Chinese billionaire living in U.S. arrested for allegedly operating $1B fraud scheme

Federal prosecutors announced the arrest of exiled Chinese businessman "Miles Guo" and his financial advisor "William Je" on charges related to over a billion dollars in fraud.

Guo, whose real name is Ho Wan Kwok, goes by several other names like Miles Kwok, Guo Wengui, Brother Seven, and The Principal, while Je’s real name is Kin Ming Je.

Damian Williams, the U.S. Attorney for the Southern District of New York, along with Michael J. Driscoll of the FBI announced the unsealing of a 12-count indictment against Guo and Je, which included wire fraud, securities fraud, bank fraud and money laundering charges. Je was also charged with obstruction of justice.

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Guo was arrested at The Sherry-Netherland Hotel in Manhattan on Wednesday morning, while Je is currently at large.

All the charges stem from a scheme by Guo, Je and others to garner investments from numerous programs and divert those funds to bank accounts, hedge funds, and pricey purchases.

For instance, Guo used the money to buy a 50,000 square foot mansion, a $3.5 million Ferrari, two $36,000 mattresses, a $37 million yacht, $62,000 television, $4.4 million Bugatti, and $53,000 fireplace log cradle holder, according to a press release from Williams’ office.

"As alleged, Ho Wan Kwok, known to many as ‘Miles Guo,’ led a complex conspiracy to defraud thousands of his online followers out of over $1 billion dollars," Williams said. "As alleged, Kwok lied to his victims and promised them outsized returns if they invested, or provided money to, GTV, his so-called Himalaya Farm Alliance, G|CLUBS, and the Himalaya Exchange. Kwok is further charged with laundering hundreds of millions of stolen funds to conceal the conspiracy’s illegal activities and continue the fraud’s operations."

Between 2018 and March 2023, Guo and Je are alleged to have conspired to defraud thousands of victims out of more than $1 billion, and Guo was the leader of the operation.

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Guo has lived in the U.S. since 2015, and in 2018 he started two nonprofit organizations called the Rule of Law Foundation and the Rule of Law Society to build a follower base that was aligned with his policy objectives in China and believed his statements on investing and making money.

The scheme operated by the two men included four parts: the GTV Media Group, Inc. Private Placement, the Farm Loan Program, G Club Operations, LLC, and the Himalaya Exchange.

The GTV Private Placement was kicked off in 2020 and touted as a "wide-ranging media company," according to a post from Guo on social media.

Between April 20, 2020, and June 2, 2020, about $452 million of GTV common stock was sold to over 5,500 investors who believed their money would be used to grow the business. But in June 2020, the private placement closed, and Guo and Je allegedly redirected $100 million of the funds to be invested in a high-risk hedge fund on behalf of GTV’s parent company, the U.S. attorney said.

Similarly, the two men are accused of fraudulently obtaining over $150 million through the Himalaya Farm Alliance, a "farm" of informal groups located around the globe, by making misrepresentations to investors and soliciting loans on promises that they would be converted into GTV common stock.

In July 2022, Guo sent out a video on social media promoting the Farm Loan Program and told investors GTV was valued at $2 billion U.S. dollars, but according to the U.S. attorney, it was valued much less.

Some of the funds raised through the Farm Loan Program were misappropriated included $2.3 million that was used to cover maintenance on a 145-foot luxury yacht and a $10 million transfer to personal bank accounts for Je and his spouse.

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Through G|CLUBS, an "exclusive, high-end membership program offering a full spectrum of services," Guo and Je allegedly obtained $250 million fraudulently and misappropriated some of the funds to purchase Guo’s 50,000 square foot home in New Jersey, a $62,000 television, $53,000 fireplace log cradle holder, and $4.4 million custom Bugatti sports car.

In the fourth piece of the alleged scheme, Guo and Je obtained over $262 million through a purported cryptocurrency "ecosystem," backed by gold.

When the Himalaya Coin, or HCN, started trading in November 2021, it was offered at 10 cents, and within two weeks, it was worth about $27, representing a 26,900 % increase.

U.S. authorities served seizure warrants between Sept. 20-21, confiscating $335 million from bank accounts associated with the Himalaya Exchange entities and other entities associated with Guo and Je.

The U.S. attorney said within two days of the seizures, Je contacted management of t bank that held the Himalaya Exchange bank accounts with the intent of doing a wire transfer to convert $46 million Himalaya Dollars into $46 million USD.

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"Je twice emphasized to the domestic bank’s management, in substance and in part, that the $46 million transfer needed to happen "today or it is meaningless."

Ultimately, U.S. authorities seized additional funds from both men and their entities, totaling more than $634 million.

The Securities and Exchange Commission also charged Guo and Je for their involvement in "unregistered and fraudulent offerings" that brought in over $850 million.

"...Since April 2020, Guo, also known as Ho Wan Kwok, Miles Kwok, Wengui Guo, and Brother Seven, and his longtime financial advisor, Je, also known as Kin Ming Je, misappropriated a large portion of the funds raised from investors to enrich themselves and their family members, who are named as relief defendants," a press release from the SEC read on Wednesday. "For example, in connection with a private placement offering of common stock in GTV Media Group, Inc. (GTV), Guo and Je allegedly diverted $100 million of investor funds to a hedge fund for the sole benefit of a company that is owned by Guo’s son."

The SEC also claims Guo misappropriated investor proceeds to purchase the mansion and to buy his son a $3.5 million Ferrari.

"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," Gurbir S. Grewal, director of the SEC’s division of enforcement said. "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."

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The SEC is seeking permanent injunctions against Guo and Je, civil penalties, disgorgement of ill-gotten gains, and officer and director bars. The complaint also seeks an injunction that prohibits Guo from issuing, purchasing, offering or selling any security, including crypto assets, other than for his own personal accounts.