Charged with multibillion-dollar fraud is a billionaire who invested “According to the Word of God”

Charged with multibillion-dollar fraud is a billionaire who invested “According to the Word of God”

A Billionaire Who Invested “According to the Word of God” Has Been Charged with Committing a Fraud That Amounts to Multiple Billions of Dollars

White-collar crime specialists believe Bill Hwang is at the center of the largest Wall Street indictment since Bernie Madoff.

The federal district attorney claimed that Bill Hwang, the head of Archegos Capital Management, “almost imperiled our financial system” when the Christian investor was accused last week in a multibillion-dollar criminal case.

Ten years ago, Hwang settled a civil case for insider trading. Now, he is being accused of doing it again. Since then, the owner of the fund, who was born in Korea, has worked with evangelical organizations as a donor, board member, and voice in the conversation about faith and work. If he is found guilty, Hwang will join a long list of high-profile cases of securities fraud like Bernie Madoff’s and could get multiple life sentences.

The US government says that Archegos, which was run by Hwang, manipulated the market by buying a lot of stock in companies to drive up their prices and then lied to banks about its market exposure to get more and more money.

The government says that in a few days in 2021, this scheme cost the banks that lent money to Archegos $10 billion and wiped out more than $100 billion in value in a dozen or so companies that Archegos traded.

Even though Hwang had a lot of money in the stock market, he wasn’t a well-known investor, and he didn’t live like a billionaire in New York. Son of a pastor, he spoke at small Christian conferences, held Bible readings at the Midtown office of his firm, and gave Christian books to people who stopped by.

He was known for the Grace and Mercy Foundation, which he started to help Christians in need. Archegos’ name comes from the Greek word, which is used to call Jesus the “author” of our salvation (Hebrews 2:10) and the “prince” of life (Acts 3:15).

Hwang told other Christians that he thinks investing helps set a “fair price” for stocks and that God is pleased with this work. In a comment that was included in the indictment, Hwang said that a rising stock price was a sign that he was buying. He then added a laughing emoji, which federal prosecutors took as a sign that he was trying to manipulate the market.

“People make “speculations” instead of investments in many countries,” Hwang said in a Korean interview at the 2018 Yonsai University Conference on Faith & Work. “As I read the Bible, I saw that God likes to set fair prices…. Part of doing God’s work is to help businesses find the right market price by investing in them and helping them do well.

“I try to invest based on what the Bible says and with the help of the Holy Spirit,” he said. “In a way, it’s a brave way to put your money to work. I don’t worry about dying or losing money. People on Wall Street are actually surprised by how free I am.”

Based on the amount of money, Hwang’s indictment seems to be the biggest white-collar case since Bernie Madoff in 2008, which was the biggest fraud case in Wall Street history. Individual investors put about $17.5 billion into Madoff’s Ponzi scheme, but in the end, those investors thought they had $60 billion in their accounts because of what Madoff said. Madoff was given a sentence of 150 years in prison and all of his assets were taken away from him.

Hwang could go to prison for up to 380 years, which is a maximum that reflects the amount of money involved and the possible effect on the financial system. However, his lawyer, Lawrence Lustberg, told The New York Times that the charges were “overblown” and had “absolutely no factual or legal basis.” Hwang has said he is not guilty of each one.

CT asked Lustberg for a comment, but he didn’t give one. Two of the most important people at Archegos have pleaded guilty and are now helping the government.

Experts on white-collar crime told CT that some parts of the case could make it harder to prosecute, but they all agreed that Hwang’s indictment is a big deal.

The No. 2 person in the US Justice Department, Deputy Attorney General Lisa Monaco, went to Manhattan to announce Hwang’s indictment, which experts said was very unusual. At Hwang’s first hearing, the judge set his bond at $100 million, which was one of the highest bails in US history. He paid $5 million in cash bail and two properties to get out of jail.

David Miller, who used to be an assistant US attorney in the Southern District of New York and now works for a private firm doing white-collar defense, said that this case is a “very important prosecution.”

He told CT that it was “highly unusual” for Southern District prosecutors to include Racketeer Influenced and Corrupt Organizations Act (RICO) charges in a securities fraud case, as they did in the criminal charges against Hwang and Archegos chief financial officer Patrick Halligan. RICO has always been used to go after organized crime, and in this case, prosecutors say that Archegos was a criminal enterprise.

The criminal division of the Justice Department in Washington, DC, would have to agree to even add that charge. Miller said that being charged with RICO has “significant forfeiture consequences,” which means that the government could take more Archegos-related assets.

Most of the time, federal prosecutors get convictions in more than 90% of their cases. David Shapiro, an expert on financial crimes at the John Jay College of Criminal Justice, said, “They love to win, they love their careers, and they love their won-loss records.”

Miller agreed that most federal cases end with a guilty plea, but he said, “Securities fraud cases, in general, can have complicated issues.”

Miller said that this case is unique because of how complicated the charges are and how they are said to have affected the market.

The loss of billions of dollars by Credit Suisse because of the collapse of Archegos doesn’t hurt as much as the loss of money by individual investors and charities that put their money in Madoff’s hands. But the indictment shows that the federal government wants to say something about the way Hwang was investing.

“When those positions had to be sold and the whole thing fell apart, it hurt not only the banks that had lent these assets, but also the market,” said Justin Sher, a lawyer in New York who handles white collar defense cases for clients in the financial industry. “In this way, it’s almost worse than what Madoff did. Archegos’s big holdings and activities drove up a lot of the prices of the stocks that all these shareholders owned. So, when Archegos fell down and moved away, that foam that might not have been real went away.”

Shapiro said that investors, whether they were legal or not, were all fooled in the same way. People thought, “This guy is great!” in both situations, he said. You put in another million, and then you find out, “Hey, it was made up.”

After his first insider trading conviction, Hwang was welcomed back to Wall Street and Christian circles in part because people thought, “This guy is great!”

In 2012, Hwang and his hedge fund Tiger Asia Management paid the Securities and Exchange Commission (SEC) $44 million to settle civil charges of insider trading. The fund itself pleaded guilty to a criminal charge of fraud, which led to a year of probation and the loss of $16 million. In 2013, Hwang changed Tiger Asia from a hedge fund to a family office called Archegos. This meant that the firm was in charge of his money.

Help people in every way
As he started making good investments again, more banks wanted to give him money. And the charity he set up grew.

Christians who asked him about faith and money rarely brought up the insider trading charges, and he never talked about the case other than to say, “I made a lot of mistakes.” In one talk at a ministry, he said, “I have a bad business problem… I knew that I had to look in the Bible.”

It is still not clear how the case will affect Hwang’s Christian charity, the Grace and Mercy Foundation.

Over the past 10 years, the foundation had given at least $80 million to organizations like Fuller Theological Seminary, Ravi Zacharias International Ministries, Prison Fellowship, and New York charities like the Bowery Mission. It had about $580 million when it filed its last tax return in 2019, which was before the alleged crimes.

Christian groups do not want Hwang to speak.
Now, some ministries have taken down videos of events where Hwang and other Christian leaders from Archegos spoke.

Fuller took down a video of Hwang talking about faith and work, and Hwang’s name is no longer on the list of trustees.

Faith Driven Investor took down a 2019 talk by Andy Mills at Redeemer Presbyterian Church. From 2014 to 2019, Mills was the executive chairman of Archegos. In 2019, he became the co-CEO. (Mills, who used to be president of The King’s College, doesn’t talk about Archegos in his current bio for The King’s College. He is not named in the indictment, and there is no proof that he did anything wrong.)

Peter Ahn, the head pastor of Metro Community Church in New Jersey, asked Hwang during a talk in 2019: “You have a lot of money. People want this desire because they think it’s the source of happiness and they want more of it. What advice could you give the people here so that money doesn’t become their god and they keep seeing it as a way to help God’s kingdom?

Hwang replied by first talking about the good things money can do.

“God made each of us so differently. He told Ahn, “I think you could handle fame really well.” “I was raised in a pastor’s family, so I’m pretty good with money. Even though we were poor, my parents always gave things away.

Hwang’s father was a pastor in Korea, and when Hwang was about 18, he moved to the United States. He said that his first job was in a hotel laundry room. He went to college at UCLA, got an MBA at Carnegie Mellon University, and then started working in finance.

He went on, “I like what God has given us.” “I go to nice restaurants. I have to tell you that I can’t live very badly. But I live a little bit lower than I could. I’m so glad that happened. Tim Keller and other people say that everything that makes us want something is like fire. So money is like fire to me. I like fire, and I like to watch it. I love using fire to cook and heat my home. But if fire gets out, it will kill you.”