The Securities and Exchange Commission (SEC) has charged Chinese businessman Miles Guo and his financial advisor William Je for their involvement in unregistered and fraudulent offerings that raised over $850 million. The SEC’s complaint alleges that Guo and Je misappropriated a significant portion of the funds raised from investors for their personal benefit and that of their family members.
One example cited in the complaint is a private placement offering of common stock in GTV Media Group, Inc. (GTV), where Guo and Je diverted $100 million of investor funds to a hedge fund solely owned by Guo’s son. Guo is also accused of misappropriating investor proceeds from two other offerings to fund his and his family’s extravagant lifestyle, including using approximately $40 million to purchase and renovate a mansion in New Jersey and $3.5 million to buy a Ferrari for his son.
In addition to Guo and Je, the SEC has also charged G Club Operations LLC and Mountains of Spices LLC, both based in New York, with violations of securities laws in connection with the offerings. Guo alone is charged in a fourth offering that raised hundreds of millions of dollars through a crypto asset security known as “H-Coin” or “Himalaya Coin,” falsely claiming that 20 percent of its value was backed by gold. Guo also allegedly made false promises to compensate investors for any potential losses.
The SEC’s complaint, filed in federal court in Manhattan, accuses Guo and Je of violating antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. Guo, G Club Operations, and Mountains of Spices are charged with violating registration provisions of the Securities Act of 1933. Je is additionally charged with aiding and abetting Guo’s violations, and Guo’s family members are named as relief defendants. The SEC seeks permanent injunctions, disgorgement of ill-gotten gains, civil penalties, and officer and director bars. It also requests a conduct-based injunction to prevent Guo from participating in the issuance, purchase, offer, or sale of any securities, including crypto asset securities, except for his personal accounts.
The U.S. Attorney’s Office for the Southern District of New York has also announced charges against Guo and Je in a parallel action.
This case is related to a previous SEC charge in September 2021 against GTV and two other entities for conducting an illegal unregistered offering of the company’s common stock and a crypto asset security called G-Coins or G-Dollars. The SEC has collected over $454 million in disgorgement, prejudgment interest, and penalties from GTV and the charged entities, including the $70 million previously transferred to the hedge fund mentioned earlier. The SEC plans to distribute the collected funds to affected investors.
The SEC’s investigation is ongoing and is being conducted by a team led by William Conway, Amanda Rios, Kerri Palen, Daniel Loss, and Sandeep Satwalekar, under the supervision of Thomas P. Smith, Jr. The SEC’s litigation will be headed by Mr. Loss, Mr. Conway, and Ms. Rios.
The SEC acknowledges the assistance of the U.S. Attorney’s Office for the Southern District of New York, the FBI, and various international regulators in this case.
