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Wednesday, June 5, 2024 | Back issues
Courthouse News Service Courthouse News Service

Chinese billionaire bilked investors of over $1 billion, prosecutors say as fraud trial opens

Government attorneys on Friday said Guo Wengui used investments in various businesses to fund a lavish lifestyle, including a $30 million yacht.

MANHATTAN (CN) — Exiled Chinese billionaire Guo Wengui scammed supporters out of more than $1 billion under the guise of launching a movement against the Chinese Communist Party, prosecutors said during opening arguments Friday in Manhattan federal court.

Guo — also known as Miles Guo and Ho Wan Kwok — is accused of lying to prospective investors and promising them outsized returns if they bought stocks in his Chinese media platform GTV, and other companies, including Himalaya Farm Alliance, G CLUBS and the Himalaya Exchange.

He faces criminal counts of racketeering conspiracy, wire fraud, securities fraud and money laundering, among others. If convicted, he could spend decades in prison or possible deportation to China, where he is wanted on accusations of rape, kidnapping and bribery.

Assistant U.S. Attorney Micah Fergenson told jurors Friday that Guo — who amassed his fortune as a real estate developer in China before moving to New York — gained a cult following posting videos criticizing the Chinese government.

When authorities in China and Hong Kong seized his assets in retaliation, the government says Guo began recruiting investors to support his “whistleblower movement” against the Chinese Communist Party. Instead of putting the money toward GTV and his other companies touting that cause, prosecutors said Guo then put those donations to personal use.

“For years, the defendant deceived thousands of people and stole their money to pay for a lifestyle he could no longer afford,” Fergenson said.

Fergenson said Guo lied to investors when he urged them to invest in his media company GTV by saying there was no risk and promising to pay back any losses.

“These were lies. And the defendant even lied about the most basic part of the GTV investment: That the money raised by GTV investors would be used by GTV to grow GTV,” Fergenson said. “Even that most basic promise was a lie. The defendant’s followers trusted him.”

During the company’s fundraising period, Fergenson said supporters invested over $400 million in GTV. But days after, Guo used $100 million of those funds for a “high risk investment” on behalf of his son.

As for Guo's other companies, Fergenson said they were just a “spin on a simple fraud,” and mirrored the same strategy as the media company.

The Himalaya Farm Alliance, Fergenson said, was comprised of online groups of Guo's followers in various cities and countries. These groups, called “farms,” pooled money from investors interested in buying GTV stock.

But Fergenson added that these “farm loans” were just another extension of the scheme orchestrated through GTV and that investors never saw their money again.

“What were the farm loans? They were another way that Miles Guo lied to take other people’s money,” Fergenson said.

Another example was G CLUBS, which was marketed as a high-end membership club. If investors paid an initial membership fee that ranged from $10,000 to $50,000, Fergenson said they were promised GTV stock.

The government says that Guo then transferred these funds into accounts he controlled and used the money to make luxurious purchases that included a $30 million yacht, a $26 million mansion, a $3.5 million Ferrari and two $36,000 mattresses, among others.

But Guo denies claims that he needed investors’ money, citing his fortune in real estate, and says he was simply living the same lifestyle as usual.

“It was not a bet. It was not a scheme. It was not a con. It was none of those things,” Sabrina Shroff, an attorney for Guo, said during opening arguments Friday. “The evidence will show the fortune is humongous.”

Guo argues that his only goal was to criticize the Chinese Communist Party, and each of his companies was an extension of that aim.

“He started to and continued over time to speak out against the Chinese Communist Party,” Shroff said. “That’s what he did all the time and all day long. That was the goal. To get the story out.”

Yvette Wang, Guo's former chief of staff, pleaded guilty earlier this month to conspiracy to commit wire fraud and conspiracy to commit money laundering. She faces up to 10 years in prison and will be sentenced in September.

Guo is an associate of American conservative media strategist Steve Bannon, who he met at Donald Trump’s Mar-a-Lago resort in 2017. Guo made headlines in August 2020 when Bannon was taken into custody while aboard Guo's 150-foot yacht off the coast of Connecticut, on charges he defrauded online donors in the name of helping construct then-President Trump’s southern border wall.

Bannon pleaded not guilty and was pardoned of the federal charges in Trump’s final days in the White House.

Follow @NikaSchoonover
Categories / Criminal, Financial, International

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