Can Subordinates Cause Criminal Liability For Executives?

August 17, 2026

The former chief financial officer for The Epoch Times, Weidong "Bill" Guan, pled guilty to a federal conspiracy charge related to money laundering in July 2026. In exchange for a guilty plea, prosecutors agreed to dismiss additional charges.

Guan admitted to taking part in a fraud scheme that allegedly involved the laundering of approximately $67 million through bank accounts linked to The Epoch Times and related entities.

According to prosecutors, Guan oversaw a team called "Make Money Online", which allegedly used cryptocurrency to purchase tens of millions of dollars in criminal proceeds in 2020, including fraudulent unemployment benefits loaded onto prepaid debit cards. In addition, prosecutors allege stolen identities were used to open accounts that helped move the funds via financial institutions, including accounts held by Guan and The Epoch Times. Guan allegedly told banks that the increase in transactions was caused by legitimate donations.

Prosecutors alleged that The Epoch Times' revenue rose roughly 410 percent after the money laundering scheme.

Guan acknowledged that he knew there was a "high probability" that the money in the accounts he oversaw was obtained via fraud. He allegedly chose to accept the explanations he was given about the funds and failed to investigate further. Guan called this failure "a tremendous lapse in judgment".

Source: https://www.the-independent.com/news/world/americas/crime/weidong-guan-epoch-times-cfo-guilty-money-laundering-b3012603.html

Commentary

Executives may face criminal charges when they direct or approve fraudulent conduct; knowingly ignore misconduct; fail to act to stop wrongdoing; certify false information; or benefit personally from fraudulent activity.

Under the Responsible Corporate Officer doctrine, corporate officers may be held criminally liable for violations that occur under their authority if they had the power to correct or prevent that conduct, even if they did not directly participate. This doctrine has been applied in several areas, including financial fraud.

Delegation does not eliminate that duty, nor does it eliminate liability. Executives may still face liability exposure if they ignored red flags in delegated teams, failed to implement adequate controls during delegation, or overrode compliance safeguards.

For executives, the following steps may help reduce exposure:

· Ensure every officer with signature authority personally reviews a sample of large or non-routine transactions, never delegating that review to staff

· Require the business purpose, due diligence, and source-of-funds analysis to be logged for any transaction involving cryptocurrency, third-party payment processors, or unfamiliar entities

· Escalate any suspicious activity to an audit committee and document the escalation

· Preserve emails, approval workflows, and logs for every non-routine transaction to avoid their absence becoming evidence of indifference or failure

The final takeaway is that criminal risk can arise for executives when subordinate conduct escapes proper oversight.

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