The Epoch Times began as an anti-Chinese Communist Party newspaper founded by Chinese dissidents and later morphed into a global conservative multimedia company championing former President Donald Trump and conspiracy theories, claiming an audience of millions.
Now it is in turmoil.
Its chief financial officer, Weidong Guan, was arrested earlier this month for allegedly engaging in a multi-year money laundering scheme that federal prosecutors say helped drive the company’s skyrocketing growth in revenue in recent years. Days after the CFO’s arrest, the founder and CEO resigned and an interim management team is now running the media organization.
Guan has pleaded not guilty and is currently suspended from his job, according to a statement from The Epoch Times. The organization has said it intends to fully cooperate with the federal investigation.
In the latest twist, the founding leader of Falun Gong, a Chinese spiritual movement The Epoch Times is associated with, appears to be publicly scolding The Epoch Times for its alleged financial wrongdoing and embrace of partisan politics.
The spiritual leader, Li Hongzhi, has penned two columns since the CFO’s arrest that appear to address the media company’s embattled leadership directly and are posted prominently on The Epoch Times’ homepage.
“You were thinking that it’s hard to fight the CCP’s persecution without funds, and wanted to make money for this cause; and that the U.S. government would be understanding if something wasn’t handled quite right,” Li wrote in a piece posted June 5, adding, “But that was your own thinking.”
In a second piece that appeared on the homepage under the headline “Wake Up” that posted June 8, Li urged his adherents who work in media to stop launching personal attacks, “particularly not on important figures in the United States’ two major political parties” as they could result in retaliation.
“You have no business thinking that you will only try to help individuals who belong to one political party, and not the other,” Li wrote, cautioning those working in media from only focusing on “your click rate.”
A.J. Bauer, a journalism professor at the University of Alabama who studies conservative media, called Li’s columns on the homepage “so peculiar and remarkable” and said “they read like internal memos.”
A dramatic rise
The Epoch Times did not respond to NPR’s questions, including whether the resignation of founder and CEO John Zhong Tang on June 7 was connected to the criminal charges against the organization’s CFO.
According to The Epoch Times website, Tang had left China and was living in the U.S. when he created the organization a quarter century ago. He practices Falun Gong, and was inspired to start an independent newsletter when he learned the Chinese Communist Party was cracking down on the spiritual practice and its practitioners in China.
The media entity now operates in 35 countries in 22 languages, and has a sister organization, New Tang Dynasty Television. The Epoch Times rose to prominence in recent years as a fierce backer of Trump due to his anti-China rhetoric, and as a peddler of conspiracy theories about COVID-19 and the 2020 election.
During the last election cycle, NBC News found that The Epoch Times launched a pro-Trump advertising blitz that used fake accounts to spread its content. It was later banned from advertising on Facebook for violating the company’s ad transparency rules by funneling advertising through pages that didn’t appear to be directly connected to The Epoch Times.
Its latest troubles first became public on June 3 when federal prosecutors from the U.S. Attorney’s Office from the Southern District of New York announced criminal charges against CFO Weidong Guan, also known as Bill Guan.
He has been accused of being part of a scheme to launder at least $67 million in illegally obtained funds that prosecutors allege benefited himself, the media organization and affiliated entities. Federal prosecutors also allege he directed a team in a foreign office, known as the “Make Money Online” team, that used cryptocurrency to buy prepaid debit cards that had been loaded up with fraudulently obtained funds.
According to the federal indictment, the Make Money Online team “and other scheme participants” moved the crime proceeds into accounts belonging to the media organization by using “tens of thousands of layered transactions, utilizing, among other things, prepaid debit cards and financial accounts that were opened using stolen identification information, including the personal identification information of U.S. residents.”
"The charges do not relate to the Media Company’s newsgathering activities," said the U.S. Attorney's office.
Guan is the only person named in the indictment but Miriam Baer, a former federal prosecutor and the vice dean at Brooklyn Law School, said prosecutors could add more counts or defendants at a later time.
“There are multiple actors here, multiple entities, there seem to be multiple crimes,” Baer said of the prosecutors’ allegations. “I just think we're going to see more than just a single indictment.”
Tax records are a ‘hot mess’
While the U.S. Attorney’s office declined to clarify to NPR which of the various companies and nonprofits linked to The Epoch Times and Guan were allegedly involved in the activities described in the indictment, publicly available tax returns for some of the nonprofits associated with the media organization show a jump in revenues after 2020, when prosecutors say the alleged scheme began.
Epoch Times Association, reported in its 2019 federal 990 tax returns that its total revenue was less than $15.5 million. That number jumped to $121.5 million in 2021.
Some of the nonprofits’ tax returns also paint a picture of questionable financial management, according to tax experts consulted by NPR.
A review of the tax returns for three related nonprofits, Epoch Times Association, Epoch Public Foundation and Universal Communications Network, which operates New Tang Dynasty Television, indicate large quantities of cash apparently moved among those entities.
In 2021, Epoch Public Foundation reported that it had close to $21 million in cash on hand at the end of the year, up from less than $410,000 at the start of the year, but noted that $20.5 million was owed to the other two organizations. Yet those organizations’ returns do not note any loans to the foundation.
Epoch Times Association did report a $4.68 million cash grant to the foundation that year, but the foundation left blank the part of the form for reporting grants or loans received from a related organization.
Guan was the treasurer for the foundation and is listed as the signatory on its tax forms while Tang was listed as the president.
By the following year, Epoch Times Association and Universal Communications Network reported in their tax returns they had given grants to the foundation that totaled together more than $12 million, but the foundation reported receiving less than $3.7 million in contributions and grants and again did not report receiving grants from a related organization.
Brian Mittendorf, an expert in nonprofit accounting who teaches at the Ohio State University’s Fisher College of Business, told NPR the tax returns were “a hot mess.”
“The financial statements are not consistent,” Mittendorf said. “There's a lot of money flowing around where the source and the recipient of those funds is very unclear. That obviously could create concern if you're already worried about money laundering.”
Brian Galle, a former federal prosecutor and tax law professor at Georgetown University Law Center called the foundation’s tax returns “fishy.”
“Certainly when you see very large and inexplicable flows of money between closely-related entities, that is at least a yellow flag,” he said.
Philip Hackney, a tax law professor at University of Pittsburgh School of Law who specializes in nonprofits, said the tax returns were unusually difficult to make sense of because of the “baffling” $20.5 million in liabilities the foundation listed in 2021 and the inconsistent reporting between the related organizations.
“If you have one organization that's related to another saying that it gave a certain amount and it's not appearing in the other return, that does look odd and is quite questionable,” Hackney said.
There are other oddities – the foundation’s website instructs donors to mail checks to a New Jersey residence that is associated with Guan.
Accountable.US, a progressive nonprofit watchdog organization that monitors financial flows of right-wing organizations, alerted NPR to some of the irregularities in the nonprofits’ federal tax filings. On Thursday, the organization filed an IRS complaintagainst Epoch Public Foundation and Epoch Times Association in the hope of triggering a civil investigation into their 2021 and 2022 returns.
Tony Carrk, the executive director of Accountable.US, told NPR his team had already started looking at The Epoch Times’ nonprofit tax returns before the charges against Guan were made public.
“We noticed that there was some financial discrepancies,” Carrk said. “This is something that is worth investigation.”
The Epoch Times did not respond to NPR’s questions about the tax returns. Nor did Guan’s attorney.
Gaining audience even as other media struggle
Though prosecutors have alleged that a portion of The Epoch Times’ financial growth was due to the alleged criminal fraud scheme, recent web traffic analysis shows that the media organization is gaining audience at a time when most media outlets are losing visitors.
Howard Polskin, who runs the newsletter The Righting, found The Epoch Times received 6,214,000 unique visitors in April, up 18% from four years ago. In contrast, almost every other of the top fifteen right-wing media sites saw steep declines during that period.
While The Epoch Times scored an exclusive video interview with Trump in 2022 and has been present at key conservative convenings, such as Conservative Political Action Conference to interview Republican politicians– Polskin says he believes other news outlets like Newsmax have more influence on the right-wing news cycle.
Polskin told NPR “to me it is a bit of a mystery” why The Epoch Times has been so successful growing its audience, and described it as, “a bit of a black box, and it kind of defies expectation.”
It remains to be seen whether the abrupt leadership changes at The Epoch Times and Li’s recent advice to his followers to back away from “rivalries between political parties” signify the outlet may be on the brink of changing its brand once again.
Guan is expected back in federal court on June 21 for a status conference.
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