Lawsuit: Former Archegos Employee Alleges Company, Hwang Coerced Him into Supporting Christian Charitable Fund
A former managing director at Archegos Capital has filed a lawsuit alleging he and other employees were coerced into funding a Christian nonprofit organization connected with the firm using money they had been given as bonuses.
Archegos employee Brendan Sullivan alleges in the lawsuit that Sung Kook (“Bill”) Hwang, founder of Archegos and the affiliated Grace and Mercy Fund, recklessly mismanaged the money in the so-called deferred compensation fund and lied to cover up his actions.
Hwang was arrested and charged with racketeering conspiracy, securities fraud, and wire fraud April 27. He is currently free on a $100 million bond and awaiting trial.
The suit says Archegos forced employees to give back bonus money and invested it in stocks that it transferred to Grace and Mercy. The foundation then allegedly sold the stocks for a profit, avoiding taxation while at the same time providing tax deductions for Archegos.
The employee fund ultimately lost a total of $500 million, the suit says. Sullivan says he is owed $30 million in deferred compensation, the alleged value of the $3.8 million he put into the fund based on Archegos’ inflated value shortly before its demise.
Law firm Brown Rudnick filed the Employee Retirement Income Security Act (ERISA) lawsuit July 5 in New York Southern District Court. Hwang, Archegos, Grace and Mercy, and several of Hwang’s associates are named as defendants in the suit.
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The filing also alleges that billionaire Hwang and the other executives named as defendants “transformed the business into a personality cult where loyalty to Hwang, not performance, was paramount and where questioning and dissent were not tolerated.”
“So-called ‘good followers’ who demonstrated agreement with whatever Hwang said or wanted were openly praised and rewarded; those who offered honest assessments or questioned actions or policies received personal abuse, lower compensation, and adverse professional treatment,” it says.
Sullivan alleges Hwang used Christianity to pressure employees to invest their earnings, and that they were questioned about their faith and pressured to go to Scripture readings.
Before Archegos’ implosion, Grace and Mercy Foundation donated more than $80 million to ministries including International Justice Mission, Luis Palau Association, Prison Fellowship, Ravi Zacharias International Ministries, The King’s College, Young Life, the Navigators, InterVarsity Christian Fellowship, Cru, Youth for Christ, Focus on the Family, and Fuller Seminary, and Hwang was hailed as part of a “new evangelical donor-class.”
Christopher Porrino, a lawyer for the Grace and Mercy Foundation, told Christianity Today that “Mr. Sullivan’s complaint against The Grace and Mercy Foundation is filled with baseless and frivolous allegations, all of which will be decisively refuted in court.”
