NJ Hedge Fund Owner Charged With Racketeering, Fraud Is Out On $100 Million Bail

TENAFLY, NJ — A Bergen hedge fund owner lied to banks and illegally inflated his family-run company's worth, officials charge, scooping up shares in big companies and then losing billions when prices fell.

Sung Kook (Bill) Hwang faces racketeering and fraud charges in connection with the multibillion-dollar collapse of his private investment firm Archegos, the Department of Justice said. Hwang, of Tenafly, was the founder and head of Archegos Capital Management.

He was arrested Wednesday, according to a joint news release from federal Deputy Attorney General Lisa O. Monaco, U.S. Attorney Damian Williams (Southern District of New York) and Assistant Director-in-Charge Michael J. Driscoll (FBI New York Field Office).

Hwang was freed on a $100 million bail and pleaded not guilty at his arraignment, according to the Associated Press.

He and three others face federal charges in a market manipulation scheme, according to the release. Patrick Halligan, the CFO, was named in an unsealed indictment alongside head trader Scott Becker and chief risk officer William Tomita.

Officials say Hwang ran the company as a private hedge fund, or "family office," meaning Archegos did not have to reveal certain information to regulators. What's more, no one outside of the company knew the trades Hwang was making, according to the DOJ.

By March 24, 2021, Hwang owned more than half of public Viacom shares and only those inside Archegos knew it, the indictment alleges.

When the market turned

“We allege that these defendants and their co-conspirators lied to banks to obtain billions of dollars that they then used to inflate the stock price of a number of publicly-traded companies,” said Williams in a news release. “The lies fed the inflation, and the inflation led to more lies. Round and round it went. In one year, Hwang allegedly turned a $1.5 billion portfolio and pumped it up into a $35 billion portfolio. But last year, the music stopped. The bubble burst. The prices dropped. And when they did, billions of dollars of capital evaporated nearly overnight.”

“As alleged, Hwang and his co-conspirators convinced major financial institutions to enter into agreements with them based on lies, the result of which ultimately led to a massive market manipulation scheme,” Driscoll said. “We allege the defendants caused harm to U.S. financial markets and ordinary investors alike, causing significant losses to banks, market participants and Archegos employees. Today’s charges highlight our commitment to making sure the investment arena remains free from fraudulent activity of all kinds.”

Hwang's exact charges are racketeering conspiracy, wire fraud, two counts of securities fraud, and seven counts of market manipulation, according to the DOJ. The maximum sentence for each of these charges is 20 years, according to the DOJ.

Hwang and Halligan, of Long Island, also face civil charges according to the Associated Press.