Archegos Prosecutors Deny Duping Hwang Before Charging Him

US prosecutors denied claims by Archegos Capital Management’s Bill Hwang that fraud and racketeering charges against him should be thrown out because of “deceitful” conduct during discussions before his April arrest.

(Bloomberg) — US prosecutors denied claims by Archegos Capital Management’s Bill Hwang that fraud and racketeering charges against him should be thrown out because of “deceitful” conduct during discussions before his April arrest.

The government acted in good faith when investigators agreed to hear presentations by Hwang and his lawyers, who were seeking to avoid charges from the investigation, prosecutors argued in court papers filed late Thursday night. 

Hwang argued in court filings last month that prosecutors duped him into thinking they had not yet decided to bring charges against him, leading him to provide information that was helpful to their case. His arrest soon after those meetings show they had already decided to prosecute, his lawyers claim. 

Hwang is seeking a hearing to determine when the government decided to charge him and whether prosecutors tricked Hwang into providing information after the point when it might have influenced their decision.

“What Hwang characterizes as indicia of deceit were in fact part of a good faith effort by the government to arrive at a just outcome by affording Hwang and his lawyers an opportunity to be fully heard before making a charging decision,” lawyers in the office of US Attorney Damian Williams said in the filing.

Hwang and former Archegos Chief Financial Officer Patrick Halligan were arrested April 27 and charged in the collapse of the asset manager, which at one point held market positions valued at $160 billion, according to prosecutors. They face the possibility of decades in prison if they’re convicted. Both men have pleaded not guilty. 

“Based upon even a preliminary review, we are confident that we will have strong and persuasive responses to both the Government’s legal and factual contentions,” Hwang’s lawyer, Lawrence Lustberg, said in an email. The lawyer said he was reviewing the papers, which were filed shortly before midnight.

Hwang’s legal team contacted federal prosecutors in Manhattan in October 2021 asking for the opportunity to meet “to demonstrate why any potential charges would be without merit,” according to the government. What followed were four sessions with investigators, two of which involved Hwang himself, under the protection of an agreement limiting what use the government could make of his statements.

Beginning weeks before his arrest, Hwang was “on notice” that the government could seek an indictment at any time. On April 1, 2022, they told Hwang’s team they “had serious concerns about the lawfulness of Hwang’s conduct and had doubts about the honesty of Hwang’s responses to questions during a voluntary interview,” according to the court filing.

The case is US v. Hwang, 22,cr-00240, US District Court, Southern District of New York (Manhattan).

(Updates with details of court filing)

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