Discover more from Letters from an American
March 15, 2023
The Justice Department today announced the arrest of Chinese billionaire Guo Wengui, also known as Ho Wan Kwok and Miles Guo, charged with defrauding followers of more than $1 billion. The 12-count indictment for wire fraud, securities fraud, bank fraud, and money laundering says Guo and a co-conspirator, Kin Ming Je, raised money by promising stock in Guo’s GTV Media Group, a high-end club, or cryptocurrency but then used the money themselves for items that included a $53,000 fireplace log holder, a watch storage box that cost almost $60,000, and two $36,000 mattresses, as well as more typical luxury items: a 50,000-square-foot mansion, a Lamborghini, and designer furniture.
The U.S. government seized more than $630 million from multiple bank accounts as well as other assets purchased with illicit money. If convicted, Guo faces up to 20 years in prison. Guo has attracted donors by developing the idea that he is a principled opponent of the Chinese Communist Party, but Dan Friedman, who writes on lobbying and corruption for Mother Jones, points out that this persona appears to be a grift.
Guo is close to sometime Trump ally Steve Bannon, who was reading a book on Guo’s yacht, Lady May, when federal officers arrested him in 2020 for defrauding donors of $25 million in his “We Build the Wall” fundraising campaign. Rather than constructing a wall, Bannon and three associates funneled that money to themselves. Trump pardoned Bannon for that scheme hours before he left office.
Friedman points out that prosecutors say Guo’s criminal conspiracy began in 2018, which is the year that Guo and Bannon launched The Rule of Law Foundation and the Rule of Law Society. They claimed the organizations would defend human rights in China and then, according to prosecutors, lured donors to other products.
In April 2020, Guo and Bannon formed the GTV Media Group, which flooded the news with disinformation before the 2020 election, especially related to Hunter Biden and the novel coronavirus. Sued by the U.S. Securities and Exchange Commission in September 2021 for the illegal sale of cryptocurrency, GTV paid more than $539 million to settle the case. Bannon’s War Room webcast features Guo performing its theme song.
One of the entities Guo and Bannon created together is the “New Federal State of China,” which sponsored the Conservative Political Action Conference in Washington, D.C., earlier this month.
In other money news, Hugo Lowell of The Guardian reported today that $8 million of the loans that bankrolled Trump’s social media platform Truth Social came from two entities that are associated with Anton Postolnikov, a relation of an ally of Russian president Vladimir Putin named Aleksandr Smirnov.
Banks continue to writhe, in Europe this time, as Credit Suisse disclosed problems in its reporting and its largest investor, Saudi National Bank, said it would not inject more cash into the institution. The government of Switzerland says it will backstop the bank.
In the U.S., Michael Brown, a venture partner at Shield Capital and former head of the Defense Department’s Defense Innovation Unit, told Marcus Weisgerber and Patrick Tucker of Defense One that the collapse of Silicon Valley Bank had the potential to be a big problem for national security, since a number of the affected start-ups were working on projects for the defense sector. “If you want to kind of knock out the seed corn for the next decade or two of innovative tech, much of which we need for the competition with China, [collapsing SVB] would have been a very effective blow. [Chinese President Xi Jinping and Russian President Vladimir Putin] would have been cheering to see so many companies fail.”
Federal and state investigators are looking into the role of Representative George Santos (R-NY) in the sale of a $19 million yacht from one of his wealthy donors to another, for which he collected a broker’s fee. In an interview with Semafor last December, Santos explained that his income had jumped from $55,000 in 2020 to enough money to loan his 2022 campaign $705,000 because he had begun to act as a broker for boat or plane sales. He told Semafor: “If you’re looking at a $20 million yacht, my referral fee there can be anywhere between $200,000 and $400,000.”
Today’s emphasis on money and politics brings to mind the speech then–FBI director Robert Mueller gave in New York in 2011, warning about a new kind of national security threat: “so-called ‘iron triangles’ of organized criminals, corrupt government officials, and business leaders” allied not by religion or political inclinations, but by greed.
It also brings to mind the adamant opposition of then–National Republican Senatorial Committee chair Mitch McConnell (R-KY) to campaign finance reform in 1997 after he raised a record-breaking amount of money for Republican candidates, saying that political donations are simply a form of free speech. The Supreme Court read that interpretation into law in the 2010 Citizens United decision, but the increasingly obvious links between money, politics, and national security suggest it might be worth revisiting.
Money and politics are in the news in another way today, too, as part of the ongoing budget debates. A letter yesterday from the Congressional Budget Office to Senators Sheldon Whitehouse (D-RI) and Ron Wyden (D-OR), answering their questions about how to eliminate the deficit by 2033, says that it is impossible to balance the budget by that year without either raising revenue or cutting either Social Security, Medicare, or defense spending. Even zeroing out all discretionary spending is not sufficient. Led by House speaker Kevin McCarthy (R-CA), Republicans have promised they can do so, but they have not yet produced a budget. This CBO information makes their job harder.
And finally, today, in Amarillo, Texas, U.S. District Judge Matthew Kacsmaryk held a hearing on the drug mifepristone, used in about half of medically induced abortions. The right-wing “Alliance Defending Freedom,” acting on behalf of antiabortion medical organizations and four doctors, is challenging the approval process the Food and Drug Administration used 22 years ago to argue that the drug should be prohibited. While the approval process took more than four years, it was conducted under an expedited process that speeds consideration of drugs that address life-threatening illnesses. “Pregnancy is not an illness,” senior counsel for Alliance Defending Freedom Julie Marie Blake said.
And yet mifepristone is commonly used in case of miscarriage and for a number of other medical conditions. And Texas’s Maternal Mortality and Morbidity Review, released in December 2022, concluded that from March 2021 to December 2022, at least 118 deaths in Texas were related to pregnancy. In 2020, 861 deaths in the U.S. were related to pregnancy, up from 754 in 2019.
Public health officials note that extensive research both in the U.S. and in Europe has proven the medication is safe and effective. They warn that a judge’s overturning a drug’s FDA approval 20 years after the fact could upend the country’s entire drug-approval system, as approvals for coronavirus treatments, for example, become plagued by political challenges.
Kacsmaryk was appointed by Trump and is well known for his right-wing views on abortion and same-sex marriage. Initially, he kept the hearing over a nationwide ban on the key drug used for medicated abortion off the docket, and in a phone call last Friday he asked lawyers not to publicize today’s hearing, saying he was concerned about safety. Legal observers were outraged at the attack on judicial transparency—a key part of our justice system—and Chris Geidner of LawDork outlined the many times Kacsmaryk had taken a stand in favor of the “public’s right to know.”
According to Ian Millhiser of Vox, Kacsmaryk let 19 members of the press and 19 members of the public into today’s hearing.
“McConnell Leads Way to ‘Soft Money’ Record,” Washington Post, October 5, 1997, p. A6.