This is Bloombird Law with June Brasso from Bloomberg Radio. Horses. What does it feel like to be in love with a horse? I want to be a famous rider? The Lovely MGMs National Velvet, The exciting story of a Girl, a horse and a dream in color National Velvet from is just one in a long line of movies about the bond between a girl and her horse. There's Black Beauty, Dreamer, Flick Up, the Horse Whisperer. The list goes on and on. But what about the bond between a woman and her horse.
Christina Fisher's horse, Lex, a champion show jumper, was so important to her that she planned to ride him at her wedding. But just ten days before the wedding, enter the I R S. They seized Lex from stables in the mountains of western North Carolina and drove him down to Delray Beach, Florida, despite Christina's please joining me is Bloomberg Legal reporter David Voriankis who wrote about the story.
So David tell us about Christina and Lex. Christina Fisher is a lifelong equestrian whose favorite horse, Lex is a big athletic jumper, and she was planning her wedding. In early May, she was visiting her mother in Atlanta when she learned that I R S agent arrived at the stables in western North Carolina where she kept Lex, and that I R S agents were seizing Lex because her father,
Jack Fisher, was under indictment. He'd been accused of generating one point three billion dollars in fraudulent tax deduction for investors in syndicated deals that conserved land, and the I R S was seizing pre conviction a bunch of assets for Jack Fisher, including the horse, which he had bought for Christina as a gift in early twenty seventeen. They'd also sees an airplane, Mercedes, a forty five foot recreational vehicle, and Lex. They put leans on real estate they could
seize if he's convicted. But for Christina Fisher this was a terrible event because she was a couple hundred miles away in Atlanta, and Lex is a champion show jumping horse. They had jumped together in about ten events a year for several years. He had also had a couple of bad accidents in which he'd fallen and hurt his neck and his back, so he was on a special metabolic diet, and she was very concerned that he would not be
handled properly by the I R S agents. She was on the phone talking to I R S agents and they would not stop until she got there. They went ahead and took the horse to a trainer in southern North Carolina for evaluation, and then they took him by police escort down to Delray Beach, Florida. And she also believes strongly that she had nothing to do with the fraud that her father is accused of. Just to clarify
this was a gift to her years ago. They're not accusing her of doing anything, certainly not accusing the horse of doing anything, but they're still taking this horse. Right it's the position of the government that this was an asset that he bought with proceeds of the fraud, and so they're trying to tease and ultimately liquidate those assets that are purchased with proceeds of the fraud. The government
would dispute that it is not Jack Fisher's assets. This seems like a complex move involving a lot of hassle and expense. It also seems kind of cruel to seize a horse is this what they do. In the ordinary course of business. The I R S and other government agencies will seize all types of assets. Got cars, houses, jewelry, artwork. Animals are also some of those assets. But all the assets they sees, animals probably take the most work. And you know there's the chance the animal could die, which
with them, we yes said, without any value. I had token with a former US Marshall's Chief inspector who, as part of a case a decade ago in Dixon, Illinois, sees several hundred quarter horses which were owned by a woman named Rita Crundwell, who was convicted of stealing fifty three point seven million dollars from the city of Dixon, Illinois, where she worked, and she had used the money that she sold to help finance her breathing and showing of
these American quarter horses. The government eventually auctioned more than four hundred of those horses, including one of them, for seven hundred and seventy five thousand dollars. And as that former Marshall told me, any asset is a liability to the government, but an animal is a significant liability because they have to eat and they require veterinarian care and ultimately they could die. And this is being done before her father is even convicted. He's just been indicted at
this point. Correct. It's what's known as a pre conviction seizure, and it goes on a lot. The government holds the asset and in the event that the defendant is acquitted, the asset is returned to them. Now, there are some instances where the government and the defendant can agree to a sale of the asset and then the amount that they raised through the sale would be returned to the
defendant if they're acquitted. In the case of an asset that has great emotional value to a dependant or whomever it sees from, as in the case with Christina Fisher, she did not agree to the sale of her horse Selects and so they were not going to do a sale in that instance. There are some other times where dependants would say it's okay, go ahead and sell it, and then they would hold the amount that they raised
in escrow until the disposition of the case. So if the government doesn't get permission for a sale, they have to maintain all these expensive assets, not only the horses, but the car is the yachts, there's the whole coordinated strategy on seizing assets and maintaining assets once they're in custody.
In general, the practice is to sell them as quickly as possible, as soon as they have legal permission to do so, because any assets depreciate in value, particularly a yacht, it costs a great deal of money to maintain a yacht. There's to be two d fifty five ft Tango which is owned by billionaire Victor Bexelberg. It was seized by Spain at the behest of the United States, and it's worth about million dollars according to the government, and the net operating costs of that super yacht is about ten
of the boat's value. So that's quite a bit of money. And generally, as I say, what the government is trying to do is sell assets as quickly as possible so that they can use the proceeds to either compensate victims or punish criminals for their listed behavior, or pay for government agencies that are involved in law enforcement. Of the value of the yacht for maintenance, that's almost ten million dollars. That's an astonishing amount of money. It's not cheap to
be an oligarch. Let's get back to Christina and lex she wanted to ride him at her wedding. What happened, she wanted her horseback for her wedding. They took a ten days before the wedding, took the horse down to Florida, and she was very distraught, and her lawyer negotiated an agreement with the U. S. Attorney's Office in Atlanta, which
is leading the prosecute. Enough her father, Jack Fisher, who by the way, is pleaded not guilty and may not go to trial for a couple of years because of a backlog in Atlanta, and the government agreed to return the horse to her for a twenty five thousand dollar deposits. And there's also an agreement that if Jack Fisher is convicted, she can pay what's known as the replacement value for
the asset. And I should say that while he bought the horse for seven hundred and fifty thousand dollars in early seventeen, after they seized the horse, the government determined that his value is a hundred and forty five thousand dollars and that he would cost forty to fifty thousand dollars a year to maintain. So if the trial was
two or three years out. It really wasn't worth it for the government to keep elects in their custody, and so they agreed to return it to Christina, which also for the government, had the benefit of shifting liability back to her because if he was injured or died, then it would be her responsibility and not the government. And she got Lex back just ten hours before her wedding at one in the morning, ten hours before her wedding. Driver returned to Lex in a trailer from Florida. He
was very relieved. She said that he was very cranky, but he got off the trailer and he immediately whinnied at me. She then rode him through the stable where she had her wedding, and her wedding train was draped over his hind quarters, so that went off well. I should say that after that though, she owns eight horses in that stable and several of them developed equine herpes,
and Lex tested positive as well. One of the horses in her stable died on the way to a hospital in Tennessee, and another one was in the hospital, and she believed that Lex dot this virus on the trip to Florida because he hadn't left the stable for three months before then, and so she's angry at the I R S over that. And she said that she feels violated and helpless, that she's not part of the case and she's not part of her father's business, and that
the i R S took an innocent animal. I wonder why, knowing when the trial was going to be, and then knowing the cost of boarding a horse like this, why they would even seize the horse so quickly. It just doesn't make any sense financially. Well, it's a reasonable question, and we tried to ask the i r S and they didn't respond, but one could infer that by returning the horse within ten days of when they seized it, it's essentially an implicit admission by the i r S
that maybe it was not a good idea. And tell us how Lex is doing. Lex is doing fine by all accounts from Christina. He's very close with her. They've and through a lot together. I believe he's still getting over his illness, but she's happy to have him back, and he's happy to be back. So I guess it's a happy ending for Lex and Christina. Thanks so much, David.
That's Bloomberg Legal Reporter David Vorriakis. The personality cult of Bill Huang's collapse family office is at the heart of a fifty million dollar lawsuit filed yesterday by former Arcagost managing director Brendan Sullivan, who claims he's owed the money from deferred bonuses he was forced to invest with the company.
He alleges that Wang did whatever it took to make money with the goal of becoming the richest person in the world, joining me as Greg Farrell, Bloomberg investigative reporter with the Legal Enforcement Team, tell us about Hwang and his religion and evangelizing at the office, Well, I don't know the guy, but he has a reputation and I think he cultivated his reputation over many years of you know, having a deep Christian faith. He set up a charity, uh,
the Grace and Mercy Foundation. But in this lawsuit, in particular the one that was filed yesterday, the charities painted very much as just another vehicle through which Bill Lang could basically do his trades, have a backup in case things went wrong at Archegos, which they of course they did. And then of course there are sort of tax benefits
to having a foundation. One of the allegations and yesterday's civil complaint was that the amount of money you know, that was given up by the charity, although it seems large to the average onlooker, actually was a smaller percentage of what it had than you know, other comparable charities. In other words, there was the suggestion that this Christian charity, the charitable foundation, had other purposes rather than just to give away just be philanthropic. Didn't he sort of force
or encourage his employees to attend scripture readings and things like. Yes, so a of the lawsuit, right, his uh apparent you know, religiosity played a big role in the way he ran the company, or at least in terms of the types of people he wanted to have on board, and then once they were there, the encouragement, uh to go attend scripture readings in concert with the Grace and Mercy Foundation, and you know, basically making religious statements or comments part
of his business. So I don't want to pass judgment another guy's religious faith. But he at times seemed to be very serious about acting the act. But at other times, according to the lawsuit, this was you know, it was described as purported religiosity. So like I said, it's it's puzzling.
It's part of Bill Wang's mystique. And you know, as a practical matter, after his legal problems of a decade ago, it probably did, you know, go some distance to help him rehabilitate his image, at least in certain parts of the world of finance. So go back a bit. Wang and the former chief financial officers are facing federal charges. What does that involve. So they've been accused of conspiracy, market manimulation, and conspiracy to basically defraud banks or at
least lie to banks. And as you know, it's federal crime to make mis representations to banks in order to get you know, credit or some kind of a benefit. Now they're not charged with you know, those lies like causing the banks to lose money just lying to them in one hearing that they had like a month ago. I think there was a preview of what the defense
is going to be like. And then Bill Whang, who has charged with market manipulation, is going to fight that aggressively, saying he's just an investor who wants his stocks go up. So we kept buying the stocks, and the stocks went up. I mean, at a certain basic level, you know if there's something wrong with that. So that's going to be one aspect of his defense and Patrick Halligan's defense. You
know that he lied to banks, made misrepresentations. Is you know his lawyer said something that I had come on. This is like the NBA and it's Lebron James versus Shack. There's a lot of elbows, you know that when different counterparties are impeding. Yeah, this sort of thing happens. That's the way the rules are. And they're all adults. These big banks shouldn't be pity because they were ignorant. They were fooled by poor little Bill Wang and Pat Halligan.
So that's going to be their attempted defense on the you know, lying to make false statements to banks charge. So tell us about this suit by former suit is different though. A former managing director and analyst, Brendan Sullivan, filed this civil suit yesterday and basically covered in One of the things we found interesting about is that it sort of opened up the world of Bill Wangs ar Chagos and how it operated, and also it uh covered an area that was not mentioned at all in the
federal prosecutors case against charges against Bill Whang. A few months ago, namely how employees like Brendan Sullivan and presumably others felt that they were coerced into, you know, putting the maximum amount of their bonus money into a deferred compensation plan that was quote unquote guaranteed by our Chigos management, you know, to never lose money, or at least the principle would never decline, only of course, to have it, you know, run to zero when judgment day came in
March of last year. So there was all sorts of color about how, you know, Brendan Sullivan and others must have felt coerced, how they felt like it was their best interest to do what you know, Bill Wang suggested, even when they wanted to cash out or get some of the money out earlier, et cetera, they're encouraged to stay.
And when they raised questions about the performance of the fund overall, how not to worry, you know, the escape pod for Chagos would be the Grace and Mercy Foundation, where Bill Wang you know, had planned allegedly to keep on trading if things didn't go that well with this fund.
Sullivan claims that employees were sort of forced to invest chunk of their annual bonuses, Yes, in so far as you you were allowed to contribute a much bigger chunk of your bonus into the deferred complaint, or you know, you could put in just a smaller action of that,
And he was interested in the smaller fraction part. But it was made clear to him that the decision on how much you get for his bonus would not be decided until he made his decision as to how much of it was going to go into the deferred complaint. So it was clearly viewed by by Sullivan and presumably others as you know, if you know it's good for you, your bonus will be bigger if you decided to put
more of it in the fund. So it's alleged that basically Bill Wang was using the deferred compensation plan as a like an interest free loan, you know, extra money he could use to play with when he was in the markets. So that's another aspect of Sullivan's lawsuit that's interesting is that you know, he's claiming fraud, you know, fraud on behalf of Bill Wang and other not just the CFO Patrick Allghan who has been charged, but four other named executives he's accusing of fraud. On conduct and
has not been charged. So it' you know, I'm not sure if this is going to be something that will be suddenly get on the radar screen of the federal prosecutors, or if this is something that the as well leave to be sorted out in civil court. As you mentioned, the suit gives some insight into the way the company was run by Wang, and loyalty to Wang, not performance, was the most important, and if you criticized or questioned,
you were publicly reprimanded. Yes, well, first of all, loyalty over performance because it was not like other hedge funds where you had your own money to play with, and you could be judged as to how Bill Wang made all the decisions or all the primary decisions. So if the performance with Bill Wang's, you know, I'm not sure you or I would have like a good year or bad year if we were there, because you're basically just
making recommendations, but it's Bill Wang who makes the ultimate judgment. Yes, loyalty was prized because there were occasions when an employee would question, like, why are we buying you know, so many shares of this little company over and over again
every day. And the anecdote is recounted in the lawsuit is that Bill Wang replied in an email and hit all you know, shared it with the entire company just to humiliate the employee who had raised this question, which doesn't sound very Christian when you come down to it, and that this was part of like management by intimidation
at the firm. So the basic claim of the lawsuit is that the employees were forced to put their money in the deferred compensation plan coerced with the maximum amount it yes, and then to keep it there as long as possible. In other words, funfolded in March of last year, but that was a full year into COVID. There could have been times earlier when we don't know yet, when some of the participants wanted money out, but we're sweet
talks and encouraged to just stay. We'll get through this, etcetera, etcetera, And everything's fine, don't worry, it's not going to go below par so your money is guaranteed, etcetera, etcetera. So when is that, you know, puffery and reassurance, and when is that fraud? Well, there are twenty counts claimed in the civil suit, and a lot of them have to
do with violations of Harissa Guideline. There were rules regarding this, so charging not just like they were talking it up, but that you're breaking, you know, laws that protect people's pensions by making misrepresentations about them in various ways and using the money for other purposes, etcetera. So those are among the twenty legal claims that are part of the civil suit. So is the Grace and Mercy Foundation still in operation. I don't know that. Certainly, it's not an
operation so far as a freestanding charity. It was so closely attached. I think it's probably been by credit or just everything's been frozen for now. You know. While all sorts of litigation starting in March of last year began against Wlang. My next question was, really, let's say they win a judgment here, where would the money for that judgment come from? Good questions. It's really unclear because you know, obviously some of the banks want a piece of as well,
banks that lost a lot of money. And this is
how the criminal case will come into play. If Wang and Alligan are convicted of crimes that you know, bolsters the band extending that they were defrauded and the ones who lost money and that they like some the fact of the you know, this is not you know, legal advice, but the fact that Bill Wang in the cfo of and charge criminally helps the civil case to some extent too, because in a civil case, if it's actually ever went to court, is that, by the way, the defendant in
this case has also be charged criminally with the same conduct. That would not that this would ever go to a jury trial. But you know, if it did. You know, the fact that the you know, top two executives at this fund, you know, and Brending Selven suits against you know, have been charged criminally maybe wouldn't have legal standing, but to any jury it would be a point of interest, if you know what I mean. And does anyone really know how much money Bill Wang has now it's not clear.
So that's going to be part of this whole exercise. Is this a tough case to make out? Well, it's gonna be secondary. The key thing for Bill Wing right now is the criminal charge. That's obviously that they could put him in prison for the rest of his life. So this is a civil suit. This is just not as important right now as the criminal charges facing him and Pat Alligan. Thanks so much, Greg. That's Greg Ferrell, Bloomberg Investigative reporter with the legal enforcement team. And that's
it for this edition of The Bloomberg Law Show. Remember you can always get the latest legal news on our Bloomberg Law Podcast. You can find them on Apple Podcasts, Spotify, and at www dot Bloomberg dot com, slash podcast Slash Law, And remember to tune into The Bloomberg Law Show every week night at ten BM Wall Street Time. I'm June Grosso and you're listening to Bloomberg