US Judge Says Archegos Founder Bill Hwang Should Get 18 Years in Prison for Fraud and Market Manipulation

Archegos founder Sung Kook “Bill” Hwang should be sentenced to 18 years in prison for defrauding banks and manipulating stock prices ahead of his firm’s collapse, Senior U.S. District Court Judge Alvin Hellerstein said Wednesday.

Hellerstein postponed the decision on compensation and then postponed the day-long sentencing hearing until 4 p.m., without ruling on forfeiture.

“I need a few minutes to restore some order at my desk,” he told the parties, before reconsidering the decision and declaring the court in recess. Hellerstein ordered everyone to return to court Thursday morning.

Hwang was convicted in July on charges including market manipulation, securities fraud and wire fraud.

The fund’s surprise decline shocked Wall Street and lenders, who lost more than $10 billion.

During the daylong sentencing hearing, Assistant U.S. Attorney Andrew Thomas said the case was a rare case that could be described as a “national disaster.”

Before handing down the sentence, Hellerstein asked Hwang’s defense attorney how he felt his client’s crimes compared to those of Sam Bankman-Fried, who was sentenced to 25 years in prison for defrauding FTX users of nearly $8 billion.

“Mr. Bankman-Fried was literally stealing from clients who had entrusted him with their money,” responded Dani James of Gibson, Dunn & Crutcher. Bankman-Fried denies any wrongdoing and has appealed.

Prosecutors sought a 21-year prison sentence and more than $12 billion in forfeiture and damages from Hellerstein.

The defense did not request a prison sentence of 46-57 months and no financial penalty.

Hwang, 60, founded Archegos more than a decade ago as a family office in New York; It comes just a year after former hedge fund Tiger Asia Management pleaded guilty to wire fraud as part of an insider trading investigation.

At one point, the firm managed approximately $36 billion.

Prosecutors allege he lied to banks about his portfolio to borrow money. He is then accused of driving up the prices of his favorite stocks. The sudden sale in March 2021 wiped out the firm and caused lenders such as Credit Suisse, Nomura, Morgan Stanley and UBS to suffer a combined $10 billion in losses.

While Thomas described Hwang as an “unrepentant” criminal who corrupted his entire institution for his own interests, the defense lawyer said the prosecution’s statements about his client were unfair.

“It is his constitutional right to have a hearing and to appeal after that hearing,” he said of Hwang’s ongoing claims that he did not commit a crime.

James stated that although Tiger Asia filed a defense, no decision has been made about Hwang.

His lawyers also noted that their client’s net worth has fallen from billions to about $55 million.

“This was his money, this was his fund,” he said. “I’m not minimizing the losses other organizations have suffered, but Bill’s money is gone. He lost it all.”

Hwang, a devout Christian, spoke very briefly. He told the judge he was “thankful to God” and thanked Hellerstein for listening to him.

The 90-year-old lawyer considered the difficulties of sentencing before deciding on detention.

“I don’t think I ever got to the right sentence,” he said. “I never felt like I got it right. How do you measure a person’s life?”

However, Hellerstein said the “fair sentence” in this case was 18 years in prison and 3 years of supervised release.

Hwang is represented by James, Barry Berke, Jordan Estes and Michael Martinez of Gibson, Dunn & Crutcher; Brian Jacobs and Chloe Lewis of Morvillo Abramowitz Grand Iason & Anello; and Dayna Chikamoto, Michael Martinez, Michelle Ban-David and Shaked Sivan at Kramer Levin Naftalis & Frankel.