HEDGE FUND ADVISORS SENTENCED IN $194 MILLION HEDGE FUND COLLAPSE

         R. Alexander Acosta, United States Attorney for the Southern District of Florida, Jonathan I. Solomon, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Division, and Don B. Saxon, Commissioner, Florida Department of Financial Regulation, announced that defendants Jung Bae Kim, a/k/a John B. Kim, formerly of Jupiter, Florida, and his brother, Yung Bae Kim, were both sentenced today for their separate roles in operating a hedge fund under the name of the KL Group LLC, in Florida and California. John Kim was sentenced to 220 months in prison, followed by three years of supervised release. Yung Kim was sentenced to 75 months in prison, followed by three years of supervised release. Both defendants were ordered to pay restitution in the amount of $78,525,567.34 through the court-appointed receiver.

        Corporate defendants KL Group LLC, Shoreland Trading LLC, and KL Triangulum Management LLC wera also ordered to pay restitution in the amount of $78,525,567.34 through the court-appointed receiver. The receiver announced in open court that approximately $6,500,000 has been recovered to date for restitution to the victims.

        Defendants John Kim and Yung Kim were indicted in December 2006 in connection with a massive investment fraud involving various hedge funds under the umbrella of the KL Group, LLC, initially located in California and later in Palm Beach County. John Kim previously pled guilty to one count of wire fraud, and Yung Kim pled guilty to one count of wire fraud and conspiracy to commit wire fraud. Three hedge fund advisor companies owned and controlled by the individual defendants also pled guilty to conspiracy to commit wire fraud. The corporate defendants were KL Group, LLC, KL Florida, LLC and KL Triangulum Management, LLC. The corporations were placed on probation, and a court appointed receiver continues to marshal assets for partial restitution to the defrauded investors.

        According to documents and statements made in Court, the defendants obtained approximately $195 million from investors between 2000 and 2005. During his plea, John Kim acknowledged lying to investors to induce them to invest and re-invest in the Hedge Funds. For example, the defendants lied to investors about the financial success of particular funds, stating that the funds were profitable, when in fact none were. These misrepresentations were made orally, on-line at a KL website, and through false account statements sent to investors by mail and email. In addition, the defendants also used counterfeit clearing firm statements to entice victims to invest and re-invest their money.

        More specifically, 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.

        Mr. Acosta commended the investigative efforts of the Federal Bureau of Investigation and the State of Florida’s Office of Financial Regulation. The case is being prosecuted by Assistant United States Attorneys Stephen Carlton and Edward Nucci.

        A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at www.usdoj.gov/usao/fls . Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov/ or on http://pacer.flsd.uscourts.gov/.