(Yicai Global) July 14 -- Luckin Coffee has removed co-founder and Chairman Charles Lu, who survived a motion to topple him earlier this month, and handed the reins to its previous acting chief executive officer as part of a major board shake-up as the Chinese coffee chain tries to clean the slate and distance management from its massive fraud scandal.

Guo Jinyi replaces Lu as chairman and CEO, according to a filing submitted to the US Securities and Exchange Commission yesterday. Shareholders Centurium Capital and Joy Capital represented by their respective founders Li Hui and Liu Erhai as well as independent director Shao Xiaoheng will no longer sit on the board.

But the reshuffle leaves Lu in effective control. The motions were passed at an extraordinary general meeting on July 5 instigated by Haode Investment, a family trust that Lu controls, and a board meeting on July 12, online news outlet The Paper reported.

Of the nine directors now on the board, five have Lu’s backing. They are Guo, as chairman, independent directors Yang Cha, Zhuang Weiyuan, Feng Liu, Ying Zeng and Jie Yang and managing directors Cao Wenbao and Wu Gang. Guo, Yang, Jie, Cao and Wu are all close friends of Lu.

Luckin Coffee was brought low by an anonymous report posted online in January by US short seller Muddy Waters Research accusing it of fraud, and has since confessed to inflating its revenue last year by as much as CNY2.12 billion (USD303 million) and its costs and expenses by CNY1.34 billion.

The Xiamen-based firm was booted off the Nasdaq on June 29, ending a 400-day listing, at a stock price of USD1.38, some 90 percent off its issue price. Co-founder and CEO Jenny Qian and Chief Operating Officer Liu Jian were fired in May for the bookkeeping fraud.

Editor: Kim Taylor