KL Fraudster In Contempt, Soon To Be In Jail

Nov 28 2006 | 11:04am ET

John Kim just can’t seem to help spending other people’s money.

The founder of the defunct Florida hedge fund KL Group is in trouble again, facing arrest for failing to repay $2.8 million, as was ordered by a federal judge.

The Securities and Exchange Commission shut KL down last year on fraud and securities law violation charges. The court-appointed receiver, Guy Lewis, estimates the scam cost investors as much as $150 million. Lewis has recovered a mere $4.3 million.

Judge John Ryskamp’s order accused Kim of falling “far short of meeting his burden to establish compliance with the preliminary injunction order by returning the frozen assets he misappropriated.”

So much for frozen: The SEC alleges Kim has used proceeds of the sale of personal property—which he is required to turn over to Lewis—for personal use, and has been traveling widely, within the country, of course, to Virginia, Texas and California from his South Florida base, the South Florida Business Journal reports.

“What made this so egregious is that we gave him opportunities to repatriate stolen money, for the benefit of defrauded investors,” Lewis said. “He has abused the good graces of the receiver, the SEC and the federal district court judge.”

Ryskamp said Kim could be jailed for up to 18 months for contempt in the civil case, “until he purges his contempt either by paying the funds or proving, categorically and in detail, his inability to do so despite good-faith efforts.”

In Depth

Related-Company Fees: Normal Industry Practice or Conflicted Compensation?

Nov 11 2015 | 4:23pm ET

Regulatory agencies as well as investors are increasingly exploring whether certain...


Ferrari Roars in Wall Street Debut

Oct 21 2015 | 4:28pm ET

Shares of supercar maker Ferrari jumped as much as 15 percent to a high of nearly...

Guest Contributor

Private Debt - What is the Opportunity?

Nov 11 2015 | 3:28pm ET

In this contributed article, Rob Allard, founding partner of Firebreak Capital...


Editor's Note

    Oct 21 2015 | 10:41am ET

    One of the most unique charity benefits in the hedge fund industry, A Leg To Stand On's (ALTSO's) Hedge Fund Rocktoberfest - NYC, raised nearly $500,000 last Thursday thanks to the generous support of major sponsors and nearly 1,400 attendees from the Tri-State finance, business and hedge fund communities. Read more…