By Brian Spegele, Sha Hua and Aruna Viswanatha
A media company linked to former Trump political adviser Steve
Bannon and exiled Chinese businessman Guo Wengui raised more than
$300 million in a private offering this spring that is now being
investigated by federal and state authorities, say people familiar
with the matter.
JPMorgan Chase & Co. and Wells Fargo & Co. have frozen
accounts tied to fundraising for the company, GTV Media Group, some
of these people said. Bank of America Corp. also closed an account
for GTV Media's parent company shortly after it was opened in
recent months, another person with knowledge of the situation
said.
The federal probe is being conducted by the Federal Bureau of
Investigation and the Securities and Exchange Commission, people
familiar with the investigation said. The investigators have been
examining whether GTV Media or associates of Mr. Guo violated
securities laws through the private share placement. The New York
state attorney general's office has also been examining the matter,
these people said.
Soon after the fundraising, some investors began pushing for
refunds after they said they never received official documentation
verifying their investments in GTV Media, among other issues that
led them to distrust Mr. Guo.
Mr. Guo, a former property tycoon who is now one of China's
most-wanted fugitives, and Mr. Bannon were two of the key people
behind GTV Media's launch this spring, according to a company
fundraising document and interviews. The document identifies Mr.
Bannon as a company director, while Mr. Guo served as the public
face for its fundraising. Associates of Mr. Guo are listed as GTV
Media executives, while Mr. Guo is described as a company
adviser.
Messrs. Guo and Bannon joined forces in the last few years as
tough critics of China's Communist Party, and recently have been
spending significant time together on Mr. Guo's yacht, according to
videos posted on a website affiliated with Mr. Guo. Mr. Guo faces
accusations of wrongdoing in China including bribery, fraud and
money laundering -- allegations he has denied.
GTV Media said in a statement that it had carried out the
private placement under the guidance of its lawyers and that "all
of the raised funds are intact."
The company added that it is fully prepared to cooperate with
any U.S. agency that has questions about the private placement or
its business.
A representative for Mr. Guo didn't provide comment, and Mr.
Bannon declined to comment.
The FBI had been examining Mr. Guo's work with Mr. Bannon even
before the private placement this spring. The Wall Street Journal,
citing people familiar with the matter, reported last month that
FBI agents had been investigating Mr. Guo and the money he used to
fund his media efforts in the U.S. for more than six months and
that prosecutors from the U.S. attorney's offices in Manhattan and
Brooklyn had been involved in the probe.
At that time, representatives for Messrs. Guo and Bannon said
neither man had been contacted by the FBI as part of the probe.
Earlier this month, Mr. Guo said in an online video that he had
been subpoenaed and that he welcomed authorities' probes. A lawyer
for Mr. Guo didn't provide comment on what information the
subpoenas were seeking and whether Mr. Guo had complied with
them.
Since fleeing China for the U.S. in 2014, Mr. Guo built a large
following online, particularly among the Chinese diaspora in the
U.S. and elsewhere, and has alleged high-level corruption in
China's Communist Party. He has also applied for asylum.
GTV Media sought to capitalize off that popularity. One
fundraising document reviewed by the Journal said the venture aimed
to be "the only uncensored and independent bridge between China and
the Western world."
The company told potential investors it would be a platform for
news, social media and e-commerce, with competitors including
Amazon.com Inc., Tencent Holdings Ltd.'s WeChat and ByteDance
Ltd.'s TikTok. A fundraising memo for potential investors this
spring didn't include a detailed business plan for GTV Media. It
stated a pre-investment valuation of $1.8 billion.
The company identified Mr. Bannon as one of several prominent
directors. Others included hedge-fund manager and China critic Kyle
Bass, Texas venture capitalist Darren Blanton and John. A. Morgan,
the son of Morgan Stanley's co-founder.
Mr. Bass said on Twitter in July that he was no longer serving
on GTV Media's board, and a person familiar with the company
confirmed he had resigned. Mr. Blanton didn't respond to requests
for comment. Mr. Morgan couldn't be reached.
The fundraising documents reviewed by the Journal say GTV Media
aimed to sell a 10% stake in the company for as much as $200
million, with the rest held by another company affiliated with Mr.
Guo.
Mr. Guo said in an online video in June that GTV Media had
raised more than $300 million, with demand for shares exceeding
expectations.
GTV Media didn't register the deal with the SEC. To avoid
registration, companies generally must sell shares only to wealthy
"accredited investors" who meet requirements such as having more
than $1 million in assets, excluding the value of a primary
residence, or earning more than $200,000 a year. GTV Media said it
sought to sell shares to such accredited investors.
Spokespeople for the SEC, the FBI field office in New York, the
Manhattan U.S. attorney's office and New York state attorney
general declined to comment.
It couldn't be determined how much money is in the accounts
linked to GTV Media. A Chase account for GTV Media collected funds
from investors willing to give at least $100,000 to GTV Media,
according to documents reviewed by the Journal.
Separately, smaller investors were told they could invest in the
GTV Media offering through another entity called Voice of Guo Media
Inc. Several of these investors said they were told that the money
sent to Voice of Guo Media would be invested in GTV Media on their
behalf.
Mr. Guo said in June that Voice of Guo Media had raised nearly
$120 million. That company didn't respond to requests for comment.
GTV Media said in its statement that it didn't issue shares to
anyone through Voice of Guo Media.
SEC investigators have been reaching out to conduct interviews
with investors who are now pushing GTV Media or Voice of Guo Media
to refund their money and are lodging complaints about Mr. Guo and
his associates, some of the people familiar with the matter
said.
The Journal reviewed documentation from investors including
copies of bank transfers, shareholder agreements and text
messages.
As U.S.-China relations have soured during the Trump
administration, Mr. Guo has proven divisive among U.S. critics of
China. Some such as Mr. Bannon have aligned themselves with Mr.
Guo, while others say they distrust him. The FBI previously viewed
Mr. Guo as a potential agency informant and tried unsuccessfully to
cultivate him as one around 2017, say people familiar with the
matter.
Some have openly questioned Mr. Guo's loyalty to the U.S. In
2018, a company affiliated with Mr. Guo hired Virginia-based
research firm Strategic Vision to investigate individuals Mr. Guo
said were tied to top Chinese Communist Party officials, according
to court filings.
Strategic Vision had issues with the request and accused Mr. Guo
of being a "dissident-hunter" for China. The contract between the
companies is now in litigation.
A lawyer for Mr. Guo has denied those claims, saying in a
previous statement to the Journal: "Mr. Guo is the most-wanted
dissident worldwide by the Chinese Communist Party and has been
their most outspoken and vitriolic critic since his arrival in the
United States."
A New York state court on June 28 dismissed a lawsuit filed by
Mr. Guo against Dow Jones & Co., publisher of the Journal, over
its reporting about the litigation between Strategic Vision and the
Guo-linked entity. Mr. Guo has indicated he plans to appeal.
The recent fundraising has also drawn scrutiny abroad. In
Taiwan, local news media reported that police had prevented one
supporter of Mr. Guo from transferring $43,000 to Voice of Guo
because they suspected financial fraud. In New Zealand, dozens of
protesters criticized a decision by Australia and New Zealand
Banking Group Ltd., or ANZ, to block transfers worth $2 million to
GTV Media, according to another local news-media report. ANZ
declined to comment.
Mr. Guo has complained online about banks blocking transfers,
alleging they are under the influence of China's Communist
Party.
Rebecca Davis O'Brien and Dave Michaels contributed to this
article.
Write to Brian Spegele at brian.spegele@wsj.com, Sha Hua at
sha.hua@wsj.com and Aruna Viswanatha at
Aruna.Viswanatha@wsj.com
(END) Dow Jones Newswires
August 19, 2020 13:32 ET (17:32 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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