The US arrested exiled Chinese businessman Guo Wengui on Wednesday, charging him with orchestrating a conspiracy to defraud thousands of online followers out of more than US$1 billion.
At his arraignment late Wednesday afternoon before US Magistrate Judge Katharine Parker, Guo pleaded not guilty to the charges. Parker denied Guo bail after prosecutors argued that he had “limited ties to the United States and the resources to flee from this country and from the legal consequences of his fraud”.
The US Department of Justice said that Guo and his alleged co-conspirator Kin Ming Je targeted fraudulent offerings to investors who were aligned with Guo’s policy stance on China.
Guo, 52, a self-described billionaire and prominent critic of China’s Communist Party, has extensive ties to former president Donald Trump’s one-time adviser Steve Bannon. Guo left China in 2014 after being accused of bribery and money laundering and subsequently applied for asylum in the United States.
Guo, the lead defendant, was arrested Wednesday morning in New York City; Je remains at large. Guo’s lawyer, Guy Petrillo, did not immediately respond to a request for comment.
The US Securities and Exchange Commission filed related civil charges.
The two were charged with 11 criminal counts: eight related to wire fraud and securities fraud; two on international money laundering; and one on unlawful monetary transactions. Ten of the counts carry up to 20 years in prison.
According to the indictment, from 2018 to the present, the defendants “operated through a series of complex fraudulent and fictitious business and investment opportunities that connected dozens of interrelated entities” that let them “solicit, launder and misappropriate” the victims’ funds.
About US$300 million were used for their personal benefit, according to the indictment, including Guo’s purchase of a US$37 million luxury yacht; a US$3.5 million Ferrari; and a US$26.5 million luxury mansion in New Jersey.
Federal prosecutors also said that, from September 2022 to this month, the US seized approximately US$634 million constituting proceeds from the alleged fraud from 21 different bank accounts.
According to the indictment, the two transferred money through more than 500 accounts in the US, the Bahamas and the United Arab Emirates, held in the name of at least 80 entities or individuals, to hide the source of the funds.
The two “took advantage of [Guo’s] prolific online presence and hundreds of thousands of online followers” by “promising outsize financial returns and other benefits”, according to the indictment.
Entities named in the indictment – which were allegedly created by the duo – include GTV Media Group, a purported news-oriented social media platform; G Club Operations, a purported membership organisation; and the Himalaya Exchange, a purported cryptocurrency “ecosystem”.
Guo amassed his following through his purported campaign against the Chinese Communist Party, the indictment reads. Around 2018, Guo founded two purported non-profits, the Rule of Law Foundation and the Rule of Law Society.
Guo is known for accusing high-ranking Chinese government officials of corruption and for his involvement in many US lawsuits.
After fleeing to the US, Guo released a series of videos and social media posts attacking China’s high-level corruption. His claims drew attention, but some were met with scepticism due to a lack of evidence or verifiability.
Guo accused Wang Qishan – Chinese President Xi Jinping’s right-hand man in the nation’s anti-corruption campaign and later China’s vice-president – and his family of financially benefiting from their association with the HNA Group, a Hainan-headquartered conglomerate which Guo claimed was a front for political elites to launder money and accumulate wealth. He also accused China’s former deputy security minister Sun Lijun, who was imprisoned for life in September, of corruption.
In 2017, a New York state judge dismissed a case brought against Guo by a hedge fund linked to Hong Kong’s Pacific Alliance Investment Management Limited. That case was thrown out on the grounds that New York was the wrong jurisdiction to adjudicate the matter.
