Welcome to CanadianHedgeWatch.com
Friday, October 22, 2021

25 years for partner in $194 mln Florida fund fraud


Date: Monday, December 14, 2009
Author: alibaba.com

* Florida hedge fund company was Ponzi scheme

* Partner was fugitive for more than two years

MIAMI, Dec 11 - A partner in KL Group, a now-defunct Florida hedge fund company, was sentenced on Friday to nearly 25 years in prison for a scheme that defrauded investors of $194 million, U.S. prosecutors said.

Won Sok Lee, who was captured in South Korea in February after more than two years on the run, also was ordered to pay $78.5 million in restitution.

Lee was indicted in 2006 on nearly three dozen charges including conspiracy, wire fraud, mail fraud and money laundering. The criminal indictment followed a civil securities fraud case filed by the U.S. Securities and Exchange Commission, which moved to shut down his company in 2005.

Prosecutors said Lee and two other men, brothers Jung Bae Kim and Yung Bae Kim, ran a number of hedge funds in Florida and Nevada under the umbrella of KL Group.

The men claimed Jung Bae Kim had invented a proprietary day trading system and told investors their flagship KL Group Fund earned in excess of 100 percent per year, prosecutors said.

In reality, the KL funds lost money and used new investors' funds "in Ponzi scheme fashion" to make payments to previous shareholders, the U.S. Attorney's Office in Miami said.

U.S. District Judge Kenneth Ryskamp sentenced Lee, formerly of Singer Island, Florida, to 298 months in prison on wire fraud charges, prosecutors said.

The two other men were sentenced last year to prison terms: Jung Bae Kim to 18 years and Yung Bae Kim to six years.