Guo Wengui / Miles Guo — criminal case · ECF #45

METADATA

Defendant: Guo Wengui / Miles Guo / Ho Wan Kwok
Court: SDNY
Case No.: 23-cr-00118
ECF #: 45
Type: UNKNOWN
Filed: 2023-04-17

FULL TEXT

|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--| | | | | | | 1 | UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK | | | | 2 | ------------------------------x UNITED STATES OF AMERICA | | | | 3 | v. 23 CR 118 (AT) Arraignment/Bail | | | | 4 | HO WAN KWOK YANPING WANG | | | | 5 | Defendants | | | | 6 | ------------------------------x New York, N.Y. | | | | 7 | April 4, 2023 11:30 a.m. | | | | 8 | | | | | 9 | Before: HON. ANALISA TORRES | | | | 10 | District Judge | | | | 11 | APPEARANCES | | | | 12 | DAMIAN WILLIAMS United States Attorney for the Southern District of New York RYAN B. FINKEL JULIE MURRAY MICAH FERGENSON Assistant United States Attorneys | | | | | | | | | 13 | | | | | 14 | | | | | 15 | BROWN RUDNICK LLP | | | | 16 | Attorneys for Defendant Kwok STEPHEN COOK | | | | 17 | WILLIAM BALDIGA | | | | 18 | LIPMAN LAW PLLC | | | | 19 | Attorney for Defendant Wang ALEX LIPMAN | | | | 20 | CHAUDHRY LAW PLLC | | | | 21 | Attorney for Defendant Wang PRIYA CHAUDHRY | | | | 22 | ALSO PRESENT: KARINA CHIN VILLEFORT, PTS (SDNY) | | | | 23 | GEOFFREY MEARNS, Paralegal Specialist (USAO) BRENDA CHEN, Interpreter (Mandarin) | | | | 24 | | | | | 25 | | | | | | | | |

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(In open court)

THE COURT: Good morning.

We are here in the matter of the United States v. Ho Wan Kwok and Yanping Wang.

Would you make your appearances, please.

MR. FINKEL: Good morning, your Honor. Ryan Finkel Julie Murray and Micah Fergenson for the United States. We're joined today at counsel table by Geoffrey Mearns, who is a paralegal in our office.

MR. COOK: Stephen Cook and William Baldiga on behalf of Mr. Kwok, who is present in custody and being assisted by a Mandarin interpreter.

MR. LIPMAN: Your Honor, Alex Lipman of Lipman Law Firm PLLC, and at counsel table also Priya Chaudhry of the Chaudhry Law Firm PLLC for defendant Yanping. Ms. Wang is here, she is present, and she is being assisted by a Mandarin interpreter. 13 14 15 16 17

THE COURT: Please be seated.

I would like the interpreter to identify herself, please. 19 20

THE INTERPRETER: Good morning, your Honor. My name is Brenda Chen. I'm a certified court Mandarin interpreter. THE COURT: Please swear in the defendants. 21 22 23

(Defendants sworn)

THE COURT: Please be seated.

Mr. Kwok and Ms. Wang, I'm going to ask some questions. Wait for me to call your name, and then you may answer. Do you understand what the interpreter is saying? Mr. Kwok? DEFENDANT KWOK: Yes, your Honor. THE COURT: Ms. Wang? DEFENDANT WANG: Yes, I do. THE COURT: Do you understand that you're now under oath, and that if you answer any of my questions falsely, you may be prosecuted for perjury based on any false answers? Mr. Kwok? DEFENDANT KWOK: Yes. THE COURT: Ms. Wang? DEFENDANT WANG: Yes. THE COURT: I understand that I must first arraign both defendants, correct? MR. FINKEL: Yes, your Honor. THE COURT: Do you each have a copy of superseding indictment? Mr. Kwok? DEFENDANT KWOK: Yes. THE COURT: And Ms. Wang? DEFENDANT WANG: Yes, your Honor. THE COURT: Has the document been translated for you? 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

of this year. Judge Lehrburger will hear Ms. Wang's bail application today at 2:00 p.m.

Mr. Kwok has been detained since March 15, the date of his arrest. He was arraigned on the preceding indictment before the Honorable Katharine H. Parker and detained on consent without prejudice to a future bail application.

Pursuant to 18 United States Code, Section 3142(e), the question I must resolve is whether there is a condition or combination of conditions that will reasonably assure the appearance of the defendant as required and the safety of any other person and the community.

To make this bail determination, I must undertake a two-step inquiry. First, I must determine whether the government has established by a preponderance of the evidence that Mr. Kwok presents a serious risk of flight or obstruction of justice. 18 United States Code, Section 3142(f)(2). United States v. Friedman, 837 F.2d 48, 49 (2d Cir. 1988). If the government carries this initial burden, I must then determine whether there are reasonable conditions of release that can be set or whether detention is appropriate. To support detention based on danger, the government's proof must be clear and convincing. 18 United States Code, Section 3142(f)(2).

The factors that I must consider in making my determination are set forth in 18 United States Code, Section 3142(g). They include the nature and circumstances of the

offense charged, including whether the offense is a crime of violence, a violation of United States Code, Section 1591, a federal crime of terrorism, or involves a minor victim or a controlled substance, firearm, explosive or destructive device; the weight of the evidence against the defendant; the history and characteristics of the defendant, including his or her physical and mental condition, family ties, employment, financial resources, length of residence in the community, community ties, past conduct, history relating to drug or alcohol abuse, criminal history, record concerning appearance at court proceedings and whether at the time of the current offense or arrest the defendant was on probation, on parole or other release pending trial, sentencing, appeal or completion of a sentence for an offense under federal, state and/or local law; and the nature and seriousness of the danger to any person or the community that would be posed by defendant's release.

I have carefully considered all of these factors and the parties' written submissions.

Does the government wish to be heard?

MR. FINKEL: Yes, your Honor.

Your Honor, there are many aspects of this case, as the Court may be familiar with the indictment, that are extraordinary. This is a billion dollar fraud case, in which Mr. Kwok preyed on thousands of individuals to line his own pockets with extraordinary luxurious items. But the issue 21 22 23 24 25

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today, your Honor, isn't extraordinary. It's actually quite straightforward. A simple application of the factors that the government has outlined in its letters to the legal framework that the Court just went through makes clear that detention is appropriate is in this case.

As this Court knows, pretrial services doesn't often recommend detention in a fraud case, but they've recommended it here, and for good reason. This court should adopt that recommendation.

I want to start first with the risk of flight. As the Court mentioned, the government's obligation is to demonstrate just by a preponderance that there is a risk of flight with respect to the defendant. So what we have here again, pretty straightforward: An exceptionally wealthy, exceptionally well-connected, exceptionally sophisticated, deeply experienced world traveler, who is 54 and has barely spent five continuous years in this country. He has at least three, and as many as eleven, different passports. He has a co-defendant who's currently fugitive who's in the UAE right now, or believed to be. The defendant has access to private aircraft and a compelling, exceptionally compelling, motive to flee, your Honor.

As a result of the charges in this case, the defendant faces decades in prison. The evidence is incredibly strong. It's not even really disputed by the defense in their briefing. 23 24 25

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The indictment itself describes it in detail. At the end of the day, your Honor, simply following the money that the defendant collected, following the money into the pockets of his wife, his children, and himself demonstrates his involvement in this epic fraud.

So, again, given the incentive structure, why would the defendant stay? It's simple rational thinking. Why would he subject himself to the court process, to potentially decades in prison, followed by likely deportation, if he can take advantage of an alternative, the alternative of flight.

So the defense claims in its briefing that he essentially is incentivized to remain for two primary reasons: The first is that his wife and his daughter are here in the United States, but his wife and his daughter have been here even less time than he has been, and they have an incentive to flee as well. They're referred to in the indictment; they were recipients of the fraud money; and they can leave the country just as easily as the defendant can.

And, in any event, the defendant has a son in the United Kingdom, in a foreign country. He certainly would be incentivized to spend time with his son, to be with his son in the same way the defense claims he is incentivized to stay to be with his wife and daughter.

Defendants, your Honor, in this courthouse flee with far less global reach than Kwok has. People are willing to 24 25

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rearrange their lives who have been here for decades to avoid prison. Kwok doesn't even have any meaningful ties in this country that make such a rearrangement impossible or even difficult. He's been here, according to the defense, continually since approximately 2017. That's it. And according to the indictment, he's been involved in this conspiracy since 2018, which means his ties to the United States, your Honor, are about laying the groundwork for and committing a billion dollar fraud.

That brings us to the second reason the defense says he's incentivized to stay. They claim he cannot travel anywhere because of fear of being repatriated to China. But that argument doesn't withstand scrutiny either, as we've outlined, your Honor. According to the defense, the defendant fled China in 2015 to escape China. If he was concerned about the Chinese trying to capture him or repatriate him at that time, according to the defense, he wouldn't travel internationally; yet, he did. Even the defense concedes he traveled from 2015 to 2017. His passports make that clear. So he traveled. He wasn't afraid to travel internationally. He wouldn't be afraid to travel internationally now.

Then we turn to does the defendant have the ability to flee? This too, your Honor, is fairly straightforward. Kwok has means; he has sophistication; and he has connections, which all make his ability to flee, like I said, straightforward.

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I mentioned the passports. But that's not all he has. As the government outlined, your Honor, he had \$394,000 in cash - cash that he didn't tell pretrial services about - in his safe in his mansion in New Jersey. He had another hundred thousand worth of gold coins, foreign currency; and his co-defendant had more than a hundred thousand dollars in a safe in her condo.

There was also a document in his co-defendant's apartment demonstrating that Kwok has access to \$34 million in bank accounts. And, your Honor, I can tell the Court that the government has worked quite hard in tracing the fraud proceeds in this case, and we've traced it not just throughout the United States, but we've tried to trace it internationally. And what we've seen is money flowing to Switzerland, to the UAE -- which I'm going to talk more about -- to England, and possibly even Kazakhstan. Yet, the defendant claims that he - let me take a step back for a second.

So does the defendant have the financial means to flee? Absolutely. And it's impossible for this Court to have any reasonable assurance of where that bottom is, where his money is, particularly because he lied to pretrial services about the \$394 plus thousand that he had in his mansion.

So let's turn to know-how. Does the defendant have the know-how, the sophistication to flee. Again, simple, straightforward. Yes, he does. This is a man who has 25

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cellphone scramblers, Faraday bags, burner phones, obfuscates his funds, uses shell companies, uses intermediaries, and, as I mentioned, has at least three and possibly as many as eleven passports. He's a deeply experienced world traveler, who admitted to pretrial services to traveling to over 50 different countries. That's exceptional. He certainly has a sophistication and know-how to flee.

Then the question becomes does he actually have anywhere to go? And the answer to that, your Honor, again simple, straightforward. Yes, he clearly does. He has a UAE passport somewhere. We don't know where it is. We have a copy of it. But what that UAE passport shows is that he's likely a citizen of that country because when you hold a passport that indicates citizenship for a particular country -- and we checked with the office of international affairs, DOJ's OIA office on this -- the UAE does not extradite citizens.

And, of course, your Honor, his co-defendant is in the UAE right now, or at least we believe him to be. There are operations for G Clubs, which is an arm of his fraud in the UAE. There are operations for the Himalaya Exchange in the UAE, another arm of his fraud. There were two personnel, two employees of G Club who spent months in the UAE and were able to obtain visas in the UAE. The defendant can go to the UAE. He would be safe, effectively safe from the reach of the government there, and he knows that because he's made

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statements about that.

So has the government established by a preponderance that the defendant is a risk of flight? Yes. And there really shouldn't be much of a serious dispute about that. So then the question becomes what conditions -- are there conditions that the Court can impose to reasonably assure that there will not than a flight? There aren't any.

So let's start with what the defense has put forth. They put forth a \$25 million bond secured by \$5 million cash. Now, if we take a step back for a moment, what is the purpose really of a bond? The purpose of the bond, your Honor, is to change the incentive structure because the defense is incentivized to flee, he's incentivized to get away from possible prison, right? So the thinking of a bond is if he flees, he loses money. So that's supposed to flip the incentive. But it doesn't here. It can't here.

And why is that? Because, as the defendant said in his pretrial services report, he claims not to have any money, and whatever money he does have is subject to the bankruptcy proceedings, which is to say all of his money is either forfeitable or encumbered by bankruptcy, so there is no money he could put up that will provide any moral suasion for him to remain.

And this, your Honor, it's also important to keep this in mind. The defendant has an uncanny ability to convince 25

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victims to depart with hundreds of millions of dollars. In just weeks, he raised \$400 plus million from thousands of victims. So if he were to lose \$5 million, which is really all he's offering, \$5 million cash, what cost for him? Really none. He can earn it again.

And that should raise another question. Where is this \$5 million coming from? If he told pretrial services that his net worth is \$10,000 comprised of the value of his clothing and two cellphones, where is this \$5 million? \$5 million that he hasn't told the bankruptcy trustee about. So there's no money. There's no PRB that could be offered here that flips the incentive for the defendant to remain.

What about cosigners? Your Honor, given the allegations in this case, the defendant's fraud is, quite frankly, sociopathic. He has taken money from thousands. Victims have cried in interviews that we have held with them explaining how their lives have been forever altered and damaged by the money that he has used to purchase Lamborghinis and Bugattis and \$30,000 mattresses. He's not going to care if by leaving this country to avoid prison he saddles a couple of people, who he hasn't even named, with a \$25 million judgment.

So, the defense, I would argue, your Honor, tacitly concedes all of this. They say that the PRB cosigners are really insufficient and so what they offer instead is or on top is this proposal of armed security. Now, the mere fact that

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this is proposed, I submit, this Court should swiftly reject it. Second Circuit, we pointed this out, disapproves of these two-tiered approaches to American justice where the rich get to provide their own private security; in this case, in a defendant's palatial Connecticut estate, where as those without access to his means are subject to the federal system. That's not fair. That's not right. And this Court shouldn't endorse it.

But even putting that aside, even putting what the Second Circuit said aside -- and we don't think this Court should -- these security arrangements don't work. They don't work because of incentives. Security personnel are, at least according to the defense, will be answerable to the Court and government. But it doesn't really work that way because they're going to be paid by him. They're going to paid by the defendant, and security is going to be incentivized to continue to get paid. And security is going to be incentivized not to tell the Court when the defendant does something he shouldn't do because it might risk him being remanded; it might risk security being unable to continue getting paid by the defendant. Security does not work. And if it is true, as the defense claims, that the only way for the Court to be reasonably assured that the defendant won't flee is for him to be surveilled 24 hours a day, seven days a week by an armed guard, there's a proper place for that. And that's the MDC. 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

But there's something else, your Honor, even putting aside those conditions. Ultimately, when a Court permits pretrial release, it's about trust. It's about trust that a defendant will appear in court as required. It's about trust that a defendant will not endanger the community, which I'll talk about. There is no reason for this Court to trust the defendant, simply based on what has happened since he was arrested. He lied about money that he had in his safe, nearly \$500,000 of it. He didn't disclose his travel documents. He circumvented the rules of the MDC, as we've explained in our papers. There's no reason for this Court to trust him just on those records. And I'm not even talking about what has happened in other cases, which I'll turn to.

In fact, let's talk about obstruction. At least three different judges, in both federal and state court, have found, in effect, that the defendant obstructs justice. Judge Ostrager, New York State Supreme Court, said, I'm quoting, "The defendant's efforts to avoid and deceive his creditors by parking his substantial personal assets with a series of corporations, trusted confidantes and family members," which is to say, your Honor, a judge found he moves money around to hide it from the judicial process.

Judge Ostrager is not alone. Judge Manning, a Bankruptcy Judge in the District of Connecticut, found similar actions that Kwok has taken. And even worse, Judge Manning 23 24 25

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found the defendant fomented unrest, threatened a court-appointed bankruptcy trustee, resulting in death threats, resulting in harassment. And this is on video. This is what the defendant said on video about that bankruptcy trustee.

On November 21, 2022, according to the bankruptcy judge's findings, "To deal with this rogue" -- I'm quoting, rogue being the trustee -- "we have our rogue's ways. In a few days you will see what would happen to him. Calamities, I can tell you guys. They will suffer calamities!"

On top of that, he encouraged his followers to flood the bankruptcy docket with false claims, to tie up the bankruptcy, to cause the trustee to expend additional resources to cause problems. We talked in our papers about how he's threatened victims, victims in this case; how he's threatened them by saying he would post associations between him and the victim, victims who have family in China, and thereby him posting publicly that he was associated with those victims would threaten the victims' families who happen to be in China.

This is all definitional obstruction. It's not theoretical. It's not speculative. It's not even isolated. It's continuous. It's ongoing. It spans multiple years, multiple courts, multiple judges, and the defendant is exceptional in his willingness to continue to do this unabated.

So has the government demonstrated that there's a risk of obstruction if he's released? Yes, we certainly have.

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So, step two, what conditions can be imposed to prevent obstruction? The answer is there are none. There aren't any. Pretty much all this Court could do is ask the defendant not to obstruct. But we know that doesn't work. Because that was tried in the bankruptcy court in Connecticut. That was tried in the New York State Supreme Court. He doesn't follow court orders. To the defendant, a court's order isn't worth the paper that it's printed on. His low regard for the judicial process and respect for due process is remarkable. And it shows that there are no conditions that can change that because if there were, it would have already happened. So again, this is straightforward. He should be detained.

Let's turn to danger. The defendant's willingness to defraud for years thousands upon thousands of individuals is quite something. He's not stopped despite the many offramps that have been the flag, the red flags he's seen, the intervention of the SEC, the government's seizure of \$630 million, his embroilment in various litigations, the fact that entities of his received grand jury subpoenas, the fact that he knew the government was on his tail, he kept going.

And in February 2023, just essentially weeks before his arrest, he announced a new offering, the A10 offering. That's what he called it. And he claimed that this offering was a way for investors to invest 5 percent -- to purchase 5 percent of the Himalaya Exchange and 5 percent of a social

media company called Gettr. And like the other investments that the defendant has proclaimed and promoted, this too had all the hallmarks of fraud. He claimed it was guaranteed and that they would get their money back and everyone would make all this great money.

But the difference about the A10 offering, your Honor, this I think speaks to obstruction and also risk of flight, the of point of it was that the money was going to be sent to the UAE, away from -- and using Kwok's words -- the long-arm jurisdiction of the United States.

So is he a continuing danger to the community? Absolutely, because he hasn't stopped. He hasn't stopped after the SEC intervened in the GTV Private Placement, after his bank accounts were closed, after many of his entities received subpoenas, and after the government executed \$630 million of bank account seizures.

Indeed, your Honor, the money that the SEC was able to intervene and save from being defrauded with respect to GTV Private Placement, it's now being distributed. It's in the process of being distributed to the victims through a fair fund distribution. And what the defendant has done is encouraged his victims to reinvest that money in other fraudulent vehicles, which is to say he keeps going. He keeps going. So what conditions could the Court impose that would

stop all of this? The defense basically offers one. The

defense offers the condition of if he wants to engage in a financial transaction, he must get either the government's or the Court's approval. But this condition is meaningless. It's meaningless because he lies to pretrial services. He circumvents court orders. It's something that can't possibly work because the defendant can't be trusted.

But more than that, your Honor, as I've explained and as our papers made clear, he works through intermediaries and shell corporations. He has the ability to conduct fraud without himself, at least on paper, signing a financial transaction. He can work through others. And that's how this whole fraud worked, which is all to say, your Honor, there are no conditions that can prevent the deep, ongoing danger that the defendant presents to this community.

Your Honor, given all of this, the defendant's incentive structure, he is highly incentivized to flee, his deep resources, his connections, his network of supporters who will harbor him, his documented unwillingness to follow court orders, his threats against court-appointed officials, including some of the people at this table, his sophistication, his multitude of travel documents, his access to cash, his willingness to lie to pretrial, his willingness to circumvent rules in the MDC, his concealment of funds, there are no conditions, your Honor. There are none that can reasonably assure the Court that he won't flee; that the community will be

safe; and he will not obstruct these proceedings.

Pretrial services is correct: The Court should follow their recommendation and detain the defendant pending trial.

THE COURT: I'll hear from counsel for Mr. Kwok.

MR. COOK: Good morning, your Honor. Stephen Cook on behalf of Mr. Kwok.

Just as an initial matter, your Honor, we've seen no evidence that Mr. Kwok threatened anyone at the table, at the prosecution table. I would certainly be interested in seeing that because I'm aware of none of that. He's been in custody since March 15, and we've seen no evidence of any threats being issued to any members of the prosecution team or anyone else, for that matter.

Let me just address the very first question that Mr. Finkel stated: Why would he stay? There are many reasons why Mr. Kwok would stay, and there are even more reasons why he would never leave. I want to go through each of the arguments made by the government, but I want to address first this idea that the UAE is this ideal place for Mr. Kwok to abscond to.

And the government begins by saying that he has three passports. The government knows that's not true. As they state in their own paperwork, this passport to the country of Vanuatu expired years ago, and it's in their possession in any case.

The UAE passport that they don't have, but they claim

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that he has, was returned to the UAE government years ago. He renounced his citizenship to the UAE years ago, and received a letter from the UAE government, which I can present to the Court and the prosecution. I would have filed this, but we just learned of this issue yesterday in government's filing.

April 11, 2018, he renounces his citizenship, and the UAE confirmed that renunciation. That passport was returned by his immigration counsel to a representative of the UAW government. So he has no UAE passport. He has no passport to Vanuatu. He has no citizenship with that nation. The third passport they reference is one to Hong Kong, the very nation that he fled from, and that passport is in the government's possession. So of the three passports they claim are available for him to use, there are zero, none. And I don't think there can be any dispute about that.

Now, Mr. Finkel says quote that "Mr. Kwok knew the government was on his tail." And that's absolutely correct. Hundreds of millions of dollars seized, grand jury subpoenas issued, SEC subpoenas issued; Mr. Kwok has known that he is a target of a federal criminal investigation for the better of a year. And despite his alleged sophistication, despite being essentially a criminal mastermind, an escape artist, what did he do with that knowledge? With all of the resources they claim he has, with the passports he says -- they say he has access to, with all the supporters worldwide, what did Mr. Kwok

do in the face of that knowledge that the government was on his tail?

He did nothing. He didn't leave. He went nowhere. He continued to reside in the same residences he had been in for years. All of the evidence that they identify that was found during the search that they point to as evidence of his being a risk of flight: The multiple cellphones, the cellphone scrambler, Faraday bags, cash. If he was this criminal mastermind, knowing the government is on his tail, he left all of those materials in the worst possible place, the place the government knew that he resided.

Mr. Kwok was not unfamiliar with an FBI search. Years ago the FBI had searched the Sherry-Netherland residence where he was arrested. He knows how thorough they are. He knows what's involved and how many agents show up. Yet, despite that knowledge and despite the government being on his tail, he did nothing to hide computer equipment or cellphones, with the exception of putting one under his mattress, as if that was going to remain unfound by the FBI. This was not evidence of a man seeking to flee. It was evidence of a man who had decided to stay in the face of the accusations that he knew were coming any day.

Why didn't he leave? Well, first of all, there's a Red Notice against him issued by China. We laid out in great detail in our papers why he fled China, why he can never go 23 24 25

back to China, and why they want him, and the enormous efforts the Chinese government and the Chinese Communist Party in particular, have taken to try and get him back in their clutches.

This is documented. You read about it, and it sounds like it comes from a spy novel. And then you start looking at the sources and you realize this all really happened. High-level DOJ officials being bribed to get our government to extradite him to China. There's a trial going on in Washington D.C. right now in which an individual failed to register as a Chinese foreign agent, who was lobbying our government illegally to get this man extradited back to China. Four agents of the Chinese intelligent service accosted Mr. Kwok in his home, threatened him, and tried to get him to return to China. They were arrested by the FBI, and because of interjurisdictional squabbles between the State Department and DOJ, they were not arrested, and they were allowed to return to China. But the Chinese Communist Party's interest in my client is well documented, well-known and indisputable.

That's why you have cellphone scramblers. The Chinese government hacks at every opportunity every electronic device that Mr. Kwok has. As soon as it's hacked, he replaces it with another one, over and over and over again. That's why you have so many phones and so many computers. That's why there's a cellphone scrambler which was recommended to him by the

security service that he hired to help him prevent this hacking. The Faraday bags designed to prevent hacking. Not by the U.S. government. They weren't hidden from the FBI. But to minimize or help reduce the risk that they would be hacked by the Chinese Communist Party, as has been done over and over and over again.

One of the things we didn't mention in our papers, but we recently discovered was that back in 2019 and 2020 Twitter, the social media platform, took down over 200,000 fake accounts all created by the Chinese Communist Party to spew Chinese propaganda. And that propaganda fell into four categories. This is all spelled out by in a report generated by Stanford University. Those four categories, not surprising, were Taiwan, the pro democracy movement in Hong Kong, and the second most prevalent topic, of Chinese propaganda, was Mr. Kwok personally individually documented in the Stanford report.

The level of attention that Mr. Kwok generates from the Chinese Communist Party is undeniable and extreme. So he has gone through extreme efforts to protect his ability to broadcast his message to his followers with minimal or reduced obstruction from the Chinese Communist Party. That's why you see all of these elements that you would typically find from a spy novel, for example, present in his apartment. Not because he's hiding it from the U.S. Government. He's trying to protect his ability to get his message out to the millions of

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safety were he to leave the United States to a level that hadn't been seen before.

So he -- for example, his family had planned a couple of years ago a vacation to Hawaii. He was advised not to even take that vacation because if there was a mechanical problem with the plane, it could land at a foreign country, and he could run into problems. He faces almost certain death if he is repatriated to China. He will do nothing to jeopardize that, even if it means spending time in a U.S. prison.

The government claims that, well, his asylum application could be revoked if he's convicted. That may be true. That's years down the road. That's a hypothetical. The consequences if he were to leave are a certainty. He would also have opportunity to seek asylum or protection under the Convention Against Torture. Yes, that could mean deportation to a third country, but far preferable to living life on the run with a Red Notice from the Chinese superpower and another Red Notice from the American superpower, there's literally nowhere left in the world for him to reasonably go under those circumstances. He cannot flee. There is nowhere he can go where he would be safe. He is here. Whether he wants to or not, he is here, and he has been here for the past six years, and that is evidence alone of his desire to remain even in the face of the government's investigation.

The foreign passports we've talked about, your Honor,

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and none of them have been used, in any case, for at least six years.

We talked about the UAE. In addition to the renunciation of that citizenship, Mr. Finkel mentions that there is no extradition treaty between the United States and UAE were Mr. Kwok to flee there. That's true. However, the UAE does have an extradition treaty with China. China and the UAE have extensive connections. In fact, the UAE is China's number one beneficiary of foreign investment of all the states in the Gulf. The relationship between the UAE and China is well-documented and public. The extradition treaty is public as well. That is probably the worst place he would go, second to China itself. So UAE is out. It was never an option, even were he to want to leave this country.

The currency found during the execution of the search warrants, the hundreds of thousands of dollars. First of all, the three residences that were searched: The Sherry-Netherland penthouse, the Greenwich estate, and the property in Mahwah, none of those properties are owned by Mr. Kwok. They're owned by other entities or other family members, not him. They are used by many family members, dozens of employees of many different companies, not just Mr. Kwok. None of that money was his. He didn't have access to the safes, and in at least two of those cases didn't even know those safes existed. They weren't in his bedroom. One of them belonged to his wife, and

he didn't know the combination. So he didn't lie to pretrial services. He didn't even know the money was there. That's the reality.

And so the assumptions that are being made by the government, as they've made assumptions in all these other areas are skewed entirely in a way to portray Mr. Kwok in the worst possible light. The reality is the money wasn't his. He had no reason to disclose something he didn't know existed.

Concerning the cellphones and the scrambling device and Faraday bags, I mentioned that, your Honor. These are recommendations made by his security staff who made every effort to try and minimize the hacking that took place. And to give you another example of just what he and anyone associated with Mr. Kwok experienced from China.

A law firm that was retained to assist him with his immigration asylum paperwork was hacked. Confidential information stolen from the law firm and publicly disseminated. Another law firm that was retained in connection with bankruptcy proceedings was hosting a conference call with 30 or 40 people from all over the world, including the U.S. trustee. On the day of that meeting, immediately prior to, that law firm's entire security system electronically was hacked and shut down. The elevator system was shut down causing a delay in the meeting. It never happened before and hasn't happened since. These sorts of hacking efforts and attempts follow him 15 16 17 18 19 20 21 22 23 24 25

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wherever he goes simply because of who he is and the message that he espouses.

Concerning the civil lawsuits and the bankruptcy litigation and Mr. Kwok's alleged disregard for the law, first of all, it's important to keep in mind that much of the civil litigation, including the civil litigation that ultimately led to the bankruptcy filing was prompted by the CCP itself. That is not just a conspiracy theory. That is a documented fact. In fact, the Wall Street Journal in July of 2020 wrote an article, "China's New Tool to Chase Down Fugitives: America Courts. Beijing is turning to lawsuits to pressure expatriates to return home and face corruption charges as an end run around U.S. law." Their efforts to use the court system to leverage and exert pressure against people they don't like is documented and well-known and something that Mr. Kwok knows of firsthand. So Mr. Kwok has aggressively defended himself in all of that litigation and in the bankruptcy proceedings.

Now, concerning the source of the \$5 million security for the bond. We never in our papers suggested Mr. Kwok would or even could himself put umm \$5 million. However, what we proposed was that there would be two financially responsible adults who would sign onto that bond, and that the source of that money would be vetted with the government so they could assure themselves that the source had nothing to do with the fraud in this case, and that the two financially responsible 18 19 20 21 22 23 24 25

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adults, one of whom would not be a family member, they could also vet to assure not only that they are not purported victims, but that they had moral suasion over the defendant.

The government also claims that Mr. Kwok -- they allude to this in their paperwork -- that he fails to follow Bureau of Prisons' procedure in connection with some family members who wanted to make phone calls with Mr. Kwok, and they used the legal pathway for legal calls instead of family calls. We looked into that, your Honor, and, in fact, our ability to communicate with our client via telephone was shut down because of that. We found out what happened. It was a mistake. We wrote to the Bureau of Prisons explaining exactly what happened. In fact, the person who did this even wrote in the application for calls "this is for family calls." It was a language issue and miscommunication on their part that we corrected. It hasn't happened again and won't happen again, and our legal calls have been reinstated. This has absolutely nothing to do with anything Mr. Kwok did or even knew about at this time, so it would be completely unfair to hold that against him.

We also proposed this round-the-clock 24/7 security. It's interesting Mr. Finkel says it's not fair and not right when this exact procedure is something the government has signed off on in other cases, but apparently in this case it's not fair and not right. Look, we don't think it's necessary.

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We don't think he is leaving. We don't think he would ever leave this country. However, we offered that as additional assurance and security that he would in fact remain here and can be monitored by professionals, and we said armed security not because we need them to be armed, but because armed security happened to be current or former law enforcement adding a level of professionalism. And we can arrange that engagement in any way the Court deems acceptable so that they report directly to the marshals, to the FBI or to the Court, and not to us. We can fashion that engagement in whatever way works. The government has done this before and done it in an acceptable fashion. There's no reason why it can't work in this case as well as an additional layer of protection against flight.

Concerning his purported efforts to contact victims or set up new businesses or perpetrate additional frauds, that can be dealt with as well. The Southern District has dealt with something in the SBF, Sam Bankman-Fried, case where they restricted his access to any electronic communications to a single laptop that is restricted to allowing the defendant access to the discovery so they could review it and to communicate with lawyers, and nobody else. If that is the government's legitimate concern that he is going to continue to communicate with the world and perpetrate frauds, we're amenable to that condition. There are conditions to satisfy 15 16 17 18 19 20 21 22 23 24 25

each of these concerns, and we can fashion them. To date the government has simply been unwilling to even have a conversation with us about it, but it's not impossible.

Finally, your Honor, I just want to note for the record and for your Honor that the courtroom is full of many of Mr. Kwok's supporters, many of whom have traveled from San Francisco, North Carolina, around the country to be here in support. These are the purported victims? No, they're actually his supporters. They are here because they care about him. They care about his message and his mission in connection with bringing democracy to China.

Your Honor we remain open willing to employ any reasonable condition as the Court may deem necessary to secure Mr. Kwok's release. We think what we've proposed is acceptable and sufficient. We will certainly entertain anything further, and we're happy to work with the government if they're willing to tailor or contour our proposal to work out any of the legitimate issues that they might have

THE COURT: I want to go back to the passports. You're saying that your client wrote to the government of the United Arab Emirates declaring that he had renounced citizenship. Is that correct?

MR. COOK: Your Honor, I have the letter. If I could approach, I'm happy to provide the Court a copy.

THE COURT: You may. Thank you. I assume you don't

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have a certified version of this.

MR. COOK: This is all I could get on such short notice, your Honor. I would note the picture of the passport submitted in the government's letter yesterday has redacted the passport number which is contained in this letter, so I have no way to confirm that the numbers match up, but I presume that they do. In any case, I can represent to the Court that the passport itself was hand-delivered to UAE, I believe it was the consulate, by Mr. Kwok's immigration counsel.

THE COURT: You're relying on your client's word on that issue? 10 11

MR. COOK: I'm relying on the word of my client's lawyer, his immigration counsel, on that issue. I can get a declaration from him to that effect, your Honor.

THE COURT: And the Vanuatu passport?

MS. McKINNEY: The Vanuatu passport, you can see in the picture submitted by the court, expired, and the government noted in its letter that it had other evidence, which it didn't talk about, suggesting that that citizenship had been renounced. I haven't seen any of that yet, but I know that to be the case from my consultations with his immigration counsel. THE COURT: I'll allow rebuttal by the government. MR. FINKEL: Thank you, your Honor. If I can, your Honor, I'd like to start with the passport issue. 16 17 18 19 20 21 22 23 24 25

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First, the defendant has proclaimed to have eleven passports, not just three. What I would also ask is, your Honor, how many defendants within a period of three or four years were able to obtain citizenship in three different countries and was on a pathway, or so he claims, to citizenship in a fourth, which is to say, your Honor, the defendant obtained citizenship in Vanuatu, obtained UAE citizenship, has a Hong Kong citizenship, and was trying to obtain citizenship here. He knows how to get travel documents. He was able to do it at least two other times, while he was on the run, according to the defense. So can he do it again? Of course he can.

And, your Honor, I just want to be clear about something else. Our burden is not to show that he will flee internationally or go to a place where he can't be extradited. The question is whether he will return to Court as required. People flee within the United States, as your Honor knows. And, your Honor, the defendant, as defense counsel has not disputed, has a broad network of people who are sympathetic to him, who, according to their social media posts, believe that all of this is a political charge, which is to say they're motivated to help him. And it's not. Those are meritless claims, of course. This is a fraud crime that is substantiated by a significant amount of evidence which we have outlined in our papers.

Your Honor, the defendant has been hiding. To respond

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to defense counsel's arguments: He hides behind his family, by keeping entities and properties not in his name. He hides apparently by saying that the \$394,000, just to be clear, was in a safe that was attached to a dressing room in which his 31 suits that have his name hand-stitched into them were there. It is simply not credible, it is not credible for him to be unaware of \$394,000 in United States currency that he didn't disclose to pretrial services.

Your Honor, it's a big planet, and it's a big country. There are places for him to go that would be beyond the reach of China; that are beyond the reach of the United States. But the Court doesn't need to find that. The question is whether there's a risk of flight, the risk that he won't appear in court, and the government has certainly met that burden.

Your Honor, the fact that defense counsel concedes that the \$5 million they're offering to put up is not from the defendant means it has no moral suasion on him at all. There is no reason for him not to leave because he wouldn't be concerned about giving up money that wasn't even his to begin with. Your Honor, if this money was clean and unencumbered by both the fraud and the bankruptcy, I would have expected the defense to explain where it's from. I would have expected the defense to explain who their cosigners could be, who would have the unencumbered assets to support a \$25 million bond for the defendant and also moral suasion over him.

Your Honor, with respect to armed security, the only other case I'm aware of that happened in this district where it was approved was before Judge Broderick. It was over Southern District's objection. And in that case there were a host of problems that occurred because the incentive structure doesn't work. Armed security took the defendant out to dinner. Armed security ate with the defendant, which is not really a good idea if, you know, an armed security guard eats something and then falls asleep and the defendant can flee. Armed security didn't report violations. It doesn't work. And, fundamentally -- and the Second Circuit has been crystal clear about this - fundamentally, it is wrong.

What I haven't heard also from the defense, your Honor, is how their conditions can satisfy the very real concerns about the danger to the community and the danger to this judicial process. There are no conditions that satisfy that.

And, your Honor, as we've outlined, and as I've explained earlier, this has been documented by three judges. Three judges have found the defendant to essentially be obstructing, including an extensive opinion that we attached for your Honor to our March 15 submission, in which the bankruptcy judge makes clear that the defendant is causing his supporters to flood the docket or threatened with calamities the court-appointed bankruptcy trustee. None of the conditions 24 25

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proposed by the defense, none of them, none, can stop that.

Your Honor, the defendant has incredible means and know-how, as the defense concedes. He apparently has access to friends who are willing to front \$5 million -- \$5 million in cash. He can go where he wants. He has a network of people who will harbor him. He has international travel -- deep international travel experience, the ability to obtain travel documents from multiple different countries, apparently citizenship in multiple different countries. He has places to go. He has people who will help him. He has a reason to flee. And the asylum application, your Honor, the mere charges in this case threaten that. It's true. The asylum application is still pending, but the mere charges in this case threaten the asylum application.

The point is, your Honor, on flight, he's motivated to flee. He has the means and know-how to do it, and there is no condition that can stop that.

On danger, he continues to endanger the public, and that hasn't stopped, and there are no conditions that can stop that. 18 19 20

And on obstruction, your Honor, as three other courts have made clear, the defendant continues to obstruct the judicial process. He will obstruct it in this criminal case too.

There are no conditions, none, there are no conditions

|----|-------------------------------------------------------------------| | | N44QkowC | | 1 | that can stop that. | | 2 | At the end of the day, this is very straightforward. | | 3 | This is very simple, we submit to the Court, the defendant | | 4 | should be detained because he's a risk of flight, he presents a | | 5 | danger, and he will obstruct. | | 6 | THE COURT: All right. I'm going to reserve decision. | | 7 | I'll issue a written decision. The matter is | | 8 | adjourned. | | 9 | (Adjourned) | | 10 | | | 11 | | | 12 | | | 13 | | | 14 | | | 15 | | | 16 | | | 17 | | | 18 | | | 19 | | | 20 | | | 21 | | | 22 | | | 23 | | | 24 | | | 25 | |