Chinese tycoon faces US trial over $1.35 billion investor swindle
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Guo Wengui fled to the US, where he built a strong online following criticising the Chinese Communist Party and pitching investments to his supporters.
PHOTO: THE NEW YORK TIMES
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New York - The trial of exiled Chinese billionaire Guo Wengui began this week in New York, where he is accused of swindling more than US$1 billion (S$1.35 billion) from investors in a complex fraud scheme that netted him luxuries including a US$26 million New Jersey mansion and a US$37 million yacht.
Opening arguments could start this week, once a jury is selected.
The outspoken businessman, also known as Ho Wan Kwok or Miles Guo, will be tried before an anonymous jury that US Marshals will escort to and from the courthouse each day – an unusual move to protect the people who will decide a case that has drawn intense interest.
The US government argues that jurors need to be shielded from Guo and his supporters, while Guo, a sharp critic of the Chinese government, says it is the Communist Party of China (CPC) that poses the threat.
Guo, who referred to himself as “Brother Seven” in online videos before his arrest in March 2023, is accused of tricking investors into handing over US$1 billion for what they thought were promising investment opportunities in crypto, a social media platform and a farm loan programme.
He has pleaded not guilty to 11 charges and claims he never defrauded anyone, let alone fellow members of his “Chinese pro-democracy movement”. Guo has been held at Brooklyn’s Metropolitan Detention Centre since his arrest.
According to prosecutors, Guo fled to the United States in 2015 and settled in a US$67.5 million penthouse in The Sherry-Netherland hotel on the Upper East Side.
He built a strong online following criticising the CPC, pitching investments to his supporters in the process.
Guo, who applied for asylum in the US in 2017, also forged ties to former president Donald Trump’s inner circle. When former Trump campaign chairman Steve Bannon was arrested for fraud in 2020, he was on board Guo’s 45m-long Lady May yacht off the Connecticut coast.
Federal prosecutors in Manhattan say Guo misled investors through a “cascade of deceit that spanned years” and involved sequential investment projects.
In 2020, Guo, his financial adviser Kin Ming Je and former chief-of-staff Yvette Wang raised more than US$400 million from 5,500 investors through an illegal private stock offering related to GTV Media Group – a news social media platform.
Guo and his co-conspirators allegedly diverted US$100 million from the stock offering and placed it in a high-risk hedge fund that, if successful, would have been a windfall for his son, according to court filings.
The fund was managed by American investor Kyle Bass, who was also the chair of a non-profit Guo founded that criticised the CPC.
The fund’s big bet that the Hong Kong dollar would collapse led to a US$30 million loss, according to prosecutors.
Creditors have attempted to claw back funds through Guo’s parallel bankruptcy proceedings.
Guo also allegedly skimmed investor funds that were meant for a farm loan programme, an exclusive members-only club and an initial coin offering.
He boasted to his social media followers about the dizzying success of his crypto “ecosystem”, Himalaya Exchange, claiming its cryptocurrencies were backed by gold.
Prosecutors allege that tens of millions of dollars were also wired to Guo’s relatives and spent on luxury purchases, including a 50,000 sq ft mansion in New Jersey, a US$4.4 million custom Bugatti, and Chinese and Persian rugs.
Wang, 45, pleaded guilty on May 3 to conspiracy to commit wire fraud and money laundering, and faces more than a decade in prison. Je is still at large. BLOOMBERG
