Exiled Chinese billionaire Guo Wengui, an associate of former Trump White House adviser Steve Bannon, was arrested by federal authorities in New York on Wednesday morning, accused of orchestrating a $1 billion fraud scheme, prosecutors announced.
Guo, charged in court papers as Ho Wan Kwok and who also goes by Miles Guo and Miles Kwok, was charged with 12 counts including wire fraud, securities fraud, bank fraud and money laundering in an indictment unsealed Wednesday, the U.S. Attorney’s Office for the Southern District of New York said in a news release.
The same day the news of his arrest came to light, Guo’s Manhattan apartment in the Sherry-Netherland Hotel on Fifth Avenue was found on fire, a source familiar with the matter said. An FBI spokesperson said agents were executing law enforcement activity at Guo’s apartment when the blaze broke out, after he was already in custody.
U.S. Attorney Damian Williams said in a statement that Guo had led a complex conspiracy to defraud thousands of his online followers out of more than $1 billion.
Guo and his alleged co-conspirator Kin Ming Je, also known as William Je, are accused of taking advantage of Guo’s online presence to solicit investments in various companies and programs by “promising outsized financial returns and other benefits,” prosecutors said. They then misappropriated hundreds of millions of dollars of fraudulently obtained funds, which Guo allegedly used on a lavish lifestyle.
“Kwok is charged with lining his pockets with the money he stole, including buying himself, and his close relatives, a 50,000 square foot mansion, a $3.5 million Ferrari, and even two $36,000 mattresses, and financing a $37 million luxury yacht,” Williams said.
Not guilty plea
Guo appeared in federal court Wednesday afternoon and seemed relaxed, with his hands resting in his lap during the hearing.
He smiled from time to time and turned to look at the reporters and public in attendance. At one point, he showed a thank you hand gesture to the courtroom sketch artist.
A Mandarin translator was present for the hearing.
Guo pleaded not guilty to Judge Katharine H. Parker and postponed his bail application until his lawyers appeared.
He agreed for the time being to be held in detention. His lawyers were out of town, so public defender Tamara Giwa handled Wednesday’s hearing. Giwa declined comment after the hearing.
Giwa said during the hearing that his lawyers would offer a “robust bail package.”
Guo's next court appearance is April 4.
Kin Ming Je, Guo's financier, was also charged in the indictment, hit with an additional charge of obstruction of justice, but has not been arrested yet.
Attorney information for Je was not immediately available Wednesday. Bannon did not respond to a request for comment.
Millions in fraud proceeds seized
The U.S. government has seized $634 million in alleged fraud proceeds from 21 different bank accounts, as well as assets purchased with the proceeds of the alleged fraud, including a Lamborghini Aventador SVJ Roads, prosecutors said.
The U.S. Securities and Exchange Commission also separately filed a parallel civil complaint against the two men Wednesday, accusing them of involvement in unregistered and fraudulent financial offerings.
Guo, who made 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's named in ongoing lawsuits, including one alleging he raped a former employee, a charge he has disputed, and another alleging he defamed a former aide to Donald Trump, which he has denied.
He is also a business associate of Bannon, who was arrested on his yacht in a fraud case in August 2020.
The fraud scheme took place from 2018 through this month, with Guo at the helm, prosecutors said.
In 2018, he founded two “purported nonprofit organizations" — the Rule of Law Foundation and the Rule of Law Society. He then allegedly used those organizations to gain followers “who were aligned with his purported policy objectives in China," prosecutors said. Those followers were "inclined to believe Guo’s statements about investment and money-making opportunities," officials said.
Bannon at one point was on the board of directors of the Rule of Law Society, CNBC reported.
One instance of fraud involved Guo posting a video on social media in April 2020 announcing the unregistered offering of common stock in the media company GTV Media Group, Inc. via a private placement and he directed people to contact him.
Between then and June 2020, $452 million worth of GTV common stock was sold to more than 5,500 investors, with investors believing their money would be invested in GTV to develop and grow the business, prosecutors alleged. But days after the GTV private placement closed, Guo and his co-conspirator allegedly directed $100 million of funds raised from that to be invested in a high-risk hedge fund for the benefit of GTV’s parent company —whose owner was Guo's close relative.
In another case, both Guo and Kin allegedly lured Guo’s followers to transfer additional funds to an online membership club called G|CLUBS, fraudulently obtaining more than $250 million in victim funds from October 2020 through this month. G|Clubs claimed on its website to be “an exclusive, high-end membership program offering a full spectrum of services” and a “gateway to carefully curated world-class products, services and experiences.”
Prosecutors said that, in reality, no such thing was offered. Guo and Kin allegedly misappropriated a “substantial portion of victim funds” and used that money to purchase Guo’s 50,000-square-foot New Jersey mansion, Chinese and Persian rugs worth $978,000, a $62,000 television, and a $53,000 fireplace log cradle holder, and a custom-built Bugatti sports car for approximately $4.4 million.