MANHATTAN (CN) — An exiled Chinese businessman was arrested Wednesday morning on charges that he orchestrated a $1 billion fraud conspiracy. Hours later, the New York City Fire Department tweeted that a fire had broken out in Fifth Avenue apartment at the Sherry-Netherland hotel where Guo Wengui was arrested.
As detailed in a letter from prosecutors seeking Guo's remand to pretrial detention, the government appeared ready for the potential of Guo destroying evidence if a federal judge agreed to release him on bail at Guo's afternoon presentment.
"The Government contends that, if released, Kwok is likely to delete, encrypt, or transfer electronic evidence that the Government is still identifying and pursuing," the Department of Justice wrote. "Kwok’s history demonstrates a significant level of sophistication and a willingness to flout court orders that would prohibit him from obstructing witnesses, moving money, or destroying evidence."
At his bail hearing on Wednesday afternoon, Guo was represented by public federal defenders because his retained counsel was out of town. The federal defenders did not oppose the government's bid to keep Guo detained. U.S. District Judge Analisa Torres set a follow-up hearing for Tuesday, April 4.
Representatives for Guo at Petrillo Klein & Boxer did not respond to requests for comment Wednesday.
Unsealed Wednesday in the Southern District of New York, the 12-count federal indictment charges Guo on counts of wire fraud, securities fraud, bank fraud and money laundering.
Federal prosecutors say the 54-year-old defendant, also known as Miles Guo and Ho Wan Kwok, led an elaborate conspiracy to defraud thousands of his online followers out of over $1 billion. With the money he stole from investors, Guo allegedly racked up charges such as the purchase of a 50,000 square foot mansion in New Jersey, a $4.4 million custom-built Bugatti sports car, a $3.5 million Ferrari, the financing of a $37 million luxury yacht and even two $36,000 mattresses.
The yacht made headlines in August 2020 when Steve Bannon, the former chief strategist for then-President Donald Trump, was aboard its deck, off coast of Connecticut, for his arrest in connection to a fundraising fraud supposedly dedicated to the construction of Trump's wall on the southern border.
Guo's attorney, Guy Petrillo, meanwhile previously represented Trump’s longtime fixer Michael Cohen on his 2018 guilty pleas to counts of campaign finance violations. Petrillo is a former chief of the criminal division for the Southern District of New York.
No injuries were reported from the fire that broke out Wednesday in Guo's 18th floor apartment at the Sherry-Netherland hotel. Approximately 150 members of FDNY and EMS responded to the blaze, whose cause is now under investigation by fire marshals, a fire department spokesperson told Courthouse News.
Guo, who lives in New York City and Greenwich, Connecticut, was indicted Wednesday alongside his financial adviser, William Je. The additional count of obstruction of justice against Je carries a maximum sentence of 20 years in prison.
The case is being handled by the Complex Frauds and Cybercrime Unit of the Department of Justice’s criminal division. Officials there say Guo and Je's fraud relied on at least four interrelated parts: the GTV Media Group Inc. Private Placement, the Farm Loan Program, G Club Operations LLC and the Himalaya Exchange.
In the past seven months, authorities overseeing the forfeiture of proceeds from Guo’s alleged fraud have seized more than approximately $634 million worth of property.
Guo and Je also face a parallel civil complaint from the Securities and Exchange Commission, which seeks permanent injunctions, disgorgement of ill-gotten gains, civil penalties, and officer and director bars.
The SEC said Guo targeted retail investors through online and social media posts and videos, deceiving them with lies such as a claim that a crypto asset security called “H-Coin” was backed by gold reserves. The SEC said Guo and Je raised about $452 million through an unregistered offering of GTV common stock from April 2020 to June 2020, claiming they would “build the most popular and safest social media and transaction platform independent of the Chinese government’s censorship and monitoring, allowing the people of China and the world to realize the freedom of speech and trade.”
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.
Guo Wengui left China in 2014 during an anti-corruption crackdown led by President Xi Jinping that ensnared people close to Guo, including a top intelligence official.
Chinese authorities seek Guo’s return on claims of rape, kidnapping, bribery and other offenses.
While Bannon received a last-minute pardon from the former president on the federal charges for which he was arrested on Guo’s yacht, he was indicted by the Manhattan District Attorney last August on charges related to We Build The Wall’s fleecing of donors.
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