CORRECTED-Brown Rudnick agrees to $8 million settlement over Guo bankruptcy work

By Dietrich Knauth

April 7 (Reuters) - Brown Rudnick has agreed to pay about $8 million to resolve a dispute over the law firm's bankruptcy work for exiled Chinese businessman Guo Wengui, who was convicted on fraud charges in the U.S. last year for stealing hundreds of millions of dollars from online followers.

Guo retained Brown Rudnick to represent him when he filed for personal bankruptcy in February 2022. Guo's bankruptcy case was turned over to a Chapter 11 trustee months later in June 2022, after creditors argued that Guo was hiding assets and not complying with court orders.

The Chapter 11 trustee, Luc Despins, said in a Friday court filing that Guo's creditors had strong legal claims against Brown Rudnick over advice that the firm provided in the early days of Guo's bankruptcy, when Guo was hiding assets from his creditors. But a settlement was the best option, providing nearly $8 million for Guo's creditors without the risk or delay of litigation, according to the trustee.

Brown Rudnick said in a Monday statement that it "unequivocally denies" the trustee's legal claims, but it was pleased to resolve the matter. The firm will return $948,000 that it received as a retainer payment and pay an additional $7 million, according to the settlement agreement.

Guo, also known as Ho Wan Kwok, was convicted in July 2024 on nine charges, including racketeering conspiracy and wire fraud.

Prosecutors said that Guo raised more than $1 billion by guaranteeing followers on social media that they would not lose money if they joined him in a series of investment and cryptocurrency schemes from 2018 to 2023. An outspoken opponent of Beijing's communist government, Guo said some of the money that he raised would go toward challenging China's government, but spent it on luxury goods including a New Jersey mansion, a red Lamborghini and a yacht, according to prosecutors.

Guo, who has been jailed since his March 2023 arrest, has not yet been sentenced.