Brian Kim '97, founder and chief investment officer of the Manhattan-based hedge fund Liquid Capital Management, pled guilty on Mar. 16 to all state and federal charges resulting from running a Ponzi scheme that led to the theft of $4 million. Kim is expected to receive a sentence of five to 15 years in prison when he appears before the New York State Supreme Court on Apr. 20, according to Kim's lawyer, Justin Levine.
Kim was indicted on Feb. 15, 2011 for organizing the scheme, which defrauded at least 45 victims, according to a Mar. 16 press release from Manhattan District Attorney Cyrus Vance, Jr.
In June 2008, Kim also stole $435,000 from the Christadora House, the Manhattan condominium complex where he resided and served as a board member, the press release said. Liquid Capital Management pled guilty as a corporate defendant to 26 felony counts, including grand larceny in the first degree, grand larceny in the second degree, scheme to defraud in the first degree, violation of the General Business Law and falsifying business records in the first degree, according to the press release.
The guilty plea will enable Kim to avoid the maximum sentence of 25 years in prison, according to Levine.
"After extensive examination of the various documentary evidence that exists in this case, it was quite clear that had he gone to trial, he would have lost and most likely would have received a greater sentence," Levine said.
On the eve of the 2009 Christadora House grand larceny trial, Kim used a false passport to leave the country and flee to Hong Kong, where he remained in hiding, Levine said. A bench warrant was issued for Kim's arrest when he failed to appear in the New York State Supreme Court for trial on Jan. 4, 2011, the press release said.
"When Brian ran away, he filed a false application for a passport saying that his passport was lost, but it had actually been surrendered to the district attorney's office so that he wouldn't leave," Levine said. "He then got a new passport, so he left and went to Hong Kong."
Kim was subsequently charged with bail jumping by a grand jury and passport fraud in a federal indictment filed in the Southern District of New York, the press release said. Through the collaboration of officers from the U.S. Department of State, U.S. Marshals Service and the People's Republic of China, Kim was apprehended and sent back to New York on Oct. 12, 2011, according to the release.
"Today's guilty pleas encompass criminal activity dating back nearly a decade and demonstrate our commitment to bringing to justice those who prey upon unsuspecting individuals and attempt to evade the consequences," Vance said in the release.
Kim began running the multi-million dollar Ponzi scheme from his Manhattan office in January 2003, according to court documents and Kim's plea allocution. Kim duped members of the technology sector and other business professionals to invest in what he claimed to be "safe, stable and consistently profitable securities," the release said.
He then allocated large sums of investors' money to his own accounts and engaged in high-risk futures contracts, generating a loss of over $293,000 in 2010, according to a Feb. 14, 2011 press release from the New York District Attorney's Office. Kim fabricated monthly performance statements with false account balances in order to mask his fraud and trading losses.
In May 2009, Liquid Capital Management was recognized as a "top 10" fund on the BarclayHedge CTA Database, which features hedge funds that deliver consistently strong risk-adjusted returns, in the stock return index category, according to an Opalesque Industry Updates release.
Kim also worked as a derivatives expert for CNBC in December 2009. He spent more than $800,000 of investors' money on luxury retail purchases and splurged on trips to Vermont and Atlantic City, N.J.
Kim expressed remorse to the judge, his victims and his family for his actions and their consequences, Levine said.
"He knows he has to go to prison and luckily he's young enough so that when he gets out of prison, he may still have a bright future," Levine said. "Let's hope that he puts his intelligence to good instead of evil, as they say in the comics."
During his time at the College, Kim majored in economics and minored in art history, according to The Aegis. Kim wrote for The Dartmouth and participated in the Entrepreneurship Society Finance Club, Japan Society and fencing team. Kim also rushed at Alpha Delta fraternity, but did not receive a bid, fencing teammate Matthew Richardson '97 said.
