The refugee Chinese billionaire Guo Wengui held a press conference in New York on November 20, 2018 on the death of tycoon Wang Jian in France on July 3, 2018.

Don Emmert | AFP | Getty Images

Wealthy Chinese businessman Guo Wengui, an outspoken critic of the Chinese government, and several others are charged with violating state securities laws in a class action lawsuit filed in Arizona.

The civil lawsuit was filed in the US District Court for the District of Arizona in late June. Plaintiffs claim they tried to invest in GTV Media, a private media company affiliated with Guo, only to see no evidence that their money was actually used in the business.

Guo and other defendants’ attorneys called the allegations “unfounded” in an email to CNBC on Monday.

GTV’s website shows Guo as one of its main attractions, and research by Graphika shows the company is part of the larger business man’s media empire.

“None of these investors got a single cent back for investing their hard-earned money, not even on redemption requests, which suggests that the investments were anything but real, let alone risk-free or lucrative,” the filing said. “The investors have also received no comparable proof of their participation or their share of ownership. Instead, they are left with worthless papers or no papers at all.”

The litigation could also provide some insight into the way funds have been raised for GTV.

The Wall Street Journal reported last year that the fundraising efforts were being investigated by the Securities and Exchange Commission and the Federal Bureau of Investigation. Investigators are reportedly investigating GTV Media for a possible violation of securities laws.

GTV Media said in a statement to the Journal at the time that it had pushed the private placement on the advice of its lawyers and “all funds raised are intact”. The company also said it was ready to comply with federal authorities.

Another journal report said that Guo himself is being investigated by the FBI. A lawyer for Guo told the newspaper at the time that Guo was not contacted by the FBI.

The FBI and SEC did not respond to requests for pre-release comment. Federal investigators have not publicly disclosed any charges.

A vocal critic of the Chinese Communist Party, Guo used his live digital shows on GTV to blow the minds of the Chinese regime. Guo fled China in 2014 pending corruption allegations. After criticizing China’s leaders, arrest warrants were reportedly issued against him for corruption and bribery. Guo denies the allegations.

Former Trump White House chief strategist Steve Bannon has been close to Guo for years. Bannon was involved in the media group, the Journal reported. The newspaper had previously reported on financiers from the same media company who also alleged cheating. Bannon is not listed as a defendant in the Arizona-based class action lawsuit. A spokesman for Bannon did not respond to requests for comment.

The Graphika report claims that Guo’s affiliates and foundations comprise a network that “acts as a prolific producer and amplifier of misinformation and disinformation, including allegations of election fraud in the US, false information about Covid-19 and QAnon narratives . “A representative from Guo previously denied that the Chinese businessman controls content on GTV.

The plaintiffs are demanding compensation. The lawsuit alleges that Guo and other defendants violated several state laws, including selling unregistered securities and fraudulently selling securities.

It is unclear how much these investors are asking for damages. The lawsuit alleges that a colleague of Guo’s and a branch of the media company eventually raised at least $ 117 million from mostly inexperienced investors.

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The plaintiffs’ attorneys listed in the complaint told CNBC that they had no interest in turning the case into a media event.

“We do not intend to try this case in the press. We intend to vigorously pursue this lawsuit in court to enforce the rights of plaintiffs and other defrauded investors, ”said Benjamin Y. Kaufman of the Wolf Haldenstein law firm in an email statement on Monday.

The lawyers representing Guo and other defendants said they were prepared to face a lawsuit.

“With regard to the Arizona lawsuit, our only comment is that we will respond and vigorously defend our client against any unsubstantiated allegations in court,” said Jeffrey S. Gavenman of the Schulman Bhattacharya law firm in an email to CNBC.

A judge ruled earlier that month that Guo and the other defendants have until September to speak to their accusers to “state any intention to dismiss the lawsuit and, if so, the reasons for dismissing the lawsuit.” “.

The case might not be a huge problem for Guo unless something comes out during the investigation, according to an attorney who has been involved in trials against the Justice Department and the SEC.

“I’m sure Mr. Guo, wherever he is, on whatever yacht or in what palace or in what palace apartment, I don’t think he got less than eight hours of sleep from doing business,” Randy Zelin told CNBC .

According to the lawsuit, there were apparently two types of investments Guo offered through its public broadcasts to people interested in funding GTV Media over the past year.

The lawsuit cites public statements by Guo claiming that those who meet the minimum direct investment of $ 100,000 could go through “private placements,” although the lawsuit said it was “used to allegedly imprimatur a company.” to give legitimate and proper operation ”. and appear to be available only to accredited investors. “

Guo instructed investors who failed to reach the $ 100,000 threshold to go through Sara Wei, the lawsuit said. According to Wei’s LinkedIn page, she had at least one leadership role with another Guo-related media group, Voice of Guo Media. Wei’s lawyer is not listed in the complaint and a representative was not available for her.

“Investors were told Ms. Wei should pool the smaller sums of money and invest in GTV on her behalf through another company, Defendant Voice of Guo Media, Inc. (” VOG “), such investors who invest through Ms. Wei and / or VOG have invested in GTV securities, “said the lawsuit.

A representative from GTV told the Journal last year that it did not accept any money from Voice of Guo Media as part of the fundraiser.

Plaintiffs allege, however, that “Ms. Wei and VOG, after taking the investors ‘money, neither bought shares in GTV nor returned the money to the investors. They kept the investors’ money either for themselves or their affiliates; Did Guo, GTV, or a Guo-affiliated entity exist without receiving any shares in GTV, or did a combination of both. “

Plaintiffs said Wei had been told they and other interested investors were required to provide evidence that they were making a donation to either the Rule of Law Society or the Rule of Law Foundation, two nonprofit organizations with ties to Guo, in order to sign up for an investment to qualify. “CNBC reported on departures from the boards of the two foundations, including Bannon. Representatives from the foundations did not respond to requests for comment.

“Ms. Wei told investors in Chinese that ‘the first thing I need from you is your proof of donation to the Rule of Law Foundation,'” the lawsuit read, which is an unofficial translation. Wei continued, according to the lawsuit, “Then you must tell me whether you have more or less than $ 100,000. You have to tell me. If it’s more than $ 100,000 I’ll contact headquarters, if it’s less than $ 100,000, VOG will do it for you together. “

Investors eventually became concerned about their initial investments in GTV. They asked, but “there was no specific information from the defendants,” the lawsuit said.

Wei initially informed investors, according to the lawsuit last year, that “the delay in confirming receipt of investor remittances and countersigning the Limited Purpose Agency contract was caused by Wells Fargo and Chase deferring part of the funds.” .

Plaintiffs also claim that it was still unclear what happened to their investments when federal authorities began the investigation and how Wei allegedly said that she was able to release the funds from the banks.

After the state investigation into GTV’s fundraising practices became public, investors who sent their money through the Voice of Guo began demanding reimbursements from Wei and Guo themselves, according to the legal complaint.

“From August 2020 through the end of the year, Ms. Wei continued to urge VOG investors to wait patiently while she and her staff reportedly contacted over 8,000 VOG investors to confirm receipt of their transfers before issuing refunds.” Investors were asked to fill out Google forms to collect identifying information about the transfers they made, “the lawsuit said.

Guo and Wei also had a fallout that made things even more complicated, the lawsuit says.

“According to information and beliefs, Mr. Guo and Ms. Wei reportedly had fallout towards the end of 2020 that resulted in a halt to VOG and Ms. Wei’s alleged reimbursement process,” the lawsuit said. “Everyone held a portion of the $ 117 million, Mr. Guo and Ms. Wei began to blame each other for defrauding the investors who sent Ms. Wei and / or VOG money.”

The lawsuit states, “In 2021, Ms. Wei and Guo began telling investors that they would no longer be able to return investments due to ongoing SEC investigations.”