Earlier this week, Chinese regulators raided the offices of Nasdaq-listed Luckin Coffee after the company announced its former chief operating officer had overstated roughly $310 million of sales.

Incorporated in 2017, the company was listed on Nasdaq in early 2019 and operates in excess of 4,500 coffee shops in China. Seen as a local rival to Starbucks, Luckin Coffee achieved a market value of $4 billion, but share prices have fallen by 80-percent-plus since word of the fabricated transactions.

So, what went wrong and how? When I read about Luckin Coffee, I immediately thought of the documentary “The China Hustle,” which chronicles the story of multiple Chinese companies undergoing a reverse takeover, whereby the companies acquire an existing, but substantially dormant, Nasdaq trading company. The primary character of the film, Dan David, produced compelling evidence of orchestrated frauds that saw companies and their shares massively overvalued before being dumped upon investors who lost billions of dollars, perhaps as much as $50 billion.

Like a number of other people, I pondered if this was a case of déjà vu or déjà poo (same old crap)? Within the film, one of the journalists smiles wryly when he says, “There’s an old joke that the biggest lie on Wall Street is that this time it’s different.” So, is Luckin Coffee different? How were the sales so overstated, and who failed to identify or report this?

“The China Hustle” tells the story of Chinese criminals supported by U.S. professionals, wittingly or unwittingly, defrauding U.S. investors. There have been no reports of the Securities and Exchange Commission or authorities in China taking action against these criminals (meanwhile, the SEC has reportedly begun probing Luckin Coffee’s misdeeds). On the contrary, the investigator and whistleblower who exposed some of the frauds, Kun Huang, was sent to jail. So while the SEC now has a reward program for whistleblowers, the Chinese authorities lock them up.

In 1993, as a London-based detective, I worked on joint investigations with the New York District Attorney’s Office examining reverse merger stock frauds on Nasdaq. The frauds were perpetrated by organized crime groups in the United States, often supported by London-based lawyers and accountants. Under the old “Reg S rules,” fraudsters persuaded non-U.S. investors to buy shares at a discount to the market price, thereby incurring an instant profit (albeit they were locked into the shares for 12 months). Behold, after 12 months, when they were able to sell the shares, the price had dropped; they had been caught within a pump-and-dump scheme.

There was very little difference between my investigations and those referenced in “The China Hustle,” such that this time it wasn’t that different at all.

That said, Luckin Coffee is different because the company self-reported the false sales figures, and the Chinese regulator appears to be taking action. Nonetheless, U.S. investors have undoubtedly lost a lot of money, which may never be recovered. The real issue here is just how does the SEC ensure foreign companies publicly traded in the United States but operating and controlled overseas apply the standards of compliance, financial reporting, and even whistleblower protections demanded of such companies in the United States? Moreover, how do you protect investors who may invest in such companies through your firm?

It’s not a case of “do you like your coffee with milk?”—it is more a case of liking your coffee with true and accurate financial reporting. Anything else can leave a bitter taste in your mouth and a big hole in your wallet.