Brian Kim, the former hedge-fund manager at Liquid Capital Management LLC accused of fleeing to Hong Kong while awaiting trial on fraud charges, pleaded not guilty to running a $6 million Ponzi scheme.
Kim, 36, appeared today before Justice Charles Solomon in New York State Supreme Court in Manhattan and pleaded to counts in two indictments. One from February charged him with grand larceny and other crimes for running the Ponzi scheme. Another charged him with bail-jumping and fleeing to Hong Kong after being accused in a previous case.
Kim was indicted in 2009 and accused of stealing $430,000 from the Christadora House, an East Village condominium complex where he lived. He fled before a trial in January using a fraudulently obtained passport and was returned to the U.S. on Oct. 12, prosecutors said.
“Those who prey upon unsuspecting investors and attempt to evade responsibility will be held accountable,” Manhattan District Attorney Cyrus Vance said today in a statement about the case.
Kim and his firm are accused of running a Ponzi scheme from January 2003 to January 2011. Kim told clients they were investing in safe and stable securities while he generated losses trading highly speculative futures contracts and diverted money to himself, prosecutors said.
He created fake monthly performance statements to conceal the scheme from at least 45 victims, the government said.
Kim and his employees told prospective clients the fund generated returns of more than 240 percent and hid 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, skiing in Vermont and excursions to Atlantic City, New Jersey, were funded by improper 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 complaint, filed in February.
Federal prosecutors accused Kim of lying to officials in New York to obtain a passport by saying it was lost. He surrendered the passport in the 2009 case, his attorney, Justin Levine, said after today’s arraignment.
Kim was returned to federal custody today and is being held without bail. He is to return to federal court on Dec. 6 and state court on Dec. 9.
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 is U.S. v. Kim, 11-cr-00642, U.S. District Court, Southern District of New York (Manhattan.)