Supporters of Christian investor and philanthropist Bill Hwang closed their eyes and prayed in federal court as they waited for a verdict on a case accusing him of massive Wall Street fraud. Hwang himself, serene throughout the proceedings, read a Bible devotional and took notes within the margins—a practice he had done throughout the trial—as he awaited the jury’s ruling.
On Wednesday, a jury found Hwang, at one time one in every of the wealthiest evangelicals within the US, guilty of manipulating the stock market and defrauding banks. It is one in every of the most important cases of Wall Street fraud when it comes to dollar amount, with banks losing $10 billion after he and his firm lied to them.
It is the crashing conclusion of a singular institution: Hwang’s Archegos Capital Management, a Christian investment firm that was named for a Greek word used to explain Christ because the “creator” of our salvation (Heb. 2:10) and the “prince” of life (Acts 3:15). While Hwang’s defense team had argued that his aggressive trading at Archegos was inside the bounds of normal Wall Street practice, the jury found he and his team were guilty of defrauding banks of billions and artificially pumping up stock prices.
The jury found him guilty of 10 of 11 counts. He was guilty of racketeering, securities fraud, market manipulation, and wire fraud. He was found not guilty on one count of market manipulation regarding one particular stock.
When Archegos collapsed in March 2021, the firm lost $36 billion, banks lending to Archegos lost $10 billion, and about $100 billion in market value disappeared.
Hwang’s Christian faith was woven into the long federal trial, featuring witnesses from Hwang’s Christian foundation Grace and Mercy in addition to references to his Christian philanthropy. The jury heard the case before a courtroom that was consistently stuffed with Hwang’s Christian supporters in New York—a feat of endurance over eight weeks when no phones were allowed within the courtroom and the technical subject material was making even the jury sleepy.
Evidence within the trial alluded to the shared faith on the firm.
As the fund’s collapse was starting in March 2021, Andy Mills, top brass at Archegos and a former president of The King’s College, a Christian college in New York, sent an email to a different Archegos leader. “Pray that the markets rise tomorrow,” he wrote, in accordance with documents from the prosecution.
“The point at which what you are promoting plan requires divine intervention is the purpose at which you’ve got a solvency problem,” said prosecutor Andrew Mark Thomas in closing arguments, in accordance with Bloomberg.
The defense initially intended to call Mills as a witness, but he didn’t find yourself testifying.
In the trial, the defense tried to discuss with Hwang’s faith and his philanthropy as a way of highlighting his humble non–Wall Street ways, however the judge limited references to his personal devotion as irrelevant to a case of market manipulation.
The government’s case was that Archegos borrowed billions from banks on false pretenses and used that cash to purchase up large positions in a couple of corporations, pumping up the costs artificially. The defense argued that Hwang genuinely believed in the businesses he invested billions in, and that he wasn’t attempting to defraud the banks but simply pursuing an aggressive trading strategy.
On Wednesday, because the jury members filed into court with their verdict, US Attorney Damian Williams slipped into the back of the courtroom—showing how seriously the Department of Justice took this case.
The jury on this case didn’t know this, but Hwang’s previous hedge fund, Tiger Asia, had pleaded guilty to a fraud charge in 2012. Tiger Asia was converted to Archegos in 2013.
The government’s case against Hwang centered on testimony from star witnesses Scott Becker and William Tomita, each former Hwang deputies at Archegos who had pleaded guilty and cooperated with prosecutors. Both Tomita and Becker said that when Archegos collapsed, Hwang offered them roles at his $528 million Grace and Mercy Foundation, which supports Christian ministries around the globe.
Archegos and Grace and Mercy shared the identical floor of office space—with a conference room to host regular lunchtime public reading of Scripture, a Hwang initiative. Some Archegos employees worked at each entities doing investments.
Grace and Mercy faces a lawsuit related to Archegos’s collapse, however it shouldn’t be affected by this ruling. It has been operating normally since Archegos closed.
Another witness for the prosecution was Fernanda Piedra, a top Archegos worker who became the compliance officer for Grace and Mercy. The prosecution asked her to testify in regards to the fund’s final days.
Tomita’s testimony undercut the defense’s image of Hwang as a humble Christian investor. He portrayed Hwang as an offended boss, yelling at traders in the event that they took bathroom breaks. He testified that Hwang had lied to the banks that Archegos was borrowing billions from.
Prosecutors showed the jury Bloomberg Terminal messages, recorded phone calls, and charts upon charts depicting the links between Archegos’s buying practices and the movement of particular stock prices. When Archegos was on a buying spree of GSX, a Chinese educational technology company, in 2020 and 2021, the stock reached a price of greater than $100 a share. It is now trading at $5 a share.
“Throughout my training at the corporate, I had been taught by Bill when obligatory to offer misleading pictures in regards to the fund and its positions,” Tomita testified, in accordance with Bloomberg.
Hwang, 60, faces the potential of spending the remainder of his life in prison and his sentencing is ready for October 28. He shall be free pending sentencing on a $100 million bond.
