Wednesday, 31 August 2016
Last updated 10 hours ago
Apr 18 2008 | 3:30am ET
A mastermind of a $195 million hedge fund scam has pleaded guilty to fraud.
John Kim, of the defunct “hedge fund” KL Group, struck a deal with federal prosecutors, who allowed him to plead guilty to one count of wire fraud in exchange for dropping the remaining fraud and conspiracy charges. He faces up to 20 years in prison and a $250,000 fine when sentenced on July 17.
Kim admitted that he, his brother, Yung Bae Kim, and Won Sok Lee cooked up a scheme in which he pretended to be a fabulously successful day-trader whose proprietary trading system earned triple-digit returns. The West Palm Beach, Fla.-based firm attracted nearly $200 million from 250 investors, who received phony account statements showing big, but fictitious, profits. In fact, the Kims and Lee lost between $20 million and $30 million on bad trades, and stole what was left.
Yung Bae Kim pleaded guilty to wire fraud and conspiracy to commit mail and wire fraud in July, and is still awaiting sentence. Lee, who was charged with the fraud alongside the Kims, remains at large.