Court Orders Accused Crypto Fraudster Miles Kwok to Bolster Expert Disclosures in Himalaya Exchange Fraud Case
On Wednesday, April 24, 2024, the United States District Court for the Southern District of New York issued an order in the criminal case United States v. Ho Wan Kwok regarding the adequacy of the defendant’s expert witness disclosures.
Ho Wan Kwok, also known as Miles Kwok, and co-defendant Yanping Wang are accused of defrauding investors of over $262 million through false statements about the Himalaya Exchange, an online platform that allowed trading of digital currencies called Himalaya Dollar and Himalaya Coin. The government alleges these cryptocurrencies did not actually use blockchain technology as claimed and were instead used to enrich the defendants.
Ahead of the trial, Kwok had served notices to call four expert witnesses covering topics like cryptocurrency, Chinese politics, and financial analysis. However, the court agreed with the government that the disclosures fell short of requirements under Rule 16 of the Federal Rules of Criminal Procedure.
Rule 16 was amended in 2022 to require “a complete statement of all opinions” each expert will present, as well as “the bases and reasons for them,” beyond a general summary. But Kwok’s notices only identified general topics witnesses may discuss, without stating their actual opinions or fully explaining the methodology and evidence supporting their conclusions.
To remedy this, the order required Kwok to supplement his expert disclosures with the missing details mandated by Rule 16. If the supplementation remained inadequate, it could risk the exclusion of expert testimony from the trial. However, the exclusion is considered an extreme remedy, so close to the scheduled start, so the court exercised its discretion to allow Kwok another chance to comply.
The ruling addressed each of the four proposed experts. For the cryptocurrency expert, more was needed than a list of possible topics without specifying opinions. Regarding accounting and valuation analyses, the order identified opinions offered but pointed out a lack of explanation of analytical methods used.
By directing robust expert disclosures, the court aims to properly execute its “gatekeeping role” to ensure expert testimony meets standards of reliability, relevancy and is based on sufficient facts and data. Going forward, the supplemental notices may allow the government the opportunity to evaluate the expert testimony and seek to exclude it if still deficient, while upholding the purpose of pretrial disclosures for efficient trial preparation.
The order demonstrates the heightened scrutiny courts now apply to expert evidence following amendments to procedural rules, while also exhibiting flexibility to remedy problems instead of immediate sanction when there is still time before a case proceeds. This could allow both parties a fair chance to challenge or support expert testimony in a complex fraud prosecution involving new technologies.
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