Wall Street & Technology is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Compliance

04:46 PM
Reuters
Reuters
News
Connect Directly
RSS
E-Mail
50%
50%

Hedge Fund Manager Sentenced for Ponzi Scheme

Hedge fund manager Brian Kim was sentenced on Friday in New York state court to up to 15 years in prison, a month after pleading guilty to running a $6 million Ponzi scheme.

The 36-year-old Kim, who previously appeared on television as a derivatives expert, founded the now-defunct Liquid Capital Management. He sent investors phony monthly statements showing their accounts had inflated gains, according to prosecutors.

He also pleaded guilty to stealing $435,000 from his Manhattan condominium.

Kim fled to Hong Kong as a fugitive on the eve of his trial on the condominium case and was returned to New York 10 months later, in October, after Hong Kong authorities took him into custody.

Liquid Capital Management pleaded guilty to similar crimes as a corporate defendant.

Prosecutors from the Manhattan District Attorney's Office said Kim put his clients' funds in highly speculative futures contracts that led to massive losses, despite touting himself as a trader investing in stable securities.

"My sincerest hope is that I can get out and start working gainfully so I can repay all of my victims," Kim told Manhattan Supreme Court Acting Justice Charles Solomon before his sentencing on grand larceny, scheme to defraud and other charges. "I have every intention of doing so."

Kim also pleaded guilty last year to passport fraud in Manhattan federal court and was sentenced Thursday to 14 months in federal prison. He had obtained a replacement passport by claiming his was lost after prosecutors confiscated his passport following his indictment on the condominium theft.

Kim's attorney, Justin Levine, said he did not believe Kim set out to commit financial fraud.

"I think he truly believed he would make money for his investors," Levine said before the court hearing.

Last year, the U.S. Commodity Futures Trading Commission obtained a default judgment order for more than $12 million against Kim and his company in restitution and penalties.

Kim will serve a five-to-15-year sentence in state prison but will remain in federal prison for another seven months on the passport fraud conviction.

The cases are People v. Kim, New York State Supreme Court, New York County, Nos. 86/2011, 97/2011, 5965/2009; and United States v. Brian Kim, U.S. District Court, Southern District of New York, 11-cr-00642.

Register for Wall Street & Technology Newsletters
Video
Stressed Out by Compliance, Reputational Damage & Fines?
Stressed Out by Compliance, Reputational Damage & Fines?
Financial services executives are living in a "regulatory pressure cooker." Here's how executives are preparing for the new compliance requirements.