Hedge Funds Advisors Indicted in Alleged $190 Million Scam
Southern District of Florida $190 Million Scam- Press Release “R. Alexander Acosta, United States Attorney for the Southern District of Florida, Jonathan I. Solomon, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Division, and Don Saxon, Commissioner, State of Florida's Office of Financial Regulation, announced that Jung Bae Kim, also known as John B. Kim, 38, formerly of Jupiter, Florida, has been charged by a West Palm Beach federal grand jury in Case No. 06-80197-Cr-KLR in a thirty-five count Indictment with conspiracy to commit wire fraud, mail fraud, conspiracy to commit money laundering, and numerous substantive acts of wire fraud, mail fraud, and money laundering.”
“The Indictment alleges that John Kim and others orchestrated a massive investment fraud in the operation of various hedge funds under the umbrella of the KL Group, LLC, initially based in California and later in Palm Beach County. Also charged were Won Sok Lee and Yung Kim, John Kim's brother, for participating in the massive scheme, in which nearly $195 million was received from investors between 2000 and 2005. Also indicted were three hedge fund advisor companies that were allegedly owned and controlled by the individual defendants: KL Group, LLC, KL Florida, LLC and KL Triangulum Management, LLC. The corporate defendants were charged only in connection with the investment fraud conspiracy.
According to the charges, the defendants touted to investors through quarterly mailings and website postings that the KL Financial Group was a hugely successful family of hedge funds. In reality, however, the funds lost millions and millions of dollars, and allegedly paid old investors with new investors' funds. In addition, the Indictment alleges that Kim and other defendants used counterfeit documents falsely reporting investment returns in order to fool lawyers, accountants and ultimately their victims, the investors.” (my emphasis)
The SEC had shut down this hedge fund scam last in August, 2005.
The DOJ’s indictment in this hedge fund scam had an interesting allegation: The individuals created fake letterhead and accounting statements of well known firms. Cut and pasting using Photoshop, no doubt.
It will be interesting to see how good these counterfeits really were in the ensuing lawsuit against the professional advisors.
