The hard task of discerning victims from victimizers continues post-verdict in a fraud case that shook two typically unrelated worlds—Wall Street and Christian ministry.
Bill Hwang
In late January, two former Archegos Capital Management leaders withdrew their bids against company founder Bill Hwang. They were part of about 20 staff members seeking to collect $32 million of a more than $9 billion judgment against Hwang.
Bloomberg reports that Archegos’ former co-CEO Andy Mills and trader Daiki Taniguchi dropped out after government prosecutors characterized them and a third claimant, analyst David Park, as participants in, rather than victims of, fraud.
Last year, MinistryWatch covered Bill Hwang’s conviction of wire fraud, securities fraud, racketeering and market manipulation that led to massive Wall Street losses. Prosecutors alleged he and his former chief financial officer, Patrick Halligan, had lied to banks to secure loans they used to inflate stock prices, which then plummeted in value after Archegos defaulted on highly leveraged margin calls. About $100 billion vanished from the stock market in a week. Banks that had given loans to Archegos lost $10 billion, while Archegos itself lost $36 billion.
In November, Manhattan U.S. District Judge Alvin Hellerstein sentenced Hwang to 18 years in prison, plus 3 years of supervised release. The judge declined the defense’s pleas for leniency on account of Hwang’s alleged Christian character and the good work he had done through his charity, the Grace & Mercy Foundation. His charity had supported numerous Christian ministries, such as Prison Fellowship, the Salvation Army and Fuller Theological Seminary, where Hwang served on the board of trustees.
Hellerstein later ordered Hwang to pay $9.4 billion in restitution to defrauded banks. He also said that much of Hwang’s remaining assets, estimated at $55 million, should go toward former Archegos employees’ claims of unpaid salaries and bonuses.
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Neither Mills, Taniguchi nor Park were charged with crimes. However, in a Jan. 21 court filing obtained by Bloomberg, prosecutors said, “In the days leading up to Archegos’s collapse, Mills joined numerous other employees in misleading Archegos’s counterparties about its financial condition.”
According to Bloomberg, Mills’ attorney Paul Fishman disputed that characterization, calling it “inflammatory and misleading,” and insisted Mills had chosen to drop his claim “in light of the limited funds available for other ACM employees seeking restitution.”
Similarly, attorney Mark Berman was quoted by Bloomberg defending the innocence of Taniguchi and Park, who both allegedly worked closely with Hwang.
“Daiki [Taniguchi] was not involved in any criminal conduct and there is no evidence that he was,” Berman said. “The government’s decision to single out Daiki (and other low-level ACM traders) is petty and unsubstantiated, but he prefers to move on with his life.”
As for Park, Berman said the prosecutions’ argument of guilt was “speculative and otherwise fails to prove Mr. Park’s knowing and intentional participation in the alleged conspiracy.”
Archegos’ catastrophic fall was a blow not just to big banks and investors, but also to the many Christian organizations that had benefited from Hwang’s philanthropy and celebrated him as a role model. However, warning signs had begun to appear long before the 2021 collapse.
In 2012, Hwang pleaded guilty to insider trading and paid $60 million to settle civil and criminal charges of manipulating Chinese stock. He shuttered his business, Tiger Asia Management, but brought the same aggressive, high-risk approach to Archegos. What’s more, he structured his new firm as a “family office,” a move that avoided transparency requirements while also side-stepping a five-year ban on managing public money.
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