Latest / Bloomberg Law / BONUS: Archegos Founder Bill Hwang Sentenced To 18 Years In Prison

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BONUS: Archegos Founder Bill Hwang Sentenced To 18 Years In Prison · Bloomberg Law

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  Speaker 1: Play Bloomberg eleven thirty.
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  Speaker 2: Former billionaire investor Bill Huang was sentenced to eighteen years
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  Speaker 2: in federal prison today over the stunning collapse of Arkago's
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  Speaker 2: capital management, which the prosecutor called a national calamity. In July,
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  Speaker 2: a jury convicted Wong on ten criminal charges, including wirefraud,
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  Speaker 2: securities fraud, and market manipulation for orchestrating a scheme to
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  Speaker 2: mislead banks into providing Arkagos with billions of dollars in
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  Speaker 2: trading capacity, which ultimately led to the collapse that cost
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  Speaker 2: Wall Street Banks more than ten billion dollars. Joining me
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  Speaker 2: as Bloomberg Legal reporter Chris Domesh, who covered the trial
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  Speaker 2: and was in the courtroom for the sentencing, Chris, this
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  Speaker 2: sentencing didn't follow this sort of normal script or procedures.
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  Speaker 3: It was really just very bizarre. You know, most sentencing
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  Speaker 3: procedures are very straightforward and move it a very time
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  Speaker 3: capted script. You know, the two sides get up, they
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  Speaker 3: argue over sentencing guidelines and other things in the pre
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  Speaker 3: sentencing report, and then you know, the government gets up,
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  Speaker 3: they make their arguments for whatever their recommendation is. The
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  Speaker 3: defense gets up and they make their recommendation. In this case,
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  Speaker 3: it kind of proceeded very slowly in an odd way,
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  Speaker 3: and the judge said at the beginning, oh, well, this
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  Speaker 3: might take all day long. We might have to come
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  Speaker 3: back tomorrow morning, which everyone was like, that's very bizarre.
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  Speaker 3: We don't see many two day sentencing hearings. In the end,
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  Speaker 3: that is what happened. But he did pronounce sentence today,
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  Speaker 3: and there was a lot of back and forth between
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  Speaker 3: the judge and the defense lawyers. It just didn't go,
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  Speaker 3: you know, by grip as it usually does, and in
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  Speaker 3: the end, the judge pronounced sentence without kind of making
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  Speaker 3: this the soliloquy that he usually does when they're pronouncing sentences,
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  Speaker 3: which is to repeat all the factors that have taken consideration, deterrence,
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  Speaker 3: the seriousness of the offense, all those things, and instead
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  Speaker 3: he just kind of pronounced them in a very succinct,
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  Speaker 3: quick manner, and they're coming back tomorrow morning to talk
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  Speaker 3: about some remaining issues which include forfeiture and possible bail
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  Speaker 3: pending appeal.
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  Speaker 2: The prosecutors that asked for twenty one years, which is
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  Speaker 2: a heavy sentence in a white collar case, and the
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  Speaker 2: judge gave them close to what they wanted. Eighteen years.
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  Speaker 2: That's a long sentence, especially considering that he's sixty years old.
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  Speaker 3: Yes, the one thing you can kind of take from
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  Speaker 3: that his attorneys that asks for no jail time, and
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  Speaker 3: the judge called that ridiculous. He took the defense attorneys
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  Speaker 3: to task on that request and kind of drilled down
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  Speaker 3: on them to get them to come up with what
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  Speaker 3: they thought was a more reasonable sentencing recommendation, which in
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  Speaker 3: the end was forty six to fifty seven months. And
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  Speaker 3: clearly the judge felt that given the amount of losses
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  Speaker 3: in this case, he didn't really have the opportunity to
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  Speaker 3: send a lesser sentence here. There are certain considerations going
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  Speaker 3: into prison sentences. If you get more than I think
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  Speaker 3: it's eleven and a half years, you have to go
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  Speaker 3: basically a higher security prison. That leads to all kinds
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  Speaker 3: of other considerations. Whereas a lesser sentence would maybe send
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  Speaker 3: him to a minimum security or a camp or something
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  Speaker 3: like that. So that's what they wanted. But in the end,
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  Speaker 3: the judge clearly was not swayed by any of that.
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  Speaker 3: And this is a pretty heavy sentence for a sixty
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  Speaker 3: year old man.
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  Speaker 2: Hwang is a devout Christian and his nonprofit foundation has
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  Speaker 2: donated something like six hundred million dollars to different causes
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  Speaker 2: like homelessness. Did the judge take that into consideration.
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  Speaker 3: Well, he did actually take that into consideration, he just
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  Speaker 3: didn't seem to give it much weight, and he said
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  Speaker 3: essentially that a lifetime of good work doesn't offset the
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  Speaker 3: massive losses in this case. You know, one of the
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  Speaker 3: factors that the judges have to consider when they're sentencing
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  Speaker 3: people is specific deterrence as to whether the individual would
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  Speaker 3: you do it again, And clearly the judge said, look,
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  Speaker 3: I'm not worried about that year. You know, he's a
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  Speaker 3: six year old man. He's probably not going to commit
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  Speaker 3: another crime. But he's a little worried about, you know,
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  Speaker 3: his indifference towards what happened to him in the past.
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  Speaker 3: When his former firm, Tiger Global, pleaded guilty and that
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  Speaker 3: led to the formation of archigos. But like I said,
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  Speaker 3: in the end, the judge was not swayed by that. Look,
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  Speaker 3: Bill has a great reputation in terms of outside of
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  Speaker 3: these allegations. You know, he's well liked by his friends,
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  Speaker 3: he's known for his charitable works, he's a religious man.
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  Speaker 3: But just those things alone going offset a thirty six
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  Speaker 3: billion dollar loss.
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  Speaker 2: What was the prosecutor's argument for why they wanted so
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  Speaker 2: much jail time was it under the sentencing guidelines, And.
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  Speaker 3: The sentencing guidelines are actually much more draftonian than that.
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  Speaker 3: They would call for him to serve two hundred years
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  Speaker 3: in prison, and that's the kind of sentences that are
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  Speaker 3: normally or for people who commit mass murder or terrorists
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  Speaker 3: or things like that. So they were well well within
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  Speaker 3: their bounds to argue for this. And there arguments that
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  Speaker 3: are really driven by the losses and the fact that
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  Speaker 3: other people were hurt by this, not just the banks,
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  Speaker 3: including his employees, some of whom lost millions of dollars
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  Speaker 3: intoferred compensation. They lost their job. The prosecution clearly wanted
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  Speaker 3: him to go to jail for a long time, and
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  Speaker 3: they succeeded. Usually in white collar crimes, we see much
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  Speaker 3: lower sentences just because the losses tend to drive up,
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  Speaker 3: you know, the guidelines and what they recommend, But in
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  Speaker 3: this case, you don't usually see the government get close
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  Speaker 3: to what it wants when it wants to draw cunning
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  Speaker 3: and set it did here.
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  Speaker 2: That's what made it surprising when I saw the number.
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  Speaker 2: What was Wong's reaction?
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  Speaker 3: He really didn't react, which is kind of keeping with
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  Speaker 3: how he's been throughout the trial, very stoic, drinking water throughout,
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  Speaker 3: staring straight ahead, and you know, presumably he thinks he
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  Speaker 3: has a shot on appeal. They've asked for bail pending appeals.
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  Speaker 3: You know, the judge himself acknowledges their there issues that
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  Speaker 3: are right for appeal. The one thing he kind of
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  Speaker 3: took the prosecution it's tasked for is the argument that
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  Speaker 3: he is unrepentant. And the judge said, he's always kind
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  Speaker 3: of uncomfortable with arguments like that by the prosecutors because
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  Speaker 3: people have a right to fight the charges against them.
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  Speaker 3: And he, you know, he's said fastly maintained he's not
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  Speaker 3: guilty here, so he has that right. And the judge said,
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  Speaker 3: you know, he doesn't really like this kind of arguments.
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  Speaker 3: Whether that appeal will be successful is obviously something that
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  Speaker 3: is for the future.
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  Speaker 2: On that point. That's what makes it difficult sometimes for
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  Speaker 2: these defendants who are appealing to then speak to the
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  Speaker 2: judge and tell them they're remorseful. What did Wang say.
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  Speaker 3: Yeah, he stopped short of that, for sure, that's a
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  Speaker 3: good question. Often you see defendants kind of you know,
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  Speaker 3: make their case to the judge get emotional. Bill banks
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  Speaker 3: the judge for taking the time to be thorough in
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  Speaker 3: reading his sentencing letters that his friends and family said
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  Speaker 3: to him. And he praised his friends and family for
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  Speaker 3: writing the sentencing themost, and he said he felt bad
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  Speaker 3: for the people who suffered. But I would say that
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  Speaker 3: the statement stopped short of admitting that he did something wrong.
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  Speaker 3: And maybe that is because of the appeal and that certainly,
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  Speaker 3: you know, we see that often.
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  Speaker 2: Not during the trial. A lot of his supporters came
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  Speaker 2: every day. Did they have any reaction to the sentence?
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  Speaker 3: They seem to hang their heads. They were here every day,
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  Speaker 3: They spent a lot of time in the courtroom, in
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  Speaker 3: the cafeteria, in the courthouse, and they were there for
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  Speaker 3: him the whole time. And he thanked them, and he
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  Speaker 3: greeted them today just like he did every day of
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  Speaker 3: the trial.
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  Speaker 2: Did the defense ever tell his story. I mean, he
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  Speaker 2: has an amazing story, really a rags to riches story.
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  Speaker 2: He came here from Korea and had nothing.
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  Speaker 3: They did go into that. That was kind of the
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  Speaker 3: heart of their initial argument is that you know that
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  Speaker 3: he came here when he was a teenager father had
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  Speaker 3: gotten a job as a pastor, and he emigrated when
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  Speaker 3: he was nineteen, came here seeking better you know, treatment
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  Speaker 3: options for a legally blind brother, and then his father
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  Speaker 3: died within years of him arriving here, and they had
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  Speaker 3: to find a way to survive because a job as
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  Speaker 3: a line coak a McDonald's worked at swap meets, and
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  Speaker 3: then moved to la with three thousand dollars to his
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  Speaker 3: name and lived in the shed in the back of
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  Speaker 3: a church with his family. They played up the charity,
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  Speaker 3: you know, they said this was not a scheme. Really,
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  Speaker 3: it was an effort to help people. They don't want
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  Speaker 3: to make everything he did seem like some sort of
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  Speaker 3: nefarious scheme when they argued these were just for you know,
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  Speaker 3: he's a god fearing man and these were his attempts
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  Speaker 3: to do good by his community.
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  Speaker 2: What about restitution? How much do the prosecutors say was
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  Speaker 2: lost here and how much restitution do they expect? I
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  Speaker 2: understand he says he's not a billionaire anymore.
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  Speaker 3: Yeah, he says he only has fifty five million dollars,
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  Speaker 3: some of which are enjoying assets with his wife. Actually,
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  Speaker 3: restitution is being deferred for a little while. They're going
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  Speaker 3: to talk about forfeiture tomorrow, possibly any other issues like bail,
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  Speaker 3: pending appeal and maybe you know, reporting dates, the kind
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  Speaker 3: of things that come at the end of sentencing hearings.
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  Speaker 3: After somebody's been pronounced.
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  Speaker 2: With forfeiture, would they have to trace it back to
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  Speaker 2: his alleged misdeeds somehow? I mean, how would they decide forfeiture?
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  Speaker 3: So that's probably the most difficult proposition here. The defense
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  Speaker 3: says there should be no porfeiture. From that argument seems
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  Speaker 3: to be a little less forceful than they're one about restitutions.
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  Speaker 3: But the government is seeking nine point eight billion dollars
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  Speaker 3: in restitution as reimbursement for the victims the counterparty banks,
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  Speaker 3: and they're seeking more than twelve billion dollars in forfeiture. Now,
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  Speaker 3: the government acknowledges here that he doesn't have the money.
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  Speaker 3: They say that regardless of the fact that he doesn't
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  Speaker 3: have the money, these shills should be subject to this
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  Speaker 3: forfeiture amount, just like say drug dealers who are convicted
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  Speaker 3: who do a drug deal and lose the drugs. It
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  Speaker 3: was a very interesting argue. You know it often that
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  Speaker 3: often makes a confusing proposition for people. Why are you
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  Speaker 3: going to ask somebody the forfeit money they don't have?
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  Speaker 3: But I guess it's a tempting to establish a framework
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  Speaker 3: for anyone who would would seek to recover money in
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  Speaker 3: this case.
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  Speaker 2: Does the judge think he has more money than he's
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  Speaker 2: saying because I noticed the judge said something about Huang
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  Speaker 2: buying a new condo in Hudson Yards.
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  Speaker 3: Yes, he did note that. It's hard to say the
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  Speaker 3: judge did. There's an extended questioning on that. So he's
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  Speaker 3: definitely not clear on what he needs to do here
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  Speaker 3: or how it could be done. So that that is
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  Speaker 3: going to be the meat up tomorrow's argument.
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  Speaker 2: And as far as appellet issues, do we already know
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  Speaker 2: one of the issues because the judge kirktailed Wang's defense.
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  Speaker 3: Yeah, that's certainly one of the issues that they're going
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  Speaker 3: to raise. You know, they certainly raised it in some
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  Speaker 3: of their post trial briefings. In their in their application
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  Speaker 3: for bail pending appeal, they've noted that they call out
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  Speaker 3: some of the expert testimony for the prosecution's expert when
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  Speaker 3: she calculated that some of the trading losses were directly
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  Speaker 3: attributable to long conduct or misrepresentations, and they say that
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  Speaker 3: that can't be proven. So you know, whether or not
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  Speaker 3: he actually they can attribute that there, that might be
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  Speaker 3: one of the main things for appeal.
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  Speaker 2: So a lot more to come, Chris, and I know
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  Speaker 2: you'll be there tomorrow to tell us about it. Thanks
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  Speaker 2: so much. That's Bloomberg Legal reporter Christopher Dolmesh