Los Angeles, CA – LAWFUEL – Legal News Network – A federal grand jury in Los Angeles returned a superseding indictment this morning charging an Anaheim man with mail fraud, wire fraud, and money laundering in a scheme that caused investors to send more than $4,000,000 to fraudulent investment companies for the purported purchase of securities.
Kangsan Kim, the president of UNUS Capital Management, Inc. and the Chief Financial Officer of PeopleN Investments, Inc., who was previously indicted on ten counts of mail fraud and five counts of wire fraud, was indicted on eleven counts of money laundering in connection with his fraud scheme.
According to the indictment, Kim and others defrauded their investors by pretending to set up securities accounts at UNUS Capital, advising the investors that their securities would be traded through PeopleN Investments or through another designated brokerage house. Kim and others would represent to the investors that all funds provided by them would be used to purchase securities and would be held in client accounts for safekeeping in a designated brokerage account. Contrary to these assurances, Kim and others would use investors’ monies for business expenses such as the payment of rent, office expenses and advertising fees as well as for personal expenses. These personal expenses included the payments for automobiles, including Kim’s Audi and BMW, mortgage payments on Kim’s home, and the payment of entertainment expenses. Further, the investors’ money was used by Kim and others to operate a “Ponzi” scheme, whereby new investor’s funds would be used to make payments to earlier investors.
Kim and others made several misrepresentations to investors. Kim and others told investors that UNUS Capital would ensure a 10 to 15 % profit on investments. This was not possible when, in fact, Kim and others used the majority of the investor’s funds for their business and personal expenses rather than for the purchase of securities. Further, Kim and others represented that the company would enter orders for an investor’s account with PeopleN Investments or with another brokerage firm. Kim and others, in fact, did not place orders for investor’s accounts with PeopleN Investments and placed few, if any, orders with any other brokerage on behalf of investors. Additionally, Kim and others told investors that UNUS Capital would only receive a management fee based on the market value of an investor’s account as set forth in a published fee schedule. Kim and others, in fact, took possession of cash from investors and used the cash for the payment of personal and business expenses in amounts that far exceeded any management fee based upon the published fee schedule.
In an effort to hide the scheme from investors and to make it seem that their money was actually used to purchase securities, Kim and others would mail false account statements to investors from UNUS Capital and from PeopleN Investments. Further, Kim and others would wire false information to investors from the PeopleN Investments website. The false account statements would indicate that securities were purchased on behalf of the investors when, in fact, they had not. Additionally, Kim and others paid a mail drop and answering service in San Francisco in order to make it appear that PeopleN Investmetns had an office located there.
UNUS Capital regularly advertised on a Korean-language radio stations in Los Angeles. Several victims invested with the company after hearing UNUS Capital’s ads.
The charges of mail fraud, wire fraud, and money laundering that Kim faces carry a maximum possible penalty of 20 years per count in federal prison and a statutory maximum fine of at least $5,500,000.
This indictment is the result of an investigation conducted by the Federal Bureau of Investigation and IRS – Criminal Investigation.
An indictment is a charging document which contains allegations of violations committed by defendants. All defendants are presumed innocent until and unless proven guilty before the court.