Jury in New York, New York, Finds Bill Hwang Guilty of Securities Fraud and Racketeering

Sun Kook (“Bill”) Hwang, once one of the wealthiest evangelicals in the United States and described as part of a “new evangelical donor-class,” now faces possible imprisonment. On July 10, after an eight-week trial in New York that addressed complex finance law, a jury found Hwang guilty of racketeering, securities fraud, market manipulation and wire fraud. The jury convicted him on all but one of 11 counts, and each count carries a maximum sentence of 20 years.

The case traces to March 2021, when high-risk investments at Archegos Capital Management, Hwang’s firm, which is now defunct, led to the sudden loss of $100 billion in stock market value at companies including ViacomCBS and Tencent. Banks that had lent to Archegos lost $10 billion, and Archegos itself lost $36 billion.

Federal prosecutors linked the collapse to Hwang’s strategy of heavily but indirectly investing in a small number of companies through a derivative contract known as a “swap.” Under such arrangements, a bank extends credit tied to the value of specific shares and can demand more cash if those shares lose value. When banks requested cash in 2021, Hwang did not have the money, and the resulting stock sell-offs and falling values spread through the market. Hwang had already been convicted of fraud in 2012 in connection with his earlier hedge fund, Tiger Asia.

Prosecutors described Archegos as a criminal enterprise that deceived banks about its level of risk while artificially inflating stock values. U.S. Attorney Damian Williams said Hwang “lied about Archegos’s positions in these companies and just about every other materially important metric investment banks would use in determining the firm’s creditworthiness.” The prosecution nonetheless faced difficulties, including the question of motive. Presiding Judge Alvin Hellerstein asked, “What was in it for him? He lost his money.” The defense argued that Hwang “bought these stocks because he loved them” and said the prosecution had “no theory” of how he hoped to benefit. Because Hwang never sold his holdings, prosecutors could not present the matter as a “pump and dump” scheme and instead described the alleged conduct as “pump and brag.” The judge barred the defense from calling that argument “novel,” and the jury found the evidence sufficient to convict beyond a reasonable doubt. The defense has not said whether it will appeal. Hwang remains free on a $100 million bond pending sentencing.

A separate civil matter involves Hwang’s Grace and Mercy Foundation, which was closely tied to Archegos. According to the reporting, the foundation had donated more than $80 million to Christian ministries before the firm’s collapse, including Luis Palau Association, Prison Fellowship and InterVarsity Christian Fellowship. Brendan Sullivan, a former Archegos managing director who testified against Hwang in the criminal case, is seeking $30 million he says the foundation owes him. He stated that he and other employees were required to place their bonuses into a fund that the firm invested in stocks and donated to Grace and Mercy, which then sold the stocks for profit. He said this arrangement allowed Archegos to receive a tax deduction, while the foundation was exempt from capital gains taxes.

The lawsuit states that “these share transfers to the foundation were all coming from the Archegos Fund, which included employee deferred compensation…which was done without the knowledge or consent of employees.” An attorney for Grace and Mercy told Christianity Today that Sullivan’s complaint “is filled with baseless and frivolous allegations, all of which will be decisively refuted in court.” The attorney added that the foundation would continue its grantmaking work.

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