Bill Hwang brought a book by Dietrich Bonhoeffer to court to read during jury selection.
And during opening arguments on Monday, his Christian connections from New York packed out a courtroom to support him.
He had given his investment firm a Christian name, held Wall Street Bible readings, and distributed millions to evangelical charities.
But federal prosecutors at Hwang’s highly anticipated criminal trial are accusing the billionaire of being a mob boss mastermind rather than a humble evangelical investor following his convictions.
Hwang has been charged with tens of billions of dollars’ worth of securities fraud. In a packed courtroom in lower Manhattan on Monday, the prosecution claimed his investment firm Archegos Capital Management was an “organized criminal enterprise,” like a mob operation. Hwang faces decades in prison.
The blockbuster trial is expected to last eight weeks and will include witnesses from the Christian world in New York. Andy Mills, the former president of The King’s College, who also served as CEO of Archegos and as chairman of Hwang’s foundation, will testify for the defense.
Hwang and his wife, Becky Hwang, are the sole backers of the $528 million Grace and Mercy Foundation, which supports ministries in New York and around the world.
Many of Hwang’s former employees at Archegos are Christians—like Jensen Ko, who, after the collapse of Archegos, started a new investment fund called AriseN. And Archegos was named for a Greek word used to describe Christ as the “author” of our salvation (Heb. 2:10) and the “prince” of life (Acts 3:15).
Archegos fell apart in March 2021. It bought up massive positions in a few companies using borrowed funds from banks, with the goal of pumping up the prices of those stocks, prosecutors allege. But when the prices came down, Archegos couldn’t pay its losses to the banks, and in a matter of days, it defaulted on billions. Investment bank Credit Suisse lost $5.5 billion to Archegos and wound down its operations in the fallout.
When Archegos collapsed, it evaporated $100 billion in market value, according to prosecutors, including about $36 billion of Archegos’s own funds. The question the trial will try to answer is if this was fraud or normal trading that went badly, as the defense argues.
Hwang “had it all, but it wasn’t enough,” said federal prosecutor Alexandra Rothman in her opening statements on Monday. Rothman said Hwang was “rigging the game to keep winning on Wall Street … lying to dozens of banks.”
Rothman said Archegos had a “corrupt core, a small group of people who did whatever Hwang wanted, including lie and cheat.” Their market manipulation left a “path of destruction,” she said.
Defense attorney Barry Berke, in his opening statement, began to tell the story of Hwang’s humble origins—Hwang is the son of a Korean pastor and immigrated from Korea to the US when he was a teenager—but Judge Alvin Hellerstein cut him off for ranging too far away from details of stocks and trades.
Still, Berke in his opening arguments wove in mentions of Hwang’s charitable foundation as well as a Grace and Mercy Foundation project called the Just Show Up Book Club. Berke emphasized that Hwang didn’t live the flashy life of a billionaire.
In court, Hwang appeared calm and coiffed, and milled in the back of the courtroom during breaks shaking hands and embracing friends. He’s currently free on a $100 million bond.
Outside the courtroom, in the same building, the corruption trial of Sen. Bob Menendez was beginning. Across the street, the trial of former president Donald Trump was continuing. TV cameras blanketed the sidewalks, adding to the sense of frenzy around the trial.
Hwang has often spoken about how his faith informs his investing, saying that setting a “fair price” for stocks is work that honors God. That was a central pillar of his defense attorney’s opening argument, that Hwang bought and held these massive positions because he sincerely valued the companies he was investing in.
“He had the courage of his convictions,” said Berke to the jury. “He believed in these companies.”
Continuing the idea of Hwang’s “fair price” argument, Berke said that Hwang believed the select companies that Archegos put billions into were victims of negative misinformation from short sellers, who would profit off of declines in stock prices.
“He believed prices were pushed artificially down,” he said.
Another detail from Hwang’s past got little mention on the first day of the trial: a 2012 civil settlement of $44 million over insider trading charges. Hwang didn’t admit fault in that settlement, but his hedge fund, Tiger Asia, pleaded guilty to a criminal fraud charge. In 2013 he converted Tiger Asia to Archegos and made it a family office to manage his wealth.
Archegos shared offices with Grace and Mercy in Manhattan, and some employees worked with both entities doing investments. In a 2020 email the prosecutors shared in the trial, Hwang discussed his investment strategy during the pandemic, addressing both Grace and Mercy and Archegos employees.
After Archegos folded, some Archegos employees took on Grace and Mercy titles. Some former Archegos employees will testify, as well as top staff from Grace and Mercy, like chief operating officer Diana Pae.
Two top Archegos employees, William Tomita and Scott Becker, have pleaded guilty and will testify for the prosecution.
Jurors spent the first day of the trial on Monday hearing explanations of terms like swaps, liquidity, and margins. Ninety-year-old judge Hellerstein, who has overseen other federal financial crimes cases, jumped in with clarifying questions when testimony seemed confusing for the average person and poured himself cups of coffee from the carafe on his bench.
In previous pre-trial hearings, Hellerstein has wondered aloud why Hwang did what he did: “What did he want to achieve? … He lost his money.”
After opening arguments, the prosecution called its first witness, Bryan Fairbanks, the longtime head of prime brokerage risk for investment bank UBS. Fairbanks testified that UBS lost $860 million through Archegos’s defaults on borrowed funds, not knowing Archegos had similar investments with other banks.
“All the information they shared with us was made up,” Fairbanks said. If he had known what Archegos’s true market position was, he said he would have “hit the panic button.”
The trial will continue Mondays to Thursdays during the coming weeks.
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