FROM THE FBI WEBSITE:In December 2006, Jung Kim, his brother Yung Bae Kim, and Won Lee were indicted by a West Palm Beach grand jury on charges that they orchestrated a massive investment fraud in running various hedge funds under the umbrella of the KL Group, LLC, initially in California and later in Palm Beach County. Yung Bae Kim pled guilty previously and is awaiting sentencing.
Also indicted were three hedge fund advisor companies that were owned and controlled by the individual defendants: KL Group, LLC, KL Florida, LLC and KL Triangulum Management, LLC. The corporate defendants were charged in the investment fraud conspiracy and subsequently pled guilty and have cooperated with the government. In sum, approximately $195 million was taken in from investors between 2000 and 2005.
During today's guilty plea, Jung Kim acknowledged lying to investors to induce them to invest and re-invest in the Hedge Funds. For example, the defendants misrepresented the success of particular funds, stating that the funds were profitable, when in fact none were. These misrepresentations regarding the success of the funds were made orally, on-line at a KL website, and through false account statements sent to investors by mail and email. Kim also admitted that counterfeit clearing firm statements were used to perpetrate the scheme to entice victims to invest or re-invest their money. More specifically, Kim admitted that in February, 2005, fictitious stock trading sheets were created that purported to show a one-day profit of $22 million in a stock known as RIMM, the company that manufacturers the "Blackberry" device. The RIMM trade, however, never took place, and the fictitious stock trading sheets were used to fool investors concerning the profitability of trades being conducted by the KL Hedge Funds.