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 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.
In early 2005, the Securities and Exchange Commission began legal action to shut down KL’s operations. Shortly thereafter, U.S. District Court Judge Kenneth L. Ryskamp appointed a trustee to oversee the assets of KL.
John Kim made his initial appearance in Court in West Palm Beach on January 10, 2007 before U.S. Magistrate Judge James M. Hopkins. Won Sok Lee and Yung Kim are fugitives.
U.S. Attorney Acosta stated, “The United States Attorney’s Office will continue to prosecute investment fraud, especially individuals who misuse technology and the internet to defraud the investing public. Despite its public representations of profitability, KL Financial was nothing more than the proverbial house of cards, which came tumbling down thanks to the superb investigative work of federal and state law enforcement in this case.”
Jonathan Solomon, Special Agent in Charge of the FBI’s Miami Office, added, “Investors must have faith in the securities market for the market to thrive. As demonstrated in this case, part of that faith comes from swift regulatory and law enforcement action against those individuals and companies that swindle investors.”
Commissioner Don Saxon of the State of Florida’s Office of Financial Regulation stated, “This case is an excellent example of the results that can be achieved when federal and state agencies work together. We were happy to provide assistance to the Office of the U.S. Attorney and the FBI during this complex hedge fund investigation. This prosecution serves as a sobering reminder to investors of the need to carefully investigate all investment opportunities before investing.”
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 Andrew Lourie.
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/.