The United States Department of Justice (DOJ) announced Wednesday that it has arrested former Chinese billionaire and business tycoon Ho Wan Kwok, also known by many alliances, including Guo Wengui, for masterminding a $1 billion fraud conspiracy.
Kwok, who has close ties to former White House chief strategist Steve Bannon, was arrested by the Federal Bureau of Investigation (FBI). Later today, he will appear in court for defrauding hundreds of millions of his online followers.
Elaborate Schemes to Defraud Investors
According to the announcement, the exiled Chinese businessman and his financier Kin Min Je, also known as William Je, orchestrated various fraudulent schemes between 2018 and 2023 to solicit funds from hundreds of millions of Kwok’s followers on social media.
In 2018, Kwok launched two non-profit organizations dubbed the Rule of Law Foundation and the Rule of Law Society, which he used to attract followers on social media. The followers believed in his financial statements and money-making opportunities.
His business partner, Je, also owned and operated different companies and investment vehicles specifically designed for the scheme and to launder money.
The duo and other co-conspirators raised over $1 billion through illegal investment programs.
GTV Media Group’s Common Stokes
Kwok and Je also participated in other frauds. The two men, who resided in America and the United Kingdom, respectively, conducted false investment programs involving the sale of GTV Media Group common stocks.
Kwok posted a video of the investment opportunity in April 2020, requesting interested investors to contact him privately for more clarification.
Two months later, the Chinese man sold the shares to 5,500 investors, raising around $452 million.
Kwok and Je also raised approximately $150 million from another company dubbed Himalaya Farm Alliance which was marketed to the investors as Farm Loan Program. The duo falsely misrepresented the program by promising investors that the loan could be converted to GTV Media Group’s common stock.
Misappropriation of Funds
In addition to the Loan, Kwok and Je raised millions of dollars by selling a crypto token called Himalaya Coin (HCN) and a related stablecoin promoted with the virtual asset. Kwok said the digital assets were backed by gold and pledged to compensate investors for potential losses.
The DOJ said that Kwok and Je misappropriated the funds generated from the scheme for their personal gains. The two men spent $2.3 million to cover maintenance expenses associated with a luxury yacht worth around $37 million. The yacht is owned and managed by Kwok. $10 million was sent to Je’s spouse.
While authorities have arrested Kwok, the leader of the elaborate scheme, Je’s whereabouts remain at large.
U.S. SEC Charges Kwok For Fraud
In a separate announcement today, the United States Securities and Exchange Commission (SEC) has charged Kwok and Je for violations of the registration provisions of the securities laws in connection with investment offerings.
“We allege that Guo was a serial fraudster who raised more than $850 million by promising investors outsized returns on purported crypto, technology, and luxury good investment opportunities. In reality, Guo took advantage of the hype and allure surrounding crypto and other investments to victimize thousands and fund his and his family’s lavish lifestyle,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.
The SEC’s complaint seeks to restrict Kwok and Je from issuing, selling, or purchasing any securities, including crypto assets other than their own.
