WEBVTT - A Wedding, A Champion Horse and the IRS

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<v Speaker 1>This is Bloombird Law with June Brasso from Bloomberg Radio. Horses.

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<v Speaker 1>What does it feel like to be in love with

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<v Speaker 1>a horse? I want to be a famous rider? The

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<v Speaker 1>Lovely MGMs National Velvet, The exciting story of a Girl,

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<v Speaker 1>a horse and a dream in color National Velvet from

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<v Speaker 1>is just one in a long line of movies about

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

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<v Speaker 1>Flick Up, the Horse Whisperer. The list goes on and on.

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<v Speaker 1>But what about the bond between a woman and her horse.

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<v Speaker 1>Christina Fisher's horse, Lex, a champion show jumper, was so

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<v Speaker 1>important to her that she planned to ride him at

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<v Speaker 1>her wedding. But just ten days before the wedding, enter

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<v Speaker 1>the I R S. They seized Lex from stables in

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<v Speaker 1>the mountains of western North Carolina and drove him down

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<v Speaker 1>to Delray Beach, Florida, despite Christina's please joining me is

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<v Speaker 1>Bloomberg Legal reporter David Voriankis who wrote about the story.

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<v Speaker 1>So David tell us about Christina and Lex. Christina Fisher

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<v Speaker 1>is a lifelong equestrian whose favorite horse, Lex is a

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<v Speaker 1>big athletic jumper, and she was planning her wedding. In

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<v Speaker 1>early May, she was visiting her mother in Atlanta when

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<v Speaker 1>she learned that I R S agent arrived at the

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<v Speaker 1>stables in western North Carolina where she kept Lex, and

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<v Speaker 1>that I R S agents were seizing Lex because her father,

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

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<v Speaker 1>one point three billion dollars in fraudulent tax deduction for

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<v Speaker 1>investors in syndicated deals that conserved land, and the I

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<v Speaker 1>R S was seizing pre conviction a bunch of assets

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<v Speaker 1>for Jack Fisher, including the horse, which he had bought

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<v Speaker 1>for Christina as a gift in early twenty seventeen. They'd

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<v Speaker 1>also sees an airplane, Mercedes, a forty five foot recreational vehicle,

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<v Speaker 1>and Lex. They put leans on real estate they could

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<v Speaker 1>seize if he's convicted. But for Christina Fisher this was

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<v Speaker 1>a terrible event because she was a couple hundred miles

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<v Speaker 1>away in Atlanta, and Lex is a champion show jumping horse.

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<v Speaker 1>They had jumped together in about ten events a year

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<v Speaker 1>for several years. He had also had a couple of

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<v Speaker 1>bad accidents in which he'd fallen and hurt his neck

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<v Speaker 1>and his back, so he was on a special metabolic diet,

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<v Speaker 1>and she was very concerned that he would not be

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<v Speaker 1>handled properly by the I R S agents. She was

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<v Speaker 1>on the phone talking to I R S agents and

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<v Speaker 1>they would not stop until she got there. They went

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<v Speaker 1>ahead and took the horse to a trainer in southern

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<v Speaker 1>North Carolina for evaluation, and then they took him by

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<v Speaker 1>police escort down to Delray Beach, Florida. And she also

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<v Speaker 1>believes strongly that she had nothing to do with the

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<v Speaker 1>fraud that her father is accused of. Just to clarify

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<v Speaker 1>this was a gift to her years ago. They're not

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<v Speaker 1>accusing her of doing anything, certainly not accusing the horse

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

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<v Speaker 1>it's the position of the government that this was an

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<v Speaker 1>asset that he bought with proceeds of the fraud, and

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<v Speaker 1>so they're trying to tease and ultimately liquidate those assets

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<v Speaker 1>that are purchased with proceeds of the fraud. The government

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<v Speaker 1>would dispute that it is not Jack Fisher's assets. This

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<v Speaker 1>seems like a complex move involving a lot of hassle

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<v Speaker 1>and expense. It also seems kind of cruel to seize

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<v Speaker 1>a horse is this what they do. In the ordinary

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<v Speaker 1>course of business. The I R S and other government

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

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<v Speaker 1>Animals are also some of those assets. But all the

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<v Speaker 1>assets they sees, animals probably take the most work. And

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<v Speaker 1>you know there's the chance the animal could die, which

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<v Speaker 1>with them, we yes said, without any value. I had

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<v Speaker 1>token with a former US Marshall's Chief inspector who, as

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<v Speaker 1>part of a case a decade ago in Dixon, Illinois,

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<v Speaker 1>sees several hundred quarter horses which were owned by a

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<v Speaker 1>woman named Rita Crundwell, who was convicted of stealing fifty

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<v Speaker 1>three point seven million dollars from the city of Dixon, Illinois,

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<v Speaker 1>where she worked, and she had used the money that

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<v Speaker 1>she sold to help finance her breathing and showing of

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<v Speaker 1>these American quarter horses. The government eventually auctioned more than

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<v Speaker 1>four hundred of those horses, including one of them, for

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<v Speaker 1>seven hundred and seventy five thousand dollars. And as that

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<v Speaker 1>former Marshall told me, any asset is a liability to

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<v Speaker 1>the government, but an animal is a significant liability because

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<v Speaker 1>they have to eat and they require veterinarian care and

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<v Speaker 1>ultimately they could die. And this is being done before

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<v Speaker 1>her father is even convicted. He's just been indicted at

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

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<v Speaker 1>and it goes on a lot. The government holds the

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<v Speaker 1>asset and in the event that the defendant is acquitted,

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<v Speaker 1>the asset is returned to them. Now, there are some

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<v Speaker 1>instances where the government and the defendant can agree to

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<v Speaker 1>a sale of the asset and then the amount that

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<v Speaker 1>they raised through the sale would be returned to the

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<v Speaker 1>defendant if they're acquitted. In the case of an asset

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<v Speaker 1>that has great emotional value to a dependant or whomever

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<v Speaker 1>it sees from, as in the case with Christina Fisher,

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<v Speaker 1>she did not agree to the sale of her horse

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<v Speaker 1>Selects and so they were not going to do a

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<v Speaker 1>sale in that instance. There are some other times where

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<v Speaker 1>dependants would say it's okay, go ahead and sell it,

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<v Speaker 1>and then they would hold the amount that they raised

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<v Speaker 1>in escrow until the disposition of the case. So if

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<v Speaker 1>the government doesn't get permission for a sale, they have

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<v Speaker 1>to maintain all these expensive assets, not only the horses,

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<v Speaker 1>but the car is the yachts, there's the whole coordinated

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<v Speaker 1>strategy on seizing assets and maintaining assets once they're in custody.

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<v Speaker 1>In general, the practice is to sell them as quickly

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<v Speaker 1>as possible, as soon as they have legal permission to

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<v Speaker 1>do so, because any assets depreciate in value, particularly a yacht,

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<v Speaker 1>it costs a great deal of money to maintain a yacht.

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<v Speaker 1>There's to be two d fifty five ft Tango which

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<v Speaker 1>is owned by billionaire Victor Bexelberg. It was seized by

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<v Speaker 1>Spain at the behest of the United States, and it's

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<v Speaker 1>worth about million dollars according to the government, and the

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<v Speaker 1>net operating costs of that super yacht is about ten

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<v Speaker 1>of the boat's value. So that's quite a bit of money.

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<v Speaker 1>And generally, as I say, what the government is trying

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<v Speaker 1>to do is sell assets as quickly as possible so

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<v Speaker 1>that they can use the proceeds to either compensate victims

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<v Speaker 1>or punish criminals for their listed behavior, or pay for

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<v Speaker 1>government agencies that are involved in law enforcement. Of the

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

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<v Speaker 1>That's an astonishing amount of money. It's not cheap to

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<v Speaker 1>be an oligarch. Let's get back to Christina and lex

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<v Speaker 1>she wanted to ride him at her wedding. What happened,

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<v Speaker 1>she wanted her horseback for her wedding. They took a

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<v Speaker 1>ten days before the wedding, took the horse down to Florida,

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<v Speaker 1>and she was very distraught, and her lawyer negotiated an

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

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<v Speaker 1>is leading the prosecute. Enough her father, Jack Fisher, who

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<v Speaker 1>by the way, is pleaded not guilty and may not

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<v Speaker 1>go to trial for a couple of years because of

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<v Speaker 1>a backlog in Atlanta, and the government agreed to return

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<v Speaker 1>the horse to her for a twenty five thousand dollar deposits.

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

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<v Speaker 1>she can pay what's known as the replacement value for

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<v Speaker 1>the asset. And I should say that while he bought

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<v Speaker 1>the horse for seven hundred and fifty thousand dollars in

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<v Speaker 1>early seventeen, after they seized the horse, the government determined

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<v Speaker 1>that his value is a hundred and forty five thousand

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<v Speaker 1>dollars and that he would cost forty to fifty thousand

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<v Speaker 1>dollars a year to maintain. So if the trial was

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<v Speaker 1>two or three years out. It really wasn't worth it

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<v Speaker 1>for the government to keep elects in their custody, and

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<v Speaker 1>so they agreed to return it to Christina, which also

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<v Speaker 1>for the government, had the benefit of shifting liability back

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<v Speaker 1>to her because if he was injured or died, then

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<v Speaker 1>it would be her responsibility and not the government. And

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<v Speaker 1>she got Lex back just ten hours before her wedding

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<v Speaker 1>at one in the morning, ten hours before her wedding.

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<v Speaker 1>Driver returned to Lex in a trailer from Florida. He

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<v Speaker 1>was very relieved. She said that he was very cranky,

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<v Speaker 1>but he got off the trailer and he immediately whinnied

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<v Speaker 1>at me. She then rode him through the stable where

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<v Speaker 1>she had her wedding, and her wedding train was draped

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<v Speaker 1>over his hind quarters, so that went off well. I

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<v Speaker 1>should say that after that though, she owns eight horses

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<v Speaker 1>in that stable and several of them developed equine herpes,

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<v Speaker 1>and Lex tested positive as well. One of the horses

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<v Speaker 1>in her stable died on the way to a hospital

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<v Speaker 1>in Tennessee, and another one was in the hospital, and

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<v Speaker 1>she believed that Lex dot this virus on the trip

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<v Speaker 1>to Florida because he hadn't left the stable for three

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<v Speaker 1>months before then, and so she's angry at the I

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<v Speaker 1>R S over that. And she said that she feels

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<v Speaker 1>violated and helpless, that she's not part of the case

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<v Speaker 1>and she's not part of her father's business, and that

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<v Speaker 1>the i R S took an innocent animal. I wonder why,

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<v Speaker 1>knowing when the trial was going to be, and then

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<v Speaker 1>knowing the cost of boarding a horse like this, why

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<v Speaker 1>they would even seize the horse so quickly. It just

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

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<v Speaker 1>and we tried to ask the i r S and

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<v Speaker 1>they didn't respond, but one could infer that by returning

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<v Speaker 1>the horse within ten days of when they seized it,

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<v Speaker 1>it's essentially an implicit admission by the i r S

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<v Speaker 1>that maybe it was not a good idea. And tell

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<v Speaker 1>us how Lex is doing. Lex is doing fine by

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

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<v Speaker 1>and through a lot together. I believe he's still getting

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<v Speaker 1>over his illness, but she's happy to have him back,

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<v Speaker 1>and he's happy to be back. So I guess it's

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<v Speaker 1>a happy ending for Lex and Christina. Thanks so much, David.

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<v Speaker 1>That's Bloomberg Legal Reporter David Vorriakis. The personality cult of

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<v Speaker 1>Bill Huang's collapse family office is at the heart of

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<v Speaker 1>a fifty million dollar lawsuit filed yesterday by former Arcagost

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<v Speaker 1>managing director Brendan Sullivan, who claims he's owed the money

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<v Speaker 1>from deferred bonuses he was forced to invest with the company.

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<v Speaker 1>He alleges that Wang did whatever it took to make

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<v Speaker 1>money with the goal of becoming the richest person in

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<v Speaker 1>the world, joining me as Greg Farrell, Bloomberg investigative reporter

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<v Speaker 1>with the Legal Enforcement Team, tell us about Hwang and

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<v Speaker 1>his religion and evangelizing at the office, Well, I don't

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<v Speaker 1>know the guy, but he has a reputation and I

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<v Speaker 1>think he cultivated his reputation over many years of you know,

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<v Speaker 1>having a deep Christian faith. He set up a charity, uh,

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<v Speaker 1>the Grace and Mercy Foundation. But in this lawsuit, in

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<v Speaker 1>particular the one that was filed yesterday, the charities painted

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<v Speaker 1>very much as just another vehicle through which Bill Lang

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<v Speaker 1>could basically do his trades, have a backup in case

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<v Speaker 1>things went wrong at Archegos, which they of course they did.

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<v Speaker 1>And then of course there are sort of tax benefits

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<v Speaker 1>to having a foundation. One of the allegations and yesterday's

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<v Speaker 1>civil complaint was that the amount of money you know,

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<v Speaker 1>that was given up by the charity, although it seems

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<v Speaker 1>large to the average onlooker, actually was a smaller percentage

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<v Speaker 1>of what it had than you know, other comparable charities.

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<v Speaker 1>In other words, there was the suggestion that this Christian charity,

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<v Speaker 1>the charitable foundation, had other purposes rather than just to

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<v Speaker 1>give away just be philanthropic. Didn't he sort of force

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

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<v Speaker 1>so a of the lawsuit, right, his uh apparent you know,

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<v Speaker 1>religiosity played a big role in the way he ran

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<v Speaker 1>the company, or at least in terms of the types

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<v Speaker 1>of people he wanted to have on board, and then

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<v Speaker 1>once they were there, the encouragement, uh to go attend

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<v Speaker 1>scripture readings in concert with the Grace and Mercy Foundation,

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<v Speaker 1>and you know, basically making religious statements or comments part

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<v Speaker 1>of his business. So I don't want to pass judgment

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<v Speaker 1>another guy's religious faith. But he at times seemed to

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<v Speaker 1>be very serious about acting the act. But at other times,

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<v Speaker 1>according to the lawsuit, this was you know, it was

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

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

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<v Speaker 1>a practical matter, after his legal problems of a decade ago,

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<v Speaker 1>it probably did, you know, go some distance to help

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<v Speaker 1>him rehabilitate his image, at least in certain parts of

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<v Speaker 1>the world of finance. So go back a bit. Wang

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<v Speaker 1>and the former chief financial officers are facing federal charges.

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

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<v Speaker 1>market manimulation, and conspiracy to basically defraud banks or at

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

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<v Speaker 1>crime to make mis representations to banks in order to

0:14:15.320 --> 0:14:17.640
<v Speaker 1>get you know, credit or some kind of a benefit.

0:14:18.000 --> 0:14:20.720
<v Speaker 1>Now they're not charged with you know, those lies like

0:14:20.840 --> 0:14:23.680
<v Speaker 1>causing the banks to lose money just lying to them

0:14:23.880 --> 0:14:26.080
<v Speaker 1>in one hearing that they had like a month ago.

0:14:26.120 --> 0:14:28.200
<v Speaker 1>I think there was a preview of what the defense

0:14:28.320 --> 0:14:30.160
<v Speaker 1>is going to be like. And then Bill Whang, who

0:14:30.160 --> 0:14:34.000
<v Speaker 1>has charged with market manipulation, is going to fight that aggressively,

0:14:34.080 --> 0:14:36.760
<v Speaker 1>saying he's just an investor who wants his stocks go up.

0:14:36.760 --> 0:14:38.600
<v Speaker 1>So we kept buying the stocks, and the stocks went up.

0:14:38.640 --> 0:14:41.720
<v Speaker 1>I mean, at a certain basic level, you know if

0:14:41.720 --> 0:14:43.800
<v Speaker 1>there's something wrong with that. So that's going to be

0:14:43.880 --> 0:14:47.400
<v Speaker 1>one aspect of his defense and Patrick Halligan's defense. You

0:14:47.440 --> 0:14:51.240
<v Speaker 1>know that he lied to banks, made misrepresentations. Is you

0:14:51.240 --> 0:14:53.440
<v Speaker 1>know his lawyer said something that I had come on.

0:14:53.520 --> 0:14:56.640
<v Speaker 1>This is like the NBA and it's Lebron James versus Shack.

0:14:56.760 --> 0:14:59.080
<v Speaker 1>There's a lot of elbows, you know that when different

0:14:59.160 --> 0:15:02.680
<v Speaker 1>counterparties are impeding. Yeah, this sort of thing happens. That's

0:15:02.720 --> 0:15:05.160
<v Speaker 1>the way the rules are. And they're all adults. These

0:15:05.160 --> 0:15:07.320
<v Speaker 1>big banks shouldn't be pity because they were ignorant. They

0:15:07.320 --> 0:15:10.320
<v Speaker 1>were fooled by poor little Bill Wang and Pat Halligan.

0:15:10.600 --> 0:15:14.040
<v Speaker 1>So that's going to be their attempted defense on the

0:15:14.120 --> 0:15:16.960
<v Speaker 1>you know, lying to make false statements to banks charge.

0:15:17.440 --> 0:15:21.360
<v Speaker 1>So tell us about this suit by former suit is

0:15:21.400 --> 0:15:25.520
<v Speaker 1>different though. A former managing director and analyst, Brendan Sullivan,

0:15:25.560 --> 0:15:29.760
<v Speaker 1>filed this civil suit yesterday and basically covered in One

0:15:29.760 --> 0:15:31.880
<v Speaker 1>of the things we found interesting about is that it

0:15:32.000 --> 0:15:34.080
<v Speaker 1>sort of opened up the world of Bill Wangs ar

0:15:34.160 --> 0:15:39.240
<v Speaker 1>Chagos and how it operated, and also it uh covered

0:15:39.280 --> 0:15:42.040
<v Speaker 1>an area that was not mentioned at all in the

0:15:42.040 --> 0:15:45.280
<v Speaker 1>federal prosecutors case against charges against Bill Whang. A few

0:15:45.280 --> 0:15:49.119
<v Speaker 1>months ago, namely how employees like Brendan Sullivan and presumably

0:15:49.120 --> 0:15:52.800
<v Speaker 1>others felt that they were coerced into, you know, putting

0:15:52.840 --> 0:15:55.400
<v Speaker 1>the maximum amount of their bonus money into a deferred

0:15:55.400 --> 0:16:00.000
<v Speaker 1>compensation plan that was quote unquote guaranteed by our Chigos management,

0:16:00.160 --> 0:16:02.080
<v Speaker 1>you know, to never lose money, or at least the

0:16:02.080 --> 0:16:04.640
<v Speaker 1>principle would never decline, only of course, to have it,

0:16:04.720 --> 0:16:07.520
<v Speaker 1>you know, run to zero when judgment day came in

0:16:07.880 --> 0:16:11.240
<v Speaker 1>March of last year. So there was all sorts of

0:16:11.280 --> 0:16:14.760
<v Speaker 1>color about how, you know, Brendan Sullivan and others must

0:16:14.800 --> 0:16:17.440
<v Speaker 1>have felt coerced, how they felt like it was their

0:16:17.440 --> 0:16:20.960
<v Speaker 1>best interest to do what you know, Bill Wang suggested,

0:16:21.040 --> 0:16:23.240
<v Speaker 1>even when they wanted to cash out or get some

0:16:23.280 --> 0:16:26.479
<v Speaker 1>of the money out earlier, et cetera, they're encouraged to stay.

0:16:26.560 --> 0:16:28.520
<v Speaker 1>And when they raised questions about the performance of the

0:16:28.520 --> 0:16:31.520
<v Speaker 1>fund overall, how not to worry, you know, the escape

0:16:31.520 --> 0:16:35.120
<v Speaker 1>pod for Chagos would be the Grace and Mercy Foundation,

0:16:35.160 --> 0:16:38.040
<v Speaker 1>where Bill Wang you know, had planned allegedly to keep

0:16:38.080 --> 0:16:40.320
<v Speaker 1>on trading if things didn't go that well with this fund.

0:16:40.800 --> 0:16:46.920
<v Speaker 1>Sullivan claims that employees were sort of forced to invest

0:16:47.480 --> 0:16:51.720
<v Speaker 1>chunk of their annual bonuses, Yes, in so far as

0:16:51.800 --> 0:16:55.880
<v Speaker 1>you you were allowed to contribute a much bigger chunk

0:16:55.880 --> 0:16:58.360
<v Speaker 1>of your bonus into the deferred complaint, or you know,

0:16:58.680 --> 0:17:00.560
<v Speaker 1>you could put in just a smaller action of that,

0:17:01.120 --> 0:17:03.880
<v Speaker 1>And he was interested in the smaller fraction part. But

0:17:03.920 --> 0:17:06.639
<v Speaker 1>it was made clear to him that the decision on

0:17:06.640 --> 0:17:08.520
<v Speaker 1>how much you get for his bonus would not be

0:17:08.600 --> 0:17:11.960
<v Speaker 1>decided until he made his decision as to how much

0:17:11.960 --> 0:17:13.840
<v Speaker 1>of it was going to go into the deferred complaint.

0:17:13.880 --> 0:17:17.560
<v Speaker 1>So it was clearly viewed by by Sullivan and presumably

0:17:17.600 --> 0:17:20.600
<v Speaker 1>others as you know, if you know it's good for you,

0:17:20.760 --> 0:17:22.440
<v Speaker 1>your bonus will be bigger if you decided to put

0:17:22.440 --> 0:17:25.520
<v Speaker 1>more of it in the fund. So it's alleged that

0:17:25.600 --> 0:17:28.680
<v Speaker 1>basically Bill Wang was using the deferred compensation plan as

0:17:28.720 --> 0:17:31.359
<v Speaker 1>a like an interest free loan, you know, extra money

0:17:31.359 --> 0:17:33.280
<v Speaker 1>he could use to play with when he was in

0:17:33.320 --> 0:17:38.120
<v Speaker 1>the markets. So that's another aspect of Sullivan's lawsuit that's

0:17:38.200 --> 0:17:41.399
<v Speaker 1>interesting is that you know, he's claiming fraud, you know,

0:17:41.440 --> 0:17:43.840
<v Speaker 1>fraud on behalf of Bill Wang and other not just

0:17:44.200 --> 0:17:46.640
<v Speaker 1>the CFO Patrick Allghan who has been charged, but four

0:17:46.720 --> 0:17:50.960
<v Speaker 1>other named executives he's accusing of fraud. On conduct and

0:17:51.040 --> 0:17:53.080
<v Speaker 1>has not been charged. So it' you know, I'm not

0:17:53.119 --> 0:17:54.760
<v Speaker 1>sure if this is going to be something that will

0:17:54.760 --> 0:17:58.400
<v Speaker 1>be suddenly get on the radar screen of the federal prosecutors,

0:17:58.720 --> 0:18:00.560
<v Speaker 1>or if this is something that the as well leave

0:18:00.640 --> 0:18:02.960
<v Speaker 1>to be sorted out in civil court. As you mentioned,

0:18:02.960 --> 0:18:05.760
<v Speaker 1>the suit gives some insight into the way the company

0:18:05.960 --> 0:18:11.240
<v Speaker 1>was run by Wang, and loyalty to Wang, not performance,

0:18:11.640 --> 0:18:16.080
<v Speaker 1>was the most important, and if you criticized or questioned,

0:18:16.080 --> 0:18:19.960
<v Speaker 1>you were publicly reprimanded. Yes, well, first of all, loyalty

0:18:20.000 --> 0:18:23.680
<v Speaker 1>over performance because it was not like other hedge funds

0:18:23.680 --> 0:18:25.679
<v Speaker 1>where you had your own money to play with, and

0:18:25.720 --> 0:18:28.560
<v Speaker 1>you could be judged as to how Bill Wang made

0:18:28.560 --> 0:18:31.520
<v Speaker 1>all the decisions or all the primary decisions. So if

0:18:31.600 --> 0:18:34.200
<v Speaker 1>the performance with Bill Wang's, you know, I'm not sure

0:18:34.240 --> 0:18:35.800
<v Speaker 1>you or I would have like a good year or

0:18:35.840 --> 0:18:38.280
<v Speaker 1>bad year if we were there, because you're basically just

0:18:38.600 --> 0:18:42.800
<v Speaker 1>making recommendations, but it's Bill Wang who makes the ultimate judgment. Yes,

0:18:43.080 --> 0:18:46.760
<v Speaker 1>loyalty was prized because there were occasions when an employee

0:18:46.760 --> 0:18:49.560
<v Speaker 1>would question, like, why are we buying you know, so

0:18:49.600 --> 0:18:52.600
<v Speaker 1>many shares of this little company over and over again

0:18:52.640 --> 0:18:55.760
<v Speaker 1>every day. And the anecdote is recounted in the lawsuit

0:18:55.840 --> 0:18:59.240
<v Speaker 1>is that Bill Wang replied in an email and hit

0:18:59.280 --> 0:19:02.000
<v Speaker 1>all you know, shared it with the entire company just

0:19:02.080 --> 0:19:05.040
<v Speaker 1>to humiliate the employee who had raised this question, which

0:19:05.080 --> 0:19:07.399
<v Speaker 1>doesn't sound very Christian when you come down to it,

0:19:07.520 --> 0:19:11.359
<v Speaker 1>and that this was part of like management by intimidation

0:19:11.680 --> 0:19:15.359
<v Speaker 1>at the firm. So the basic claim of the lawsuit

0:19:15.480 --> 0:19:19.560
<v Speaker 1>is that the employees were forced to put their money

0:19:19.600 --> 0:19:23.200
<v Speaker 1>in the deferred compensation plan coerced with the maximum amount

0:19:23.320 --> 0:19:25.920
<v Speaker 1>it yes, and then to keep it there as long

0:19:25.920 --> 0:19:29.120
<v Speaker 1>as possible. In other words, funfolded in March of last year,

0:19:29.160 --> 0:19:30.960
<v Speaker 1>but that was a full year into COVID. There could

0:19:30.960 --> 0:19:33.920
<v Speaker 1>have been times earlier when we don't know yet, when

0:19:33.960 --> 0:19:36.840
<v Speaker 1>some of the participants wanted money out, but we're sweet

0:19:36.880 --> 0:19:39.960
<v Speaker 1>talks and encouraged to just stay. We'll get through this, etcetera, etcetera,

0:19:40.359 --> 0:19:42.240
<v Speaker 1>And everything's fine, don't worry, it's not going to go

0:19:42.320 --> 0:19:46.159
<v Speaker 1>below par so your money is guaranteed, etcetera, etcetera. So

0:19:46.240 --> 0:19:50.280
<v Speaker 1>when is that, you know, puffery and reassurance, and when

0:19:50.359 --> 0:19:53.840
<v Speaker 1>is that fraud? Well, there are twenty counts claimed in

0:19:53.880 --> 0:19:55.600
<v Speaker 1>the civil suit, and a lot of them have to

0:19:55.600 --> 0:19:59.320
<v Speaker 1>do with violations of Harissa Guideline. There were rules regarding this,

0:19:59.440 --> 0:20:02.199
<v Speaker 1>so charging not just like they were talking it up,

0:20:02.240 --> 0:20:05.439
<v Speaker 1>but that you're breaking, you know, laws that protect people's

0:20:05.480 --> 0:20:09.440
<v Speaker 1>pensions by making misrepresentations about them in various ways and

0:20:09.560 --> 0:20:13.119
<v Speaker 1>using the money for other purposes, etcetera. So those are

0:20:13.160 --> 0:20:15.320
<v Speaker 1>among the twenty legal claims that are part of the

0:20:15.359 --> 0:20:19.680
<v Speaker 1>civil suit. So is the Grace and Mercy Foundation still

0:20:20.119 --> 0:20:23.840
<v Speaker 1>in operation. I don't know that. Certainly, it's not an

0:20:23.880 --> 0:20:26.600
<v Speaker 1>operation so far as a freestanding charity. It was so

0:20:26.680 --> 0:20:29.919
<v Speaker 1>closely attached. I think it's probably been by credit or

0:20:30.080 --> 0:20:33.080
<v Speaker 1>just everything's been frozen for now. You know. While all

0:20:33.119 --> 0:20:36.399
<v Speaker 1>sorts of litigation starting in March of last year began

0:20:36.440 --> 0:20:40.200
<v Speaker 1>against Wlang. My next question was, really, let's say they

0:20:40.240 --> 0:20:42.880
<v Speaker 1>win a judgment here, where would the money for that

0:20:42.960 --> 0:20:47.919
<v Speaker 1>judgment come from? Good questions. It's really unclear because you know,

0:20:48.040 --> 0:20:50.640
<v Speaker 1>obviously some of the banks want a piece of as well,

0:20:50.680 --> 0:20:52.840
<v Speaker 1>banks that lost a lot of money. And this is

0:20:52.880 --> 0:20:55.560
<v Speaker 1>how the criminal case will come into play. If Wang

0:20:55.720 --> 0:20:59.720
<v Speaker 1>and Alligan are convicted of crimes that you know, bolsters

0:20:59.760 --> 0:21:02.280
<v Speaker 1>the band extending that they were defrauded and the ones

0:21:02.320 --> 0:21:04.920
<v Speaker 1>who lost money and that they like some the fact

0:21:05.119 --> 0:21:08.120
<v Speaker 1>of the you know, this is not you know, legal advice,

0:21:08.160 --> 0:21:11.040
<v Speaker 1>but the fact that Bill Wang in the cfo of

0:21:11.040 --> 0:21:14.720
<v Speaker 1>and charge criminally helps the civil case to some extent too,

0:21:14.760 --> 0:21:17.320
<v Speaker 1>because in a civil case, if it's actually ever went

0:21:17.359 --> 0:21:20.080
<v Speaker 1>to court, is that, by the way, the defendant in

0:21:20.080 --> 0:21:22.479
<v Speaker 1>this case has also be charged criminally with the same conduct.

0:21:22.520 --> 0:21:24.280
<v Speaker 1>That would not that this would ever go to a

0:21:24.359 --> 0:21:27.119
<v Speaker 1>jury trial. But you know, if it did. You know,

0:21:27.280 --> 0:21:30.080
<v Speaker 1>the fact that the you know, top two executives at

0:21:30.080 --> 0:21:33.119
<v Speaker 1>this fund, you know, and Brending Selven suits against you know,

0:21:33.200 --> 0:21:35.960
<v Speaker 1>have been charged criminally maybe wouldn't have legal standing, but

0:21:36.000 --> 0:21:38.320
<v Speaker 1>to any jury it would be a point of interest,

0:21:38.359 --> 0:21:40.879
<v Speaker 1>if you know what I mean. And does anyone really

0:21:40.920 --> 0:21:45.080
<v Speaker 1>know how much money Bill Wang has now it's not clear.

0:21:45.320 --> 0:21:47.199
<v Speaker 1>So that's going to be part of this whole exercise.

0:21:47.760 --> 0:21:50.600
<v Speaker 1>Is this a tough case to make out? Well, it's

0:21:50.640 --> 0:21:52.760
<v Speaker 1>gonna be secondary. The key thing for Bill Wing right

0:21:52.760 --> 0:21:55.120
<v Speaker 1>now is the criminal charge. That's obviously that they could

0:21:55.119 --> 0:21:56.800
<v Speaker 1>put him in prison for the rest of his life.

0:21:56.800 --> 0:21:59.000
<v Speaker 1>So this is a civil suit. This is just not

0:21:59.080 --> 0:22:02.480
<v Speaker 1>as important right now as the criminal charges facing him

0:22:02.480 --> 0:22:05.439
<v Speaker 1>and Pat Alligan. Thanks so much, Greg. That's Greg Ferrell,

0:22:05.560 --> 0:22:10.000
<v Speaker 1>Bloomberg Investigative reporter with the legal enforcement team. And that's

0:22:10.040 --> 0:22:12.639
<v Speaker 1>it for this edition of The Bloomberg Law Show. Remember

0:22:12.680 --> 0:22:14.760
<v Speaker 1>you can always get the latest legal news on our

0:22:14.800 --> 0:22:18.919
<v Speaker 1>Bloomberg Law Podcast. You can find them on Apple Podcasts, Spotify,

0:22:19.119 --> 0:22:24.160
<v Speaker 1>and at www dot Bloomberg dot com, slash podcast Slash Law,

0:22:24.560 --> 0:22:27.199
<v Speaker 1>And remember to tune into The Bloomberg Law Show every

0:22:27.200 --> 0:22:30.680
<v Speaker 1>week night at ten BM Wall Street Time. I'm June

0:22:30.680 --> 0:22:32.879
<v Speaker 1>Grosso and you're listening to Bloomberg