A look at registration records of companies that bought vouchers and others that received repeated supplier payments shows that many had links to Luckin, Mr. Lu or Mr. Lu's two previous ventures. Some listed the same office addresses and contact numbers as branches of CAR Inc. or Ucar. Several were registered with email addresses of employees of those companies. One was registered with a Luckin email address.
A few of the companies had links to a relative or a friend of Mr. Lu. One regular bulk buyer of coffee vouchers, Date Yingfei (Beijing) Data Technology Development Co. Ltd., has the same phone number as a branch of CAR Inc. and a predecessor of Ucar.
Zhengzhe International Trade (Xiamen) Co. shows up in the documents as a supplier of raw materials to Luckin.
Date Yingfei and Zhengzhe have the same legal representative, Wang Baiyin, a former classmate of Mr. Lu. Mr. Wang owns 60% of Date and 95% of Zhengzhe, according to corporate registration records. Mr. Wang couldn't be reached for comment.
Not all details of the operations could be learned. People familiar with these transactions surmised that, over time, the rafts of purchases and payments formed a loop of transactions that allowed the company to inflate sales and expenses with a relatively small amount of capital that circulated in and out of the company's accounts. It remains unclear what was the original source of funds to kick-start the transactions.
In November 2019, Luckin reported a 558% year-over-year jump in third-quarter product sales, and projected around a 400% rise for the fourth quarter. Average net revenue from products per store soared 80%, its financial report showed.
About two months later, after the stock price had roughly doubled, Luckin raised $865 million in a follow-on sale of shares and convertible notes. Its stock climbed further when Luckin said it had overtaken Starbucks by number of cafes in China and it would roll out numerous vending machines selling its drinks.
Then, on Jan. 31, Muddy Waters LLC, a U.S. short seller with a record of exposing misbehavior at Chinese companies, circulated an 89-page unattributed report on Luckin. The report said an examination of more than 11,000 hours of video footage of customer comings and goings, of more than 25,000 customer receipts and of observation by 1,500 individuals who visited Luckin outlets showed that much of the company's revenue must be fabricated.
Luckin's stock took a dive but started rising again after the company denied the allegations. The report was released around the time Luckin's auditor was set to review 2019 results.
Two months later, on April 2, came Luckin's explosive disclosure. Luckin said that as much as 2.2 billion yuan (about $310 million) of its 2019 revenue had been fabricated. That represented nearly half of its reported and projected sales from April to December.
Auditor Ernst & Young Hua Ming LLP indicated the following day it had sparked an internal investigation by finding that some management personnel at Luckin fabricated transactions leading to inflation of income, costs and expenses.
Luckin's once $12 billion valuation is now around $650 million.
"Luckin Coffee has been mired in an unprecedented crisis and a maelstrom of public debates," an internal company memo said on May 12. "We believe, with the help of all Luckin staff, the company will overcome the crisis and get back on track."
contributed to this article.
Write to Jing Yang at Jing.Yang@wsj.com