A former director of Bill Hwang’s investment firm, seeking millions in compensation, said Grace and Mercy was used as a financial “escape pod.”
A former managing director at Archegos Capital–a family office at the center of one of Wall Street’s biggest white collar crime cases in decades–has filed a lawsuit alleging fraudulent activity at the Grace and Mercy Foundation, the Christian nonprofit connected to the firm. In seeking millions in compensation, he claims the foundation’s $800 million in assets includes funding diverted from Archegos’s employees’ compensation.
In April, federal prosecutors charged Archegos founder Bill Hwang, a billionaire outspoken about his Christian faith, with racketeering and “massive fraud.” In 2021, banks lending to Archegos lost $10 billion, and the firm’s collapse evaporated $100 billion from the stock market, according to prosecutors. Hwang is currently free on a $100 million bond and awaiting trial.
Brendan Sullivan, who started at Archegos in 2014 and resigned during its downfall in March 2021, is seeking millions in compensation he says he is owed. He says Archegos leadership forced employees to put their bonuses back into a fund at the firm, which he alleges Archegos then invested in stocks and transferred to Grace and Mercy. The foundation, he said, then sold the stocks and got the profits. That would protect appreciated stock from taxation and give Archegos a tax deduction for the donation.
“These share transfers to the foundation were all coming from the Archegos Fund, which included employee deferred compensation … which was done without the knowledge or consent of employees,” the lawsuit says. The employee fund lost $500 million total, Sullivan says. Sullivan was owed $30 million in deferred compensation at the time of his resignation and has not received …
Continue reading…