DOJ Arrests Chinese Billionaire and Steve Bannon Associate in $1B Fraud Scheme

A financial advisor and the exiled Chinese businessman he works for — an associate of former Trump White House advisor Steve Bannon — were charged separately on Wednesday in U.S. District Court for the Southern District of New York by the Justice Department and Securities and Exchange Commission over an alleged, complex scheme to solicit more than $1 billion of investments in various entities and programs via allegedly false statements and representations.

On Wednesday, the U.S. Attorney’s Office for the Southern District of New York announced the unsealing of an indictment charging advisor Kin Ming Je (aka “William Je”) and businessman Guo Wengui (identified in the Department of Justice filing as “Ho Wan Kwok” but also known via other aliases, including “Miles Guo”, “Miles Kwok” and “Brother Seven”) with wire fraud, securities fraud, bank fraud and money laundering.

Guo, an exiled Chinese businessman, has been living in the United States since 2015 and caught national attention in 2020 for his relationship with Steve Bannon.

As charged in the DOJ indictment, Guo allegedly lied to his victims and promised them outsized returns if they invested in, or provided money to, Guo-controlled entities, including GTV Media, the Himalaya Farm Alliance, G|CLUBS, and the Himalaya Exchange.

Guo and Je allegedly misappropriated hundreds of millions of dollars in fraudulently obtained funds, including for the purchase of a mansion and luxury vehicles.

Guo was arrested on Wednesday in New York, but Je was still at large, according to the Justice Department.  

The case was assigned to U.S. District Judge Analisa Torres. An arraignment for Guo was scheduled for Wednesday afternoon.

The SEC alleged in a complaint filed at the same court on Wednesday that the defendants raised more than $850 million in their scheme.

Misappropriation Allegations

According to the SEC’s complaint, since April 2020, Guo and Je misappropriated a large portion of the funds raised from investors to enrich themselves and their family members, who were named as relief defendants in the complaint.

As an example, in connection with a private placement offering of common stock in GTV Media Group, the defendants allegedly diverted $100 million of investor funds to a hedge fund for the sole benefit of a firm that is owned by Guo’s son.

Guo also allegedly misappropriated investor proceeds in two other offerings to fund his and his family’s lifestyle, including misappropriating about $40 million to buy and renovate a mansion in New Jersey and $3.5 million to purchase a Ferrari for his son.

The SEC also charged the defendants with violations of the registration provisions of securities laws in connection with these offerings.

Crypto Fraud Charges

A fourth offering, for which Guo alone was charged, raised hundreds of millions of dollars from investors via a crypto asset security referred to as “H-Coin,” “Himalaya Coin,” or “HCN” and a related purported stablecoin.

“We allege that Guo was a serial fraudster, who raised more than $850 million by promising investors outsized returns on purported crypto, technology and luxury good investment opportunities,” Gurbir S. Grewal, director of the SEC’s Division of Enforcement, said in a statement.

“In reality, Guo took advantage of the hype and allure surrounding crypto and other investments to victimize thousands and fund his and his family’s lavish lifestyle,” Grewal added.

The SEC’s complaint seeks permanent injunctions against the defendants, disgorgement of ill-gotten gains, civil penalties and officer and director bars. The SEC’s complaint also seeks a conduct-based injunction that prohibits Guo from participating in the issuance, purchase, offer or sale of any securities, including crypto asset securities, other than for his own personal accounts.

In a related matter, in September 2021, the SEC charged GTV and two other entities with conducting an illegal unregistered offering of the company’s common stock and GTV and its parent company with an illegal unregistered offering of a crypto asset security referred to as either G-Coins or G-Dollars.

The SEC went on to collect over $454 million in disgorgement, prejudgment interest and penalties, including about $70 million previously transferred to the hedge fund, from GTV and two other charged entities, it said. The SEC added that it is distributing the funds collected to harmed investors.

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