter, CNY700 million in the third, and about CNY1.2 billion in the fourth, which added up to a total of CNY2.1 billion, the statement also noted.

The coffee chain also decided to dismiss the 12 employees implicated in or aware of the faked transactions and another 15 staffers will also be disciplined.

Luckin’s board also recommended that current chairman Lu Zhengyao step down and even cease as a director, and convened a meeting today to officially review the proposal. Lu’s ouster is also the demand of most of his peers, based on the special committee’s investigation results and suggestions.

The company dropped its appeal of Nasdaq’s decision to delist it before the US stock market’s trading session started on June 26, and its shares were suspended on June 29. They will likely finally get bumped off in the next few weeks, according to the Wall Street Journal, which reported the ultimate usually occurs 10 days after the company files the Form 25 required under US securities laws with the Securities and Exchange Commission.

Editor: Ben Armour