U.S. rejects Bill Hwang’s sandbagging claim against Archegos prosecution

Jonathan Stempel

NEW YORK (Reuters] – Bill Hwang’s claims that the U.S. Department of Justice sandbagged it by hiding its plans to accuse him of fraud in relation to the collapse of Archegos Capital Management LP, worth $36 billion, was rejected forcefully by the U.S. Department of Justice.

In Manhattan federal court on Thursday night, prosecutors stated that there was no basis for Hwang’s motion of dismissal due to prosecutorial misconduct before his April 27, 2022 arrest.

Prosecutors said that Hwang’s motion rests on a series inflammatory claims about government conduct that are entirely untrue. It contains false and misleading facts, outrageous and conspiratorial allegations; it is completely without merit.

Lawrence Lustberg, a Hwang lawyer, stated on Friday that he was confident that he would have persuasive responses to both government’s factual and legal contentions.

Archegos collapsed March 2021 following failure to meet margin calls after trades through total return swaps. Nomura Holdings Inc and Credit Suisse Group AG lost approximately $10 billion.

Hwang claimed that Hwang’s defense strategy was revealed by the prosecutors, who concealed their long-held view of him as the “mastermind” of a market manipulation scheme.

However, prosecutors claimed they made a good-faith attempt to discover what went wrong at Archegos. They also said that Hwang was given a voice by the legal team and always engaged “professionally” and “fairly” with them.

Prosecutors stated that the courts do not have the power to dismiss any indictments based on government misconduct.

A hearing is set for February 7.

Hwang pleaded guilty to racketeering and fraud conspiracy charges. Patrick Halligan, Archegos former chief financial officer has also pleaded guilty.

Prosecutors also filed a Thursday night motion to reject the defendants’ claim that they did not commit any crimes, as Archegos’ trading was legal.

Prosecutors claimed that the indictment addressed the “core crime at issue” as well as the essential elements of each offense. This justified a trial on its merits.

Mary Mulligan was a Halligan attorney. She declined to comment.

U.S. V. Hwang and Others, U.S. District Court Southern District of New York. 22-cr-00240.

(Reporting by Jonathan Stempel from New York; Editing and Managing by Matthew Lewis