Eastern Profit Corporation Limited v. Strategic Vision U.S. LLC, 18-cv-2185 (LJL)

CourtUnited States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
Writing for the CourtLEWIS J. LIMAN, United States District Judge:
PartiesEASTERN PROFIT CORPORATION LIMITED, Plaintiff, v. STRATEGIC VISION U.S. LLC, Defendant.
Docket Number18-cv-2185 (LJL)
Decision Date22 June 2021

EASTERN PROFIT CORPORATION LIMITED, Plaintiff,
v.

STRATEGIC VISION U.S. LLC, Defendant.

No. 18-cv-2185 (LJL)

United States District Court, S.D. New York

June 22, 2021


FINDINGS OF FACT AND CONCLUSIONS OF LAW

LEWIS J. LIMAN, United States District Judge:

Plaintiff Eastern Profit Corporation Limited (“Plaintiff or “Eastern”) brings this action against Defendant Strategic Vision U.S. LLC (“Defendant” or “Strategic”) for breach of contract, a declaratory judgment, and unjust enrichment.[1] Strategic asserts counterclaims for breach of contract and fraudulent inducement.

An in-person bench trial commenced on April 19, 2021 and concluded on April 23, 2021. Closing statements were made remotely on April 30, 2021. This opinion constitutes the Court's Findings of Fact and Conclusions of Law pursuant to Fed.R.Civ.P. 52.

For the reasons that follow, the Court finds for Eastern on its claim seeking a declaratory judgment that the research agreement at issue is void and unenforceable as a matter of Virginia law and public policy.

I.FINDINGS OF FACT

A. Relevant Persons

Eastern is a private limited company registered under the laws of the Hong Kong Special Administrative Region of the People's Republic of China.

Eastern is, in essence, a shell corporation for an individual named Guo Wengui, also known as Mile Kwok (“Guo”). Eastern is not registered to do business in the United States. It has no office in the United States and no operations in the United States. It also has no operations in Hong Kong where it is registered. Its only asset is a bank account in Hong Kong that was frozen by the Hong Kong High Court in 2007 and that now has $80, 000 in it. Prior to 2017, the owner and sole director of Eastern was an individual named Han Changhui (“Han”). In 2017, Han transferred ownership and control to Guo's daughter, Guo Mei, who was a friend of Han's and who is now the owner and sole director of Eastern.

Guo is a former resident of China who now resides in the United States. He has achieved some notoriety in this country and internationally as he has made claims that are critical of the policies and practices of the Chinese Communist Party (“CCP”) while at the same time making statements supportive of individuals within the Chinese government. He has applied for asylum in the United States. Guo maintains a family office under the name Golden Spring New York Ltd. (“Golden Spring”).

Yvette Wang (“Wang”) is an associate of Guo and is the president and director of his company Golden Spring.

Defendant Strategic is a limited liability company registered and in good standing with the Nevada Secretary of State. Strategic's principal place of business is in Arlington, Virginia.

Among other services, Strategic provides private “investigatory research” to clients within the United States in exchange for monetary compensation.

French Wallop (“Wallop”) was and is Strategic's sole manager and only member. Wallop was married to Malcolm Wallop, the U.S. Senator representing Wyoming from 1977 to 1994, who is now deceased. Wallop resides in Arlington, Virginia.

J. Michael Waller (“Waller”) is a long-time friend and professional acquaintance of Wallop and is an active member of the community of persons in the United States opposed to the CCP. He holds a Ph.D. in international security affairs from Boston University and has an extensive academic background. In addition to his work with Strategic, he is also currently employed as a senior analyst for strategy at the Center for Security Policy, a think tank based in Washington D.C. Waller has worked with Strategic on a number of projects since 2016 or 2017.

Strategic has never had employees. Nor has Eastern.

B. The Origins of the Agreement

The case concerns a research agreement (the “Agreement”) dated December 29, 2017 and signed by Strategic and Eastern on January 6, 2018. Wallop signed on behalf of Strategic. Wang signed the name Han on behalf of Eastern.

The Agreement stated that it was “for the purpose of [Strategic] providing business research, reporting, documentation, and other consulting services.” The Agreement also reflected Strategic's promise to “conduct high quality original research and prepare reports on subjects chosen at [Eastern's] discretion, for the purpose of detecting, stopping, and preventing crime or other harm to innocent people.” PX1.

The Agreement had its origins in meetings among Wallop, Waller, and Guo and persons associated with Guo in late 2017.

Guo was introduced to Wallop and Waller in late October or early November of 2017, by an individual named Linchao Han (“L. Han”). A former reporter for the Washington Free Beacon and current reporter for the Washington Times named Bill Gertz (“Gertz”), who is a mutual acquaintance of Guo, Wallop, and Waller, was also involved in the introduction.

Both Gertz and L. Han are members of the community of persons in the United States who are opposed to the CCP and self-identify as “China Hawks.” L. Han had immigrated to the United States from China and worked in the United States Senate for several years (including for the late Senator Wallop) on matters relating to China. Before he immigrated and after the Tiananmen Square Massacre in 1989, L. Han helped found the Independent Federation of Chinese Students and Scholars. Gertz has opposed the CCP through his writings and books. He met Guo when he interviewed him in June or July 2017 and was asked by Guo to be a director of the Rule of Law Foundation, an organization established by Guo in October 2018 to bring about democratic reform in China.

Wallop and Waller also have been involved in activities dedicated to the overthrow of the CCP.

In late 2017, Gertz approached Wallop and offered to introduce her to L. Han with respect to a project Gertz thought might be of interest to Wallop. L. Han, who is a lawyer, was helping Guo with his application to obtain asylum in the United States. Gertz believed that Wallop could provide strategic communications support to Guo who was engaged in activities to oppose the CCP.

Wallop and Waller met with L. Han and Gertz in late October or early November 2017 at Wallop's home in Virginia. L. Han described Guo to Strategic as a wealthy businessman who had moved to the United States to escape political persecution in China and who had recently purchased the penthouse at the Sherry-Netherland Hotel in Manhattan. According to L. Han and Gertz, Guo had developed several broad goals involving the Chinese government that would be beneficial to the people of China. In particular, Gertz described Guo as a dissident who had broken with the CCP, who was engaged in a whistleblower campaign, and who wanted to devote his resources to undermining the CCP and causing it to collapse. L. Han believed that Guo needed to sustain an image as a “whistleblower” against the CCP. To be a “whistleblower, ” L. Han believed Guo needed to obtain and publish well-researched information against high-ranking government officials.

Thereafter, Wallop and Waller held several meetings with Guo in late 2017. Other meetings were held with Wang and L. Han. The first meeting, held by Wallop with Guo, was at Guo's apartment in New York City. Subsequent meetings, which were held by Wallop and Waller with L. Han and Wang, were held in Virginia or in Washington, D.C.

Wallop and Waller first met with Guo at his New York apartment on November 21, 2017. L. Han was also in attendance. Guo stated that he was on a mission to dismantle the CCP and described himself as an enemy of the CCP who wanted to use his wealth and influence and contacts to bring out information to expose the contradictions within the CCP to bring it down.

Wallop presented a document reflecting a “Vision” for Guo “to remain safely in [the United States] and accomplish his mission back home, ” i.e., in China. DX38. The document was prepared at the request of L. Han, who Strategic understood to be Guo's emissary but who in fact acted simply as an intermediary between Strategic and Guo. See, e.g., Trial Tr. at 57. The “Vision” document tracked Wallop's then-understanding of the services Guo desired. It was addressed both to his asylum application and to activities intended to help him undermine figures in the CCP. It was also addressed to transforming Guo's public image. The document reflected the objective for Guo to “transform himself from an apolitical businessman to an international statesman” and to “build a global moral standing, with a sound philosophical or principled base, to show a positive vision for his country's future that will unite people who ordinarily would never follow a wealthy businessman” as well as to “bring Mr. G into a new community of leaders and follows to accomplish his objectives.” DX38.

In the “Vision, ” Strategic proposed to provide services to Guo to change his public image and to build that community. Strategic stated it would “focus on building those communities [of support] in this country, for the purpose of preventing any chance of [Guo] being forcibly repatriated, and as a base from which to expand publicly.” Id. The services would include helping to change his public image, expanding sources of respect, developing a social engagement presence for Guo with policymakers, media figures, and decisionmakers in Washington D.C., making Guo a thought-leader and policy leader, and building a foundation to educate people from the United States and China on Guo's ideas. Among the services promised to Eastern was that Strategic would deploy a secretive and untraceable network of persons supportive of and associated with then-President Donald J. Trump. Strategic proposed to provide an “aggressive defense” against attacks that were expected to intensify and to develop a network of surrogates who could speak on Guo's behalf without being traced back to him and who would be developed from online networks...

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