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Speaker 1: This is Bloombird Law with June Brasso from Bloomberg Radio. Horses.

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Speaker 1: What does it feel like to be in love with

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Speaker 1: a horse? I want to be a famous rider? The

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Speaker 1: Lovely MGMs National Velvet, The exciting story of a Girl,

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Speaker 1: a horse and a dream in color National Velvet from

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Speaker 1: is just one in a long line of movies about

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Speaker 1: the bond between a girl and her horse. There's Black Beauty, Dreamer,

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Speaker 1: Flick Up, the Horse Whisperer. The list goes on and on.

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Speaker 1: But what about the bond between a woman and her horse.

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Speaker 1: Christina Fisher's horse, Lex, a champion show jumper, was so

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Speaker 1: important to her that she planned to ride him at

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Speaker 1: her wedding. But just ten days before the wedding, enter

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Speaker 1: the I R S. They seized Lex from stables in

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Speaker 1: the mountains of western North Carolina and drove him down

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Speaker 1: to Delray Beach, Florida, despite Christina's please joining me is

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Speaker 1: Bloomberg Legal reporter David Voriankis who wrote about the story.

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Speaker 1: So David tell us about Christina and Lex. Christina Fisher

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Speaker 1: is a lifelong equestrian whose favorite horse, Lex is a

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Speaker 1: big athletic jumper, and she was planning her wedding. In

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Speaker 1: early May, she was visiting her mother in Atlanta when

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Speaker 1: she learned that I R S agent arrived at the

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Speaker 1: stables in western North Carolina where she kept Lex, and

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Speaker 1: that I R S agents were seizing Lex because her father,

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Speaker 1: Jack Fisher, was under indictment. He'd been accused of generating

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Speaker 1: one point three billion dollars in fraudulent tax deduction for

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Speaker 1: investors in syndicated deals that conserved land, and the I

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Speaker 1: R S was seizing pre conviction a bunch of assets

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Speaker 1: for Jack Fisher, including the horse, which he had bought

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Speaker 1: for Christina as a gift in early twenty seventeen. They'd

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Speaker 1: also sees an airplane, Mercedes, a forty five foot recreational vehicle,

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Speaker 1: and Lex. They put leans on real estate they could

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Speaker 1: seize if he's convicted. But for Christina Fisher this was

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Speaker 1: a terrible event because she was a couple hundred miles

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Speaker 1: away in Atlanta, and Lex is a champion show jumping horse.

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Speaker 1: They had jumped together in about ten events a year

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Speaker 1: for several years. He had also had a couple of

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Speaker 1: bad accidents in which he'd fallen and hurt his neck

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Speaker 1: and his back, so he was on a special metabolic diet,

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Speaker 1: and she was very concerned that he would not be

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Speaker 1: handled properly by the I R S agents. She was

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Speaker 1: on the phone talking to I R S agents and

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Speaker 1: they would not stop until she got there. They went

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Speaker 1: ahead and took the horse to a trainer in southern

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Speaker 1: North Carolina for evaluation, and then they took him by

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Speaker 1: police escort down to Delray Beach, Florida. And she also

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Speaker 1: believes strongly that she had nothing to do with the

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Speaker 1: fraud that her father is accused of. Just to clarify

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Speaker 1: this was a gift to her years ago. They're not

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Speaker 1: accusing her of doing anything, certainly not accusing the horse

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Speaker 1: of doing anything, but they're still taking this horse. Right

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Speaker 1: it's the position of the government that this was an

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Speaker 1: asset that he bought with proceeds of the fraud, and

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Speaker 1: so they're trying to tease and ultimately liquidate those assets

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Speaker 1: that are purchased with proceeds of the fraud. The government

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Speaker 1: would dispute that it is not Jack Fisher's assets. This

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Speaker 1: seems like a complex move involving a lot of hassle

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Speaker 1: and expense. It also seems kind of cruel to seize

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Speaker 1: a horse is this what they do. In the ordinary

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Speaker 1: course of business. The I R S and other government

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Speaker 1: agencies will seize all types of assets. Got cars, houses, jewelry, artwork.

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Speaker 1: Animals are also some of those assets. But all the

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Speaker 1: assets they sees, animals probably take the most work. And

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Speaker 1: you know there's the chance the animal could die, which

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Speaker 1: with them, we yes said, without any value. I had

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Speaker 1: token with a former US Marshall's Chief inspector who, as

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Speaker 1: part of a case a decade ago in Dixon, Illinois,

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Speaker 1: sees several hundred quarter horses which were owned by a

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Speaker 1: woman named Rita Crundwell, who was convicted of stealing fifty

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Speaker 1: three point seven million dollars from the city of Dixon, Illinois,

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Speaker 1: where she worked, and she had used the money that

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Speaker 1: she sold to help finance her breathing and showing of

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Speaker 1: these American quarter horses. The government eventually auctioned more than

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Speaker 1: four hundred of those horses, including one of them, for

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Speaker 1: seven hundred and seventy five thousand dollars. And as that

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Speaker 1: former Marshall told me, any asset is a liability to

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Speaker 1: the government, but an animal is a significant liability because

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Speaker 1: they have to eat and they require veterinarian care and

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Speaker 1: ultimately they could die. And this is being done before

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Speaker 1: her father is even convicted. He's just been indicted at

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Speaker 1: this point. Correct. It's what's known as a pre conviction seizure,

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Speaker 1: and it goes on a lot. The government holds the

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Speaker 1: asset and in the event that the defendant is acquitted,

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Speaker 1: the asset is returned to them. Now, there are some

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Speaker 1: instances where the government and the defendant can agree to

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Speaker 1: a sale of the asset and then the amount that

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Speaker 1: they raised through the sale would be returned to the

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Speaker 1: defendant if they're acquitted. In the case of an asset

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Speaker 1: that has great emotional value to a dependant or whomever

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Speaker 1: it sees from, as in the case with Christina Fisher,

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Speaker 1: she did not agree to the sale of her horse

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Speaker 1: Selects and so they were not going to do a

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Speaker 1: sale in that instance. There are some other times where

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Speaker 1: dependants would say it's okay, go ahead and sell it,

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Speaker 1: and then they would hold the amount that they raised

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Speaker 1: in escrow until the disposition of the case. So if

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Speaker 1: the government doesn't get permission for a sale, they have

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Speaker 1: to maintain all these expensive assets, not only the horses,

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Speaker 1: but the car is the yachts, there's the whole coordinated

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Speaker 1: strategy on seizing assets and maintaining assets once they're in custody.

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Speaker 1: In general, the practice is to sell them as quickly

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Speaker 1: as possible, as soon as they have legal permission to

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Speaker 1: do so, because any assets depreciate in value, particularly a yacht,

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Speaker 1: it costs a great deal of money to maintain a yacht.

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Speaker 1: There's to be two d fifty five ft Tango which

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Speaker 1: is owned by billionaire Victor Bexelberg. It was seized by

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Speaker 1: Spain at the behest of the United States, and it's

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Speaker 1: worth about million dollars according to the government, and the

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Speaker 1: net operating costs of that super yacht is about ten

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Speaker 1: of the boat's value. So that's quite a bit of money.

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Speaker 1: And generally, as I say, what the government is trying

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Speaker 1: to do is sell assets as quickly as possible so

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Speaker 1: that they can use the proceeds to either compensate victims

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Speaker 1: or punish criminals for their listed behavior, or pay for

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Speaker 1: government agencies that are involved in law enforcement. Of the

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Speaker 1: value of the yacht for maintenance, that's almost ten million dollars.

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Speaker 1: That's an astonishing amount of money. It's not cheap to

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Speaker 1: be an oligarch. Let's get back to Christina and lex

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Speaker 1: she wanted to ride him at her wedding. What happened,

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Speaker 1: she wanted her horseback for her wedding. They took a

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Speaker 1: ten days before the wedding, took the horse down to Florida,

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Speaker 1: and she was very distraught, and her lawyer negotiated an

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Speaker 1: agreement with the U. S. Attorney's Office in Atlanta, which

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Speaker 1: is leading the prosecute. Enough her father, Jack Fisher, who

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Speaker 1: by the way, is pleaded not guilty and may not

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Speaker 1: go to trial for a couple of years because of

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Speaker 1: a backlog in Atlanta, and the government agreed to return

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Speaker 1: the horse to her for a twenty five thousand dollar deposits.

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Speaker 1: And there's also an agreement that if Jack Fisher is convicted,

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Speaker 1: she can pay what's known as the replacement value for

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Speaker 1: the asset. And I should say that while he bought

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Speaker 1: the horse for seven hundred and fifty thousand dollars in

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Speaker 1: early seventeen, after they seized the horse, the government determined

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Speaker 1: that his value is a hundred and forty five thousand

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Speaker 1: dollars and that he would cost forty to fifty thousand

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Speaker 1: dollars a year to maintain. So if the trial was

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Speaker 1: two or three years out. It really wasn't worth it

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Speaker 1: for the government to keep elects in their custody, and

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Speaker 1: so they agreed to return it to Christina, which also

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Speaker 1: for the government, had the benefit of shifting liability back

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Speaker 1: to her because if he was injured or died, then

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Speaker 1: it would be her responsibility and not the government. And

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Speaker 1: she got Lex back just ten hours before her wedding

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Speaker 1: at one in the morning, ten hours before her wedding.

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Speaker 1: Driver returned to Lex in a trailer from Florida. He

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Speaker 1: was very relieved. She said that he was very cranky,

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Speaker 1: but he got off the trailer and he immediately whinnied

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Speaker 1: at me. She then rode him through the stable where

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Speaker 1: she had her wedding, and her wedding train was draped

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Speaker 1: over his hind quarters, so that went off well. I

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Speaker 1: should say that after that though, she owns eight horses

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Speaker 1: in that stable and several of them developed equine herpes,

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Speaker 1: and Lex tested positive as well. One of the horses

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Speaker 1: in her stable died on the way to a hospital

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Speaker 1: in Tennessee, and another one was in the hospital, and

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Speaker 1: she believed that Lex dot this virus on the trip

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Speaker 1: to Florida because he hadn't left the stable for three

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Speaker 1: months before then, and so she's angry at the I

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Speaker 1: R S over that. And she said that she feels

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Speaker 1: violated and helpless, that she's not part of the case

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Speaker 1: and she's not part of her father's business, and that

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Speaker 1: the i R S took an innocent animal. I wonder why,

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Speaker 1: knowing when the trial was going to be, and then

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Speaker 1: knowing the cost of boarding a horse like this, why

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Speaker 1: they would even seize the horse so quickly. It just

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Speaker 1: doesn't make any sense financially. Well, it's a reasonable question,

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Speaker 1: and we tried to ask the i r S and

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Speaker 1: they didn't respond, but one could infer that by returning

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Speaker 1: the horse within ten days of when they seized it,

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Speaker 1: it's essentially an implicit admission by the i r S

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Speaker 1: that maybe it was not a good idea. And tell

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Speaker 1: us how Lex is doing. Lex is doing fine by

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Speaker 1: all accounts from Christina. He's very close with her. They've

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Speaker 1: and through a lot together. I believe he's still getting

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Speaker 1: over his illness, but she's happy to have him back,

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Speaker 1: and he's happy to be back. So I guess it's

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Speaker 1: a happy ending for Lex and Christina. Thanks so much, David.

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Speaker 1: That's Bloomberg Legal Reporter David Vorriakis. The personality cult of

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Speaker 1: Bill Huang's collapse family office is at the heart of

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Speaker 1: a fifty million dollar lawsuit filed yesterday by former Arcagost

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Speaker 1: managing director Brendan Sullivan, who claims he's owed the money

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Speaker 1: from deferred bonuses he was forced to invest with the company.

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Speaker 1: He alleges that Wang did whatever it took to make

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Speaker 1: money with the goal of becoming the richest person in

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Speaker 1: the world, joining me as Greg Farrell, Bloomberg investigative reporter

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Speaker 1: with the Legal Enforcement Team, tell us about Hwang and

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Speaker 1: his religion and evangelizing at the office, Well, I don't

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Speaker 1: know the guy, but he has a reputation and I

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Speaker 1: think he cultivated his reputation over many years of you know,

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Speaker 1: having a deep Christian faith. He set up a charity, uh,

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Speaker 1: the Grace and Mercy Foundation. But in this lawsuit, in

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Speaker 1: particular the one that was filed yesterday, the charities painted

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Speaker 1: very much as just another vehicle through which Bill Lang

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Speaker 1: could basically do his trades, have a backup in case

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Speaker 1: things went wrong at Archegos, which they of course they did.

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Speaker 1: And then of course there are sort of tax benefits

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Speaker 1: to having a foundation. One of the allegations and yesterday's

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Speaker 1: civil complaint was that the amount of money you know,

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Speaker 1: that was given up by the charity, although it seems

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Speaker 1: large to the average onlooker, actually was a smaller percentage

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Speaker 1: of what it had than you know, other comparable charities.

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Speaker 1: In other words, there was the suggestion that this Christian charity,

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Speaker 1: the charitable foundation, had other purposes rather than just to

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Speaker 1: give away just be philanthropic. Didn't he sort of force

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Speaker 1: or encourage his employees to attend scripture readings and things like. Yes,

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Speaker 1: so a of the lawsuit, right, his uh apparent you know,

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Speaker 1: religiosity played a big role in the way he ran

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Speaker 1: the company, or at least in terms of the types

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Speaker 1: of people he wanted to have on board, and then

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Speaker 1: once they were there, the encouragement, uh to go attend

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Speaker 1: scripture readings in concert with the Grace and Mercy Foundation,

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Speaker 1: and you know, basically making religious statements or comments part

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Speaker 1: of his business. So I don't want to pass judgment

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Speaker 1: another guy's religious faith. But he at times seemed to

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Speaker 1: be very serious about acting the act. But at other times,

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Speaker 1: according to the lawsuit, this was you know, it was

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Speaker 1: described as purported religiosity. So like I said, it's it's puzzling.

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Speaker 1: It's part of Bill Wang's mystique. And you know, as

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Speaker 1: a practical matter, after his legal problems of a decade ago,

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Speaker 1: it probably did, you know, go some distance to help

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Speaker 1: him rehabilitate his image, at least in certain parts of

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Speaker 1: the world of finance. So go back a bit. Wang

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Speaker 1: and the former chief financial officers are facing federal charges.

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Speaker 1: What does that involve. So they've been accused of conspiracy,

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Speaker 1: market manimulation, and conspiracy to basically defraud banks or at

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Speaker 1: least lie to banks. And as you know, it's federal

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Speaker 1: crime to make mis representations to banks in order to

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Speaker 1: get you know, credit or some kind of a benefit.

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Speaker 1: Now they're not charged with you know, those lies like

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Speaker 1: causing the banks to lose money just lying to them

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Speaker 1: I think there was a preview of what the defense

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Speaker 1: has charged with market manipulation, is going to fight that aggressively,

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Speaker 1: saying he's just an investor who wants his stocks go up.

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Speaker 1: So we kept buying the stocks, and the stocks went up.

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Speaker 1: I mean, at a certain basic level, you know if

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Speaker 1: there's something wrong with that. So that's going to be

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Speaker 1: one aspect of his defense and Patrick Halligan's defense. You

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Speaker 1: know that he lied to banks, made misrepresentations. Is you

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Speaker 1: know his lawyer said something that I had come on.

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Speaker 1: This is like the NBA and it's Lebron James versus Shack.

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Speaker 1: There's a lot of elbows, you know that when different

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Speaker 1: counterparties are impeding. Yeah, this sort of thing happens. That's

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Speaker 1: the way the rules are. And they're all adults. These

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Speaker 1: big banks shouldn't be pity because they were ignorant. They

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Speaker 1: were fooled by poor little Bill Wang and Pat Halligan.

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Speaker 1: So that's going to be their attempted defense on the

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Speaker 1: you know, lying to make false statements to banks charge.

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Speaker 1: So tell us about this suit by former suit is

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Speaker 1: different though. A former managing director and analyst, Brendan Sullivan,

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Speaker 1: filed this civil suit yesterday and basically covered in One

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Speaker 1: of the things we found interesting about is that it

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Speaker 1: sort of opened up the world of Bill Wangs ar

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Speaker 1: Chagos and how it operated, and also it uh covered

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Speaker 1: an area that was not mentioned at all in the

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Speaker 1: federal prosecutors case against charges against Bill Whang. A few

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Speaker 1: months ago, namely how employees like Brendan Sullivan and presumably

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Speaker 1: others felt that they were coerced into, you know, putting

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Speaker 1: the maximum amount of their bonus money into a deferred

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Speaker 1: compensation plan that was quote unquote guaranteed by our Chigos management,

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Speaker 1: you know, to never lose money, or at least the

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Speaker 1: principle would never decline, only of course, to have it,

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Speaker 1: you know, run to zero when judgment day came in

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Speaker 1: March of last year. So there was all sorts of

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Speaker 1: color about how, you know, Brendan Sullivan and others must

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Speaker 1: have felt coerced, how they felt like it was their

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Speaker 1: best interest to do what you know, Bill Wang suggested,

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Speaker 1: even when they wanted to cash out or get some

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Speaker 1: of the money out earlier, et cetera, they're encouraged to stay.

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Speaker 1: And when they raised questions about the performance of the

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Speaker 1: fund overall, how not to worry, you know, the escape

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Speaker 1: pod for Chagos would be the Grace and Mercy Foundation,

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Speaker 1: where Bill Wang you know, had planned allegedly to keep

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Speaker 1: on trading if things didn't go that well with this fund.

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Speaker 1: Sullivan claims that employees were sort of forced to invest

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Speaker 1: chunk of their annual bonuses, Yes, in so far as

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Speaker 1: you you were allowed to contribute a much bigger chunk

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Speaker 1: of your bonus into the deferred complaint, or you know,

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Speaker 1: you could put in just a smaller action of that,

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Speaker 1: And he was interested in the smaller fraction part. But

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Speaker 1: it was made clear to him that the decision on

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Speaker 1: how much you get for his bonus would not be

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Speaker 1: decided until he made his decision as to how much

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Speaker 1: of it was going to go into the deferred complaint.

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Speaker 1: So it was clearly viewed by by Sullivan and presumably

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Speaker 1: others as you know, if you know it's good for you,

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Speaker 1: your bonus will be bigger if you decided to put

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Speaker 1: more of it in the fund. So it's alleged that

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Speaker 1: basically Bill Wang was using the deferred compensation plan as

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Speaker 1: a like an interest free loan, you know, extra money

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Speaker 1: he could use to play with when he was in

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Speaker 1: the markets. So that's another aspect of Sullivan's lawsuit that's

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Speaker 1: interesting is that you know, he's claiming fraud, you know,

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Speaker 1: fraud on behalf of Bill Wang and other not just

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Speaker 1: the CFO Patrick Allghan who has been charged, but four

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Speaker 1: other named executives he's accusing of fraud. On conduct and

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Speaker 1: has not been charged. So it' you know, I'm not

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Speaker 1: sure if this is going to be something that will

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Speaker 1: be suddenly get on the radar screen of the federal prosecutors,

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Speaker 1: or if this is something that the as well leave

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Speaker 1: to be sorted out in civil court. As you mentioned,

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Speaker 1: the suit gives some insight into the way the company

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Speaker 1: was run by Wang, and loyalty to Wang, not performance,

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Speaker 1: was the most important, and if you criticized or questioned,

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Speaker 1: you were publicly reprimanded. Yes, well, first of all, loyalty

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Speaker 1: over performance because it was not like other hedge funds

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Speaker 1: where you had your own money to play with, and

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Speaker 1: you could be judged as to how Bill Wang made

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Speaker 1: all the decisions or all the primary decisions. So if

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Speaker 1: the performance with Bill Wang's, you know, I'm not sure

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Speaker 1: you or I would have like a good year or

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Speaker 1: bad year if we were there, because you're basically just

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Speaker 1: making recommendations, but it's Bill Wang who makes the ultimate judgment. Yes,

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Speaker 1: loyalty was prized because there were occasions when an employee

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Speaker 1: would question, like, why are we buying you know, so

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Speaker 1: many shares of this little company over and over again

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Speaker 1: every day. And the anecdote is recounted in the lawsuit

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Speaker 1: is that Bill Wang replied in an email and hit

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Speaker 1: all you know, shared it with the entire company just

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Speaker 1: to humiliate the employee who had raised this question, which

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Speaker 1: doesn't sound very Christian when you come down to it,

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Speaker 1: and that this was part of like management by intimidation

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Speaker 1: at the firm. So the basic claim of the lawsuit

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Speaker 1: is that the employees were forced to put their money

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Speaker 1: in the deferred compensation plan coerced with the maximum amount

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Speaker 1: it yes, and then to keep it there as long

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Speaker 1: as possible. In other words, funfolded in March of last year,

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Speaker 1: but that was a full year into COVID. There could

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Speaker 1: have been times earlier when we don't know yet, when

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Speaker 1: some of the participants wanted money out, but we're sweet

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Speaker 1: talks and encouraged to just stay. We'll get through this, etcetera, etcetera,

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Speaker 1: And everything's fine, don't worry, it's not going to go

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Speaker 1: below par so your money is guaranteed, etcetera, etcetera. So

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Speaker 1: when is that, you know, puffery and reassurance, and when

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Speaker 1: is that fraud? Well, there are twenty counts claimed in

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Speaker 1: the civil suit, and a lot of them have to

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Speaker 1: do with violations of Harissa Guideline. There were rules regarding this,

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Speaker 1: so charging not just like they were talking it up,

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Speaker 1: but that you're breaking, you know, laws that protect people's

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Speaker 1: pensions by making misrepresentations about them in various ways and

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Speaker 1: using the money for other purposes, etcetera. So those are

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Speaker 1: among the twenty legal claims that are part of the

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Speaker 1: civil suit. So is the Grace and Mercy Foundation still

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Speaker 1: in operation. I don't know that. Certainly, it's not an

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Speaker 1: operation so far as a freestanding charity. It was so

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Speaker 1: closely attached. I think it's probably been by credit or

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Speaker 1: just everything's been frozen for now. You know. While all

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Speaker 1: sorts of litigation starting in March of last year began

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Speaker 1: against Wlang. My next question was, really, let's say they

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Speaker 1: win a judgment here, where would the money for that

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Speaker 1: judgment come from? Good questions. It's really unclear because you know,

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Speaker 1: obviously some of the banks want a piece of as well,

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Speaker 1: banks that lost a lot of money. And this is

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Speaker 1: how the criminal case will come into play. If Wang

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Speaker 1: and Alligan are convicted of crimes that you know, bolsters

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Speaker 1: the band extending that they were defrauded and the ones

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Speaker 1: who lost money and that they like some the fact

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Speaker 1: of the you know, this is not you know, legal advice,

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Speaker 1: but the fact that Bill Wang in the cfo of

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Speaker 1: and charge criminally helps the civil case to some extent too,

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Speaker 1: because in a civil case, if it's actually ever went

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Speaker 1: to court, is that, by the way, the defendant in

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Speaker 1: this case has also be charged criminally with the same conduct.

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Speaker 1: That would not that this would ever go to a

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Speaker 1: jury trial. But you know, if it did. You know,

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Speaker 1: the fact that the you know, top two executives at

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Speaker 1: this fund, you know, and Brending Selven suits against you know,

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Speaker 1: have been charged criminally maybe wouldn't have legal standing, but

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Speaker 1: to any jury it would be a point of interest,

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Speaker 1: if you know what I mean. And does anyone really

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Speaker 1: know how much money Bill Wang has now it's not clear.

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Speaker 1: So that's going to be part of this whole exercise.

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Speaker 1: Is this a tough case to make out? Well, it's

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Speaker 1: gonna be secondary. The key thing for Bill Wing right

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Speaker 1: now is the criminal charge. That's obviously that they could

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Speaker 1: put him in prison for the rest of his life.

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Speaker 1: So this is a civil suit. This is just not

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Speaker 1: as important right now as the criminal charges facing him

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Speaker 1: and Pat Alligan. Thanks so much, Greg. That's Greg Ferrell,

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Speaker 1: Bloomberg Investigative reporter with the legal enforcement team. And that's

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Speaker 1: it for this edition of The Bloomberg Law Show. Remember

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Speaker 1: you can always get the latest legal news on our

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Speaker 1: Bloomberg Law Podcast. You can find them on Apple Podcasts, Spotify,

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Speaker 1: and at www dot Bloomberg dot com, slash podcast Slash Law,

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Speaker 1: And remember to tune into The Bloomberg Law Show every

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Speaker 1: week night at ten BM Wall Street Time. I'm June

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Speaker 1: Grosso and you're listening to Bloomberg