Guo Wengui, a Chinese businessman who was arrested on Wednesday, is accused of orchestrating a $1 billion fraud. Guo Wengui, who gained attention for exploding Chinese government corruption at a Manhattan penthouse, later founded a media company with Donald Trump confidant Steve Bannon.
Prosecutors said Guo used the hundreds of thousands of followers he had amassed online to solicit investment for his cryptocurrency, media and other companies. However, Guo used the money to buy a $26 million home in New Jersey, a yacht, a Ferrari and a $36,000 mattress, among other items, the indictment said. The indictment charges Guo with 11 counts of fraud and money laundering. Prosecutors said they seized $634 million in proceeds of crime and assets, including a Lamborghini vehicle.
Guo Wengui pleaded not guilty at his arraignment Wednesday afternoon and agreed to be held in a federal prison, though he is expected to apply for bail at a later date. A lawyer for him declined to comment. Guo Wengui said on his official social media account on Wednesday morning that FBI agents raided his home around 5 a.m. A New York City official said that a few hours later, the New York City Fire Department was alerted to the fire in Guo Wengui’s residence and called the police to put out the fire. Firefighters are investigating the cause of the fire, the official said.
The prosecution of Guo Wengui, if successful, could ease a vexing factor in U.S.-China relations that have grown increasingly tense as the two countries jostle for economic and military dominance.
Prosecutors demanded Guo’s immediate arrest, arguing he might escape. Guo Wengui loves ostentation, and often travels with many entourages, including armed security personnel. Guo Wengui has fought dozens of court battles against former business partners, unnamed American students who criticized him on social media, Dow Jones & Co. Reporter for The Wall Street Journal. A New York state court previously dismissed Guo’s lawsuits against Dow Jones and Wall Street Journal reporters. Guo Wengui often summons his followers to physically harass his opponents, claiming that the opponents are all spies of the CCP.
Guo Wengui once built a huge real estate empire in China. He said he fled China in 2014 after hearing that a Chinese national security official close to him was about to be arrested. He came to the U.S., settled into a $67.5 million Manhattan residence overlooking Central Park, applied for asylum in the U.S., and began a barrage of tweets, online videos and social media posts accusing Chinese politicians and Various corrupt connections between corporate elites, in order to attract some Chinese people who care about politics.
The Chinese government calls Guo Wengui a sensationalist criminal and has brought bribes, kidnapping, fraud and other charges against him, which Guo has denied. Guo Wengui said he had spent $150 million to launch a counterattack. He said he would use the funds to promote a massive campaign against the CCP and counter the Chinese government’s slander against him.
Guo Wengui used the social media platform Discord to communicate with his followers and investors. The Wall Street Journal interviewed some members of the chat groups, who they described as having a “cult-like” vibe. Membership status is determined by closeness to Guo, with those who can prove their devotion and devotion to Guo granted certain privileges, such as access to secret chat groups, they said.
Since 2017, Guo Wengui’s presence in the United States has triggered many international diplomatic incidents. That year, Chinese security agents tried to pressure Mr. Guo to return home, sparking a confrontation with FBI agents that resulted in a standoff at the airport that narrowly escaped arrest for the Chinese agent. It was also in this year that Chinese officials tried to bring Guo Wengui back to China from the United States through curved lobbying, involving casino tycoon Steve Wynn, former Fugees rapper Pras Michel, Republican fundraiser Elliott Broidy, and others. Michel is due to appear in court later this month on criminal charges related to the incident; he has denied wrongdoing.
Guo Wengui later joined forces with Bannon, an adviser to former U.S. President Trump, to become a sharp critic of the Chinese Communist Party; the two also founded the media company GTV Media Group, which raised more than 300 million in a private offering in 2020. The U.S. dollar funding prompted an investigation by the U.S. government and the federal government. The Wall Street Journal reported at the time that shortly after the fundraising, some investors began demanding refunds because they said they had never received official documents confirming their investment in GTV Media.
Guo became a controversial figure among U.S. critics of China as U.S.-China relations deteriorated during the Trump administration. Some, including Bannon, have stood with Guo, while others say they don’t trust Guo. According to previous reports in the Wall Street Journal, the FBI once regarded Guo Wengui as a potential informant of the US intelligence agency and tried to train him as an informant, but failed. Some of Guo Wengui’s colleagues have also publicly questioned his loyalty to the United States.
In 2020, Bannon was arrested aboard Guo’s yacht, the Lady May, off the coast of Connecticut at the time, and charged with fraud related to a border wall program that had nothing to do with Guo. Bannon pleaded not guilty, and Trump pardoned Bannon before the end of his term. A lawyer for Bannon did not respond to a request for comment.
The details of the new case add to the air of mystery surrounding Guo Wengui. Prosecutors disclosed, for example, that when the FBI searched Guo Wengui’s penthouse in 2019 during a separate investigation of Guo, they found about 96 cellphones, about half of which were in safes mounted on Faraday devices that block signals. (Faraday ) inside the bag.
In 2021, GTV Media and two other companies linked to Guo agreed to pay $539 million to settle claims by regulators that the companies violated investor protection laws when they raised money from more than 5,000 investors. . Since then, Guo “intensified, adjusted his tactics and continued to loot thousands of people,” prosecutors said in a document arguing for Guo’s arrest. Last year, Guo Wengui even tried to get defrauded investors to reinvest in his new product, prosecutors said. Those investors were being compensated at the time through a settlement with regulators. His asylum application is still pending, the document said.
The new indictment, dated March 6 but unsealed on Wednesday, includes more details about the allegations against GTV. Prosecutors also charged Guo’s longtime associate, William Je, in that case. Both face new parallel civil fraud lawsuits brought by the U.S. Securities and Exchange Commission (SEC). A lawyer for Yu Jianming declined to comment.
In 2020, days after GTV sold $452 million in stock, Guo Wengui and Yu Jianming conspired with others to misappropriate $100 million into a high-risk hedge fund, the indictment alleges. Guo then raised an additional $150 million through a so-called farm scheme focused on promoting democratic reforms in China and hundreds of millions of dollars through so-called “G-Club” memberships, the indictment said. Some of that money was used to maintain the roughly 150-foot Lady May yacht, buy a $4.4 million custom Bugatti sports car, a New Jersey mansion and other assets.
In September and October last year, U.S. authorities seized $335 million in bank accounts linked to a so-called cryptocurrency company founded by Guo Wengui.
In recent years, Guo Wengui has dabbled in music and fashion. In 2020, Guo Wengui released a song called “Take Down the CCP” (Overthrow the Communist Party), followed by a music video in which he smokes a cigar and drives what appears to be a now-confiscated Lamborghini. On his G-fashion site, a beanie costs $715 and a cotton zip-up polo shirt costs $1,265.
Guo filed for personal bankruptcy in 2022 after a New York judge ordered him to pay a $134 million fine for taking the Lady May yacht out of New York state in violation of a court order.
Guo’s largest debt at the time was an outstanding $254 million loan from the Pacific Alliance Asia Opportunity Fund LP. The fund had previously been trying to gain control of Guo Wengui’s assets after receiving a favorable judgment. Guo Wengui “hid assets in a maze of corporate entities and family members,” New York State Supreme Court Judge Barry R. Ostrager said in imposing the $134 million fine.
Guo later asked the court to dismiss his personal bankruptcy case, saying he could not afford to use Chapter 11 of the Bankruptcy Code to respond to the growing costs of the Pacific Alliance Asia Opportunity Fund lawsuit. However, the judge in Guo’s bankruptcy case appointed a trustee under Chapter 11 of the Bankruptcy Code to task him with finding other assets held by Guo.
A critic of Guo Wengui, Teng Biao, a 49-year-old Chinese human rights activist and visiting professor at the University of Chicago, said as many as 20 of Guo’s followers stood outside his New Jersey home this year and last winter, shouting slogans , distributed leaflets, accusing him of being a “Chinese Communist Party spy.”
Talking about the news of Guo Wengui’s arrest on Wednesday, Teng Biao said that justice will be late, but it will never be absent. Teng Biao said that Guo Wengui escaped prosecution in China thanks to the protection of powerful people. He also said that Guo Wengui thought he could get away with it in the United States, but the United States is about the rule of law.