Month: March 2023

Source: United States Department of Justice News

Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of a twelve-count Indictment charging HO WAN KWOK, a/k/a “Miles Guo,” a/k/a “Miles Kwok,” a/k/a “Guo Wengui,” a/k/a “Brother Seven,” a/k/a “The Principal,” and KIN MING JE, a/k/a “William Je,” with various wire fraud, securities fraud, bank fraud, and money laundering charges.  JE, who is KWOK’s financier, is also charged with obstruction of justice.  The charges in the Indictment arise from an alleged sprawling and complex scheme by the defendants, and others, to solicit investments in various entities and programs through false statements and representations to hundreds of thousands of KWOK’s online followers.  As alleged, KWOK and JE misappropriated hundreds of millions of dollars in fraudulently obtained funds during the course of their conspiracy.  KWOK was arrested this morning in New York, New York, and will be presented this afternoon.  JE is currently at large. 

In addition, Mr. Williams announced that between September 2022 and March 2023, the U.S. Government seized approximately $634 million from 21 different bank accounts.  The $634 million constitutes proceeds of KWOK’s alleged fraud, which the Government will seek to forfeit.  Today, law enforcement also seized assets that were purchased with proceeds of KWOK’s alleged fraud, including a Lamborghini Aventador SVJ Roads.   

U.S. Attorney Damian Williams said: “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.  Kwok is charged with lining his pockets with the money he stole, including buying himself, and his close relatives, a 50,000 square foot mansion, a $3.5 million Ferrari, and even two $36,000 mattresses, and financing a $37 million luxury yacht. 

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.  My office and our law enforcement partners will continue to do all that we can to protect the community from the devastating consequences of pernicious fraud schemes.  If you believe you are a victim of Kwok and Je’s fraud, please contact USANYS.GuoVictims@usdoj.gov or https://forms.fbi.gov/NY_GTV.  My Office and the FBI are here to help those who were harmed by this malicious fraud.”

FBI Assistant Director Michael J. Driscoll said: “The indictment today alleges the defendants were behind an elaborate scheme that defrauded thousands of individuals of over one billion dollars.  Fraudulent investment scams make victims out of innocent people, ultimately harming the public’s confidence in the integrity of financial systems.  The FBI continues to make investigating complex financial crimes a top priority, and anyone attempting these crimes will be made to face the consequences in the criminal justice system.”   

As alleged in the Indictment unsealed in Manhattan federal court and court filings:[1]

From at least in or about 2018 through at least in or about March 2023, KWOK, JE, and others, conspired to defraud thousands of victims of more than approximately $1 billion.  KWOK was the leader of this complex conspiracy. 

KWOK is an exiled Chinese businessman who has resided in the United States since in or about 2015 and garnered a substantial online following.  In or about 2018, KWOK founded two purported nonprofit organizations, namely, the Rule of Law Foundation and the Rule of Law Society.  KWOK used the nonprofit organizations to amass followers who were aligned with his purported policy objectives in China and who were also inclined to believe KWOK’s statements regarding investment and money-making opportunities. 

JE is a dual citizen of Hong Kong and the United Kingdom who principally resided in the United Kingdom.  JE owned and operated numerous companies and investment vehicles central to the scheme and served as its financial architect and key money launderer.

KWOK and JE’s fraud relied on at least four interrelated parts:  the GTV Media Group, Inc. (“GTV”) Private Placement, the Farm Loan Program, G Club Operations, LLC (“G|CLUBS”), and the Himalaya Exchange. 

GTV Private Placement

On or about April 21, 2020, KWOK posted a video on social media announcing the unregistered offering of GTV Media Group, Inc. (“GTV”) common stock via a private placement.  GTV was touted as a wide-ranging media company.  In that video, KWOK described, in substance and in part, the investment terms for the GTV Private Placement, and directed people to contact him, via a mobile messaging application, with any questions about the GTV Private Placement.  The video and GTV Private Placement materials included a written “Confidential Information Memorandum” (the “PPM”).  The PPM stated on the cover “Everything Is Just the Beginning!,” provided information about GTV, and contained false representations regarding how the money raised from the GTV Private Placement would be used.

Between on or about April 20, 2020 and on or about June 2, 2020, approximately $452 million worth of GTV common stock was purportedly sold to more than 5,500 investors.  Investors participated in the GTV Private Placement based, in part, on the belief that their money would be invested into GTV to develop and grow that business, as the PPM promised.  In early June 2020, just days after the GTV Private Placement closed, KWOK and JE directed that $100 million of funds raised from the GTV Private Placement be invested in a high-risk hedge fund for the benefit of GTV’s parent company and its ultimate beneficial owner who was a close family relative of KWOK.

Farm Loan Program

KWOK, JE, and their co-conspirators fraudulently obtained more than approximately $150 million in victim funds through the “Himalaya Farm Alliance.”  The Himalaya Farm Alliance, which KWOK organized and promoted, was a collective of informal groups (each known as a “Farm”) located in various cities around the world.  KWOK, JE, and others working on their behalf and at their direction, obtained these funds by making further misrepresentations to the investors in the GTV Private Placement and fraudulently soliciting further investments, this time in the form of “loans” to a Farm, and promising that such loans would be convertible into GTV common stock at a conversion rate of one share per dollar loaned.  On or about July 22, 2020, in a video distributed via social media, KWOK promoted the Farm Loan Program.  After launching the Farm Loan Program, KWOK continued to promote GTV and to falsely represent the value of GTV.  For example, on or about August 2, 2020, in a video distributed via social media, KWOK falsely stated, in substance and part, “How much is GTV? . . . a market value of 2 billion US dollars.”   In truth and in fact, and as KWOK well knew, GTV’s market value was far less. 

KWOK and JE misappropriated funds that were raised through the Farm Loan Program.  For example:  (i) approximately $2.3 million was used to cover maintenance expenses associated with an approximately 145-foot luxury yacht worth approximately $37 million, nominally owned by close family relative of KWOK and used by KWOK, which is pictured below; and (ii) approximately $10 million was transferred to personal bank accounts in the name of JE and/or JE’s spouse.

 

G|CLUBS

KWOK, JE and others known and unknown, fraudulently induced KWOK’s followers to transfer additional funds to a purported online membership club called G|CLUBS.  From at least in or about October 2020 through at least in or about March 2023, KWOK, JE, and others fraudulently obtained more than approximately $250 million in victim funds through G|CLUBS.  G|CLUBS claimed, on its website, to be “an exclusive, high-end membership program offering a full spectrum of services” and “a gateway to carefully curated world-class products, services and experiences.” 

In truth and in fact, and as KWOK and JE well knew, G|CLUBS provided nothing close to “a full spectrum of services” and “experiences” to its members.  Indeed, most of the money G|CLUBS members paid did not fund the business of G|CLUBS.  Rather, the defendants misappropriated a substantial portion of the victim funds using, among other things, a complex web of entities and bank accounts to do so.  For example,  G|CLUBS funds were used by KWOK and JE:  (i) toward the purchase of KWOK’s 50,000 square foot New Jersey mansion (pictured below); (ii) to purchase various furniture and decorative items including, among other items, Chinese and Persian rugs worth approximately $978,000, a $62,000 television, and a $53,000 fireplace log cradle holder; and (iii) to purchase a custom-built Bugatti sports car for approximately $4.4 million (pictured below):

 

 

Himalaya Exchange

KWOK, JE, and others known and unknown, fraudulently obtained more than approximately $262 million in victim funds through the Himalaya Exchange, a purported cryptocurrency “ecosystem” accessible on the Internet.  The Himalaya Exchange included a purported stablecoin called the Himalaya Dollar (“HDO” or “H Dollar”) and a trading coin called Himalaya Coin (“HCN” or “H Coin”).  In videos distributed via social media, KWOK trumpeted the prospects and valuation of the Himalaya Exchange and both HCN and HDO, which he publicly described as cryptocurrencies.  For example, in a video posted on the Internet on or about October 20, 2021, KWOK falsely stated:  “If the H Coin is worthless, [the issuer of H coin] can sell all 20% of the gold, exchange it to you, and become your money.  Or take all the value of 20% gold and ask everyone to unify it and make it yours;” and “If anyone loses money, I can say that I will compensate 100%.  I give you 100%.  Whoever loses money, I will bear it.”  The initial coin offering of HCN and HDO occurred on or about November 1, 2021.  HCN began trading at 10 cents and, within approximately two weeks, the Himalaya Exchange website claimed that each HCN purportedly was worth approximately 27 HDO (i.e., $27), which represented a 26,900% increase in value and a total value of approximately $27 billion.  JE also falsely claimed to media outlets that a €3.5 million Ferrari was purchased via the Himalaya Exchange.  In truth, a Himalaya Exchange employee sent the Ferrari broker an international bank wire to cover the cost of the Ferrari, while also processing a corresponding “transaction” on the Himalaya Exchange to create the false appearance that the purchase had taken place using HDO in order to show HDO was easily tradeable and to promote the Himalaya Exchange.  The buyer of the Ferrari was a close relative of KWOK.

U.S. Government Seizures

On or about September 20, 2022 and September 21, 2022, U.S. authorities served judicially-authorized seizure warrants on several domestic banks, and subsequently seized approximately $335 million of proceeds from bank accounts held in the names of Himalaya Exchange entities and other entities associated with KWOK and JE.  Within approximately two days of the first judicially authorized seizures of Himalaya Exchange-related funds, on or about September 22, 2022, JE contacted the management of a domestic bank that held Himalaya Exchange bank accounts.  JE sought to implement a wire transfer, which he and a Himalaya Exchange executive claimed to the domestic bank was needed to effectuate a “redemption” from HDO to U.S. dollars for an unnamed “VIP” (i.e., very important client of the Himalaya Exchange).  In subsequent communications with the domestic bank, JE revealed that the VIP was, in fact, JE himself.  JE provided the domestic bank with documents reflecting two purported HCN sales by JE on or about September 22, 2022—totaling 46 million HDO, which JE was attempting to “convert” into $46 million.  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.”

U.S. Authorities subsequently seized additional funds from KWOK and JE-associated entities in October 2022 and March 2023.  In total, U.S. Authorities seized more than approximately $634 million of fraud proceeds, including approximately $278 million from bank accounts held in the names of the Himalaya Exchange entities.

Today, pursuant to judicially-authorized warrants, U.S. Authorities are seizing additional items from KWOK-associated properties, which KWOK and JE allegedly purchased with fraud proceeds.

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HO WAN KWOK, a/k/a “Miles Guo,” a/k/a “Miles Kwok,” a/k/a “Guo Wengui,” a/k/a “Brother Seven,” a/k/a “The Principal,” 52, of New York, New York, and KIN MING JE, a/k/a “William Je,” 56, of London, England, are charged in an Indictment with the following offenses:

The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge. 

Mr. Williams praised the investigative work of the FBI.  Mr. Williams further thanked the U.S. Securities and Exchange Commission, which today filed a parallel civil action against KWOK and JE, for its assistance and cooperation in this investigation.  Mr. Williams also expressed appreciation for the assistance of the United States Marshals Service, the Justice Department’s Office of International Affairs, and the U.K. Metropolitan Police.

If you believe you are a victim of KWOK and JE’s fraud, please find more information here: https://www.justice.gov/usao-sdny/united-states-v-ho-wan-kwok-aka-miles-guo-and-kin-ming-je-aka-william-je 

The case is being handled by the Complex Frauds and Cybercrime Unit of the Office’s Criminal Division.  Assistant U.S. Attorneys Ryan B. Finkel, Juliana N. Murray, and Micah F. Fergenson are in charge of the prosecution.

The allegations in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

Source: United States Department of Justice News

Mackenzy Scott, 26, began filing fraudulent applications for pandemic-related benefits on March 28, 2020, one day after the CARES Act, passed by Congress to provide economic assistance programs in response to the COVID-19 pandemic, became law. Scott’s fraudulent activity was discovered in February 2021 by a United States Probation Officer, during an investigation into alleged violations of the terms of Scott’s federal supervised release related to his earlier conviction for sex trafficking.

Scott used his own name and the names of others to carry out the scheme in an attempt to collect COVID-related, federally-funded unemployment benefits from state agencies in ten states: North Dakota, Massachusetts, Arizona, Nevada, Kentucky, Texas, Hawaii, Pennsylvania, Michigan, and Indiana. In each of the applications he filed, Scott made false statements about employment and/or his residence.

Scott pleaded guilty on December 21, 2022, to conspiracy to commit wire fraud, seven counts of wire fraud, theft of government money, and four counts of aggravated identity theft. He was sentenced on Tuesday by U.S. District Court Chief Judge John J. McConnell, Jr., to 30 months of incarceration to be followed by 3 years of federal supervised release. Scott was ordered to pay restitution in the amount of $16,336.

These matters and other cases of alleged criminal activity related to fraudulent applications for unemployment insurance benefits due to the pandemic are being investigated jointly by the FBI and Rhode Island State Police, with the assistance of the U.S. Department of Labor. Cases are jointly reviewed, charged, and prosecuted by a team of prosecutors to include Assistant U.S. Attorneys Stacey A. Erickson, Denise M. Barton, G. Michael Seaman, and Rhode Island Assistant Attorney General John M. Moreira, chief of the Rhode Island Attorney General’s Public Integrity Unit. Assistant U.S. Attorney Lee H. Vilker represented the government at today’s sentencing hearing.

Rhode Islanders who believe their personal identification has been stolen and used to fraudulently obtain unemployment benefits are urged to contact the Rhode Island State Police at financialcrimes@risp.gov or the FBI Providence office at (401) 272-8310.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

Anyone with information about allegations of attempted fraud involving COVID- 19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

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Source: United States Department of Justice News

A federal grand jury in Riverside, California, returned an indictment, unsealed Tuesday, charging a California man with 47 counts of preparing false tax returns.

According to the indictment, for tax years 2016 through 2021, Salvador Gonzalez operated a tax preparation business, Grace’s Lighthouse Resource Center, Inc., in Corona, California, and prepared individual and corporate income tax returns for clients to submit to the IRS that claimed tens of thousands of dollars in false business losses. Gonzalez also allegedly falsified additional deductions on client returns, including medical and dental expenses, unreimbursed employee expenses, and charitable contributions, knowing that the clients were not entitled to the amounts claimed.

If convicted, Gonzalez faces a maximum penalty of three years in prison for each false return count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Martin Estrada for the Central District of California made the announcement.

IRS-Criminal Investigation is investigating the case.

Trial Attorney Lauren K. Pope of the Justice Department’s Tax Division and AUSA Robert S. Trisotto of the U.S. Attorney’s Office for the Central District of California, Riverside Branch Office, are prosecuting the case.

An indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Source: United States Department of Justice News

            WASHINGTON – Two men were found guilty today of charges, including felonies, related to the breach of the U.S. Capitol on January 6, 2021. Their actions and the actions of others disrupted a joint session of the U.S. Congress that was in the process of ascertaining and counting the electoral votes related to the presidential election.

            Joshua Christopher Doolin, 25; of Polk City, Florida, and Michael Steven Perkins, 39, of Plant City, Florida were each found guilty of civil disorder, a felony, entering and remaining in a restricted building or grounds, and disorderly and disruptive conduct in a restricted building or grounds.  Doolin was also convicted of theft of government property.  Perkins was also convicted of assaulting a federal officer with a deadly or dangerous weapon and engaging in acts of physical violence while on the restricted Capitol grounds.  U.S. District Court Judge Carl J. Nichols scheduled sentencing for July 13, 2023.

            Both defendants were arrested on June 30, 2021, along with co-defendants, Joseph Hutchinson and Olivia Pollock.  A fifth co-defendant, Jonathan Pollock, has not yet been apprehended.  Joseph Hutchinson, Olivia Pollock, and Jonathan Pollock are being sought by law enforcement;  https://www.fbi.gov/contact-us/field-offices/tampa/news/press-releases/fbi-increases-reward-offered-for-central-florida-man-wanted-on-charges-from-the-us-capitol-breach.

            According to evidence and testimony presented at trial, Doolin and Perkins were on the west side of the Capitol on Jan. 6.

            Shortly after 2:00 p.m., Hutchinson, pushed from behind by Perkins, charged a line of police officers in an effort to break through the line.  Shortly thereafter, as officers descended into the crowd to assist another officer, Perkins picked up a flagpole and thrust it into the chest of an approaching officer.  Perkins then raised the flagpole over his head swung it down, striking two officers in the back of their heads.

            Doolin and Perkins then advanced closer to the Capitol building, as far as the Upper West Terrace of the building.  Doolin acquired a Metropolitan Police Department crowd-control spray cannister and a United States Capitol Police riot shield, both of which carried with him on the Capitol grounds. 

            By about 4:15 p.m., Doolin had re-located close to the entrance to the passageway that connects the lower west terrace to the interior of the Capitol building.  There, using the stolen riot shield, Doolin joined the crowd of rioters pushing against the police officers inside the passageway in an effort to break through and enter the Capitol building.

            The case is being prosecuted by the U.S. Attorney’s Office for the District of Columbia and the Department of Justice National Security Division’s Counterterrorism Section, with valuable assistance provided by the U.S. Attorney’s Office for the Middle District of Florida.

            The case is being investigated by the FBI’s Tampa Field Office and Washington Field Office, with valuable assistance provided by the Metropolitan Police Department and U.S. Capitol Police.

            In the 26 months since Jan. 6, more than 999 individuals have been arrested on charges related to the Jan. 6 Capitol breach, including over 320 individuals charged with assaulting or impeding law enforcement. The investigation remains ongoing.

            Anyone with tips can call 1-800-CALL-FBI (800-225-5324) or visit tips.fbi.gov.

Source: United States Department of Justice News

DAYTON, Ohio – A Dayton man, who as part of his fraud scheme purported he was a Ghanaian prince, was sentenced in U.S. District Court today to the statutory maximum of 240 months in prison. 

Daryl Robert Harrison, also known as Prince Daryl R. Attipoe and Prophet Daryl R. Attipoe, 44, was found guilty of 10 counts of various federal fraud crimes following a jury trial in September 2022. Harrison defrauded at least 14 victims of more than $800,000. He was convicted of mail and wire fraud, conspiracy to commit mail and wire fraud, and witness tampering.

According to court documents and trial testimony, from January 2014 until September 2020, Harrison defrauded victims who thought they were investing in African trucking and mining companies.

Harrison – falsely holding himself out to be a royal prince from the African national of Ghana – told investors he had direct connections with these companies, and that they could expect an investment return of 28 to 33 percent.

Harrison solicited prospective investors at local Starbucks coffee shops, IHOP restaurants, Kroger grocery stores, carwashes and fitness centers.

Harrison and his stepfather claimed to be ministers with Power House of Prayer Ministries, which sponsored religious services in various church facilities and private residences throughout the Greater Dayton area, Southwestern Ohio area and Parker, Colorado. Many investor victims were members of the congregation.

Harrison routinely withdrew thousands of dollars in cash from the Ministries bank accounts shortly after receiving investments. Harrison and his stepfather used the investment funds to rent a house in Colorado, purchase luxury vehicles, airplane tickets, hotel accommodations and rental cars.

The defendant was indicted by a federal grand jury in September 2020.

Kenneth L. Parker, United States Attorney for the Southern District of Ohio, and Jaime Carazo, Special Agent in Charge, U.S. Secret Service, announced the sentence imposed today by U.S. District Judge Michael J. Newman. Assistant United States Attorneys Dwight K. Keller and Ryan A. Saunders are representing the United States in this case.

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