Entertainment
The Star Entertainment Group and Crown Resorts, two Australian casino and hospitality powerhouses, are facing lawsuits for their past dealings with Michael Gu, an international fugitive who was behind one of Australia’s biggest Ponzi schemes.
Gu Defrauded Investors of Millions of Dollars
Michael Gu, for context, described himself as a high-end property developer. As the founder of iProsperity, a major participant in Australia’s significant visa initiative (SIV), a program offering residency visas to foreigners willing to invest at least AUD 5 million ($3.17 million) in local businesses. iProsperity, however, turned out to be a huge scam.
Instead of using his investors’ money to develop his business, Gu spent it on a luxurious lifestyle. Investigators understood that over half of the $380 million his company raised was either gambled away or used for personal expenses.
Among other things, Gu bought two Lamborghinis, an Audi Q7, a Ferrari GTB, a Rolls Royse Wraith, and a McLaren Spider. He also used some of the money to settle personal loans and cover his private jet expenses.
Gu disappeared in 2020, owing some $245 million to his investors.
Liquidators Seek the Stolen Money
As mentioned, Gu gambled millions alongside his partner Harry Huang. This money was gambled at Star Sydney and Crown Melbourne, suggesting that the fraudsters were laundering the money. Liquidators, who have been working hard to follow the complex tracks of Gu’s money, successfully traced back $112 million of it, $45 million of which has been linked to accounts at the two gambling companies.
As liquidators seek to recover the stolen money, they have launched lawsuits against the two operators.
This, however, wouldn’t be the first time Star Entertainment Group has faced trouble because of Gu. The company has been struggling with regulatory matters for several years now. In the 2022 public regulatory inquiry into the company’s suitability to hold a license, regulators mentioned Gu’s gambling at the property as one of many oversights. The company’s senior vice president of high roller operations, Mark Walker, is believed to have been a close friend to Gu.
Speaking of regulatory trouble, Queensland recently deferred the license suspension of The Star Gold Coast, providing it with a few more months to implement its remediation plan and comply with the local regulations.
A month ago, Star Entertainment confirmed the execution of a $130 million debt facility amid a bumpy period for the operator’s business.
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Fiona Simmons