LAWFUEL – 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 B. Saxon, Commissioner, Florida Department of Financial Regulation, announced that defendant, Jung Bae Kim, a/k/a John B. Kim, 39, formerly of Jupiter, Florida, pled guilty earlier today to one count of wire fraud in connection with the running of a hedge fund formerly run by the KL Group LLC in Florida and California. Kim faces a maximum period of twenty (20) years in jail, a fine of $250,000, and possible restitution to the victims of the massive fraud. Sentencing has been scheduled for July 17, 2008 at 2:30 p.m. in West Palm Beach before U.S. District Court Judge Kenneth Ryskamp.
In December 2006, Jung Kim, his brother Yung Bae Kim, and Won Lee were indicted by a West Palm Beach grand jury on charges that they orchestrated a massive investment fraud in running various hedge funds under the umbrella of the KL Group, LLC, initially in California and later in Palm Beach County. Yung Bae Kim pled guilty previously and is awaiting sentencing.
Also indicted were three hedge fund advisor companies that were owned and controlled by the individual defendants: KL Group, LLC, KL Florida, LLC and KL Triangulum Management, LLC. The corporate defendants were charged in the investment fraud conspiracy and subsequently pled guilty and have cooperated with the government. In sum, approximately $195 million was taken in from investors between 2000 and 2005.
During today’s guilty plea, Jung Kim acknowledged lying to investors to induce them to invest and re-invest in the Hedge Funds. For example, the defendants misrepresented the success of particular funds, stating that the funds were profitable, when in fact none were. These misrepresentations regarding the success of the funds were made orally, on-line at a KL website, and through false account statements sent to investors by mail and email. Kim also admitted that counterfeit clearing firm statements were used to perpetrate the scheme to entice victims to invest or re-invest their money. More specifically, Kim admitted that in February, 2005, fictitious stock trading sheets were created that purported to show a one-day profit of $22 million in a stock known as RIMM, the company that manufacturers the “Blackberry” device. The RIMM trade, however, never took place, and the fictitious stock trading sheets were used to fool investors concerning the profitability of trades being conducted by the KL Hedge Funds.
Mr. Acosta commended the investigative efforts of the Federal Bureau of Investigation and the State of Florida’s Office of Financial Regulation. The case is being prosecuted by Assistant United States Attorneys Stephen Carlton and Edward Nucci.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at www.usdoj.gov/usao/fls . Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov/ or on http://pacer.flsd.uscourts.gov/.