M. Norman Goldberger, partner-in-charge of Ballard Spahr’s Securities Litigation Group, has been counseling investors on how to avoid becoming victims of potentially fraudulent Chinese companies that have been raising capital in America.

"Make sure the company has assets in the U.S., real plants and real bank accounts," Mr. Goldberger said. "The other thing to look for is directors and officers who reside in the U.S., and who carry directors and officers insurance."