Former Archegos Employee Sues, Alleging Firm and Founder Coerced Staff into Funding Christian Charitable Fund

A former managing director at Archegos Capital has filed a lawsuit alleging that he and other employees were coerced into funding a Christian nonprofit organization connected with the firm, using money they had been given as bonuses. The plaintiff, Brendan Sullivan, alleges that Sung Kook (“Bill”) Hwang, founder of Archegos and of the affiliated Grace and Mercy Fund, recklessly mismanaged 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 on April 27. He is currently free on a $100 million bond and awaiting trial.

According to the suit, Archegos required employees to return bonus money and invested it in stocks that were transferred to Grace and Mercy. The foundation then allegedly sold the stocks for a profit, avoiding taxation while 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, which he describes as the alleged value of the $3.8 million he put into the fund, based on Archegos’ inflated value shortly before its collapse.

The filing also alleges that 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.” It further states that “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.” The suit thus describes a workplace in which honest assessment was penalized, a failure of the truthfulness and fairness that should govern dealings within any organization (Proverbs 18:17).

Sullivan alleges that Hwang used Christianity to pressure employees to invest their earnings, and that employees were questioned about their faith and pressured to attend Scripture readings.

Law firm Brown Rudnick filed the lawsuit under the Employee Retirement Income Security Act (ERISA) on July 5 in the U.S. District Court for the Southern District of New York. Hwang, Archegos, Grace and Mercy, and several of Hwang’s associates are named as defendants.

Before Archegos’ collapse, the 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. Hwang was also 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.”

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