Saturday, July 20, 2024

Chinese billionaire and Steve Bannon ally arrested in $1 billion fraud scheme, authorities say

Exiled Chinese billionaire Guo Wengui, an ally of former Trump White House adviser Steve Bannon, was arrested by federal authorities in New York on Wednesday morning, accused of masterminding a $1 billion fraud scheme, prosecutors announced.

Kuo, identified in court documents as Ho Van Kwok, Miles Kuo and Miles Kwok were charged in an unsealed indictment Wednesday with 12 counts including wire fraud, securities fraud, bank fraud and money laundering. The U.S. Attorney’s Office for the Southern District of New York said in a news release.

On the same day news of his arrest broke, Guo’s Manhattan apartment at the Sherry-Netherlands Hotel on Fifth Avenue caught fire, a source familiar with the matter said. An FBI spokesman said agents were conducting a law enforcement operation at Guo’s apartment after he was already in custody when the fire broke out.

U.S. Attorney Damian Williams said in a statement that Guo led a complex conspiracy to defraud thousands of his online followers of more than $1 billion.

Guo and Qin Ming Jie, also known as William J, are accused of taking advantage of Guo’s online presence to make investments in various companies and projects “promising high financial returns and other benefits”. They then misappropriated hundreds of millions of dollars in fraudulently obtained funds, which Guo used for a lavish lifestyle.

“Kwok is accused of using the stolen money to buy himself and his close relatives a 50,000-square-foot mansion, a $3.5 million Ferrari, and two $36,000 mattresses and a $37 million luxury yacht,” Williams said.

Not guilty

Guo appeared in federal court Wednesday afternoon and rested with his hands in his lap during the hearing.

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He occasionally smiled and looked back at reporters and members of the public. At one point, Guy made a thank you gesture to the courtroom sketch artist.

A Mandarin interpreter was present for the hearing.

Quoting Judge Catherine H. Parker pleaded not guilty and deferred bail pending the appearance of his lawyers.

He agreed to remand for now. Public Defender Tamara Kiva handled Wednesday’s hearing because her attorneys were out of town. Kiva declined to comment after the hearing.

Kiva said his lawyers would offer a “strong bail package” during the trial.

Guo’s next court appearance is April 4.

Guo’s financier, Qin Ming Jie, was also charged in the indictment, hit with an additional charge of obstruction of justice, but has not yet been arrested.

Attorney information for Jay was not immediately available Wednesday. Bannon did not respond to a request for comment.

Crores of fraudulent money seized

The U.S. government has seized $634 million in alleged fraud from 21 different bank accounts, including a Lamborghini Aventador SVJ Roadster, prosecutors said.

The US Securities and Exchange Commission also filed a parallel civil complaint against the two on Wednesday, accusing them of engaging in unregistered and fraudulent financial offers.

Kuo, who made his money in real estate and securities, is a controversial figure. He is an exiled Chinese businessman who has lived in the United States since about 2015 and has amassed a “substantial online following,” prosecutors said.

He has been named in ongoing lawsuits, including one alleging he sexually assaulted a former staffer, an allegation he disputes, and another accusing him of defaming a former aide to Donald Trump, which he denies.

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He was also a business associate of Bannon’s who was arrested on his yacht in August 2020 in a fraud case.

The fraud scheme took place from 2018 until this month, led by Guo, prosecutors said.

In 2018, he founded two “non-profit organizations” – the Rule of Law Foundation and the Rule of Law Society. He then “used those organizations to gain followers in China aligned with his policy objectives,” prosecutors said. Those followers “tended to believe Guo’s statements about investment and money-making opportunities,” officials said.

Bannon was at one point on the board of directors of the Rule of Law Society. CNBC reported.

GTV Media Group, Inc

Between then and June 2020, $452 million worth of GTV common stock was sold to 5,500 investors, prosecutors alleged, hoping the investors would invest their money in GTV and improve the business. But days after the GTV private placement closed, Guo and his co-conspirator allegedly directed the $100 million raised from it to be invested in a high-risk hedge fund for the benefit of GTV’s parent company, a close relative of Guo’s.

In another case, Guo and Kin fraudulently obtained more than $250 million in victim funds between October 2020 and this month by luring Guo’s followers to transfer additional funds to an online membership club called G|CLUBS. G|Clubs describes itself on its website as “an exclusive, premium membership program offering a full range of services” and “a gateway to carefully curated world-class products, services and experiences”.

Prosecutors said nothing of the sort was actually offered. Guo and Qin allegedly misappropriated a “substantial portion of the victim’s funds” and used the money to buy Guo’s 50,000-square-foot New Jersey mansion, $978,000 worth of Chinese and Persian rugs, a $62,000 television, and a $53,000 fireplace and a fireplace in the tub. A customized Bugatti sports car costing around $4.4 million.

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