Hedge Fund Founder Kim Admits Larceny in $6 Million Fraud
Brian Kim, founder and operator of the hedge fund Liquid Capital Management LLC, pleaded guilty to grand larceny after being accused by Manhattan prosecutors of running a $6 million Ponzi scheme.
Kim entered the plea today before Justice Charles Solomon of New York State Supreme court in Manhattan, admitting nine of 26 counts against him. The punishment for the most serious is as much as 25 years in prison. Sentencing was set for April 20.
Kim, 36, who fled overseas when he was about to be tried in another case, apologized for dragging out the proceedings.
“I know these matters could have been resolved a long time ago,” he told the court. He said he had no “malicious intent.”
Kim was taken into custody in October 2011 by authorities in Hong Kong, where he fled before a U.S. trial scheduled to begin in January 2011 on charges that he stole $430,000 from a Manhattan condominium complex where he lived.
He admitted that crime today as well. Kim told the judge the stolen money went to his investors.
The Ponzi scheme indictment in February 2011 charged him with running a fraud from January 2003 to January 2011.
Kim told clients they were investing in safe and stable securities, prosecutors said. Instead, he traded in highly speculative contracts and diverted money to himself, they said.
“The defendant induced his clients to make risky and speculative investments by portraying himself as an accomplished trader and money manager,” District Attorney Cyrus R. Vance Jr. said in a statement after the charges were filed.
Claims to Clients
Kim and his employees told prospective clients the fund generated returns of more than 240 percent and hid his losses by making new investments look like profits, the U.S. Commodity Futures Trading Commission said in a civil suit.
Shopping trips in New York at Coach and Barneys New York, skiing in Vermont and gambling excursions to Atlantic City, New Jersey, were funded by withdrawals from the fund, the CFTC said. Kim “is the sole and managing member” of the New York-based company, the agency said in its February 2011 complaint.
Just before the trial for the condominium complex theft, Kim fled to Hong Kong using a fraudulently obtained U.S. passport, according to prosecutors.
“He’s suffered from these crimes,” Kim’s lawyer, Justin Levine, told the court. “And he will continue to suffer.”
The state case is People v. Kim, 2011/86, New York State Supreme Court, New York County (Manhattan). The CFTC suit is U.S. Commodity Futures Trading Commission v. Kim, 11-cv-01013, and the federal criminal case over the passport fraud is U.S. v. Kim, 11-cr-00642, U.S. District Court, Southern District of New York (Manhattan.)
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