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New York (HedgeCo.Net) – Won Sok Lee will face a U.S. trial after fleeing for three years following the discovery of his bogus Florida hedge fund. The KL Group allegedly defrauded about $200 million out of investors over the course of five years. Lee appeared for the first time in a West Palm Beach, Florida court on Friday since his indictment in 2006.
Lee has been hit with dozens of charges including money laundering, mail fraud, conspiracy and wire fraud.
“Almost from its inception, the main fund suffered losses in each and every quarter of its existence,” said prosecutors.
Still, the fund managed to raise almost $200 million from 2000 to 2005. Lee, along with his brothers Jung Bae Kim and Yung Bae Kim, ran these hedge funds from locations in Florida and Nevada. The SEC caught wind of the suspicious activity in 2005, when they seized the company and appointed a receiver. Assets recovered only totaled $6.6 million, with only a portion of that amount actually returned to the investors.
Lee’s brothers were both sentenced to hefty terms. Jung Bae will serve 18 years while Yung Bae was sentenced to six years.
Lee was seized in February at an airport in Seoul after trying to board a flight to Argentina. Though his bail hearing is set for next Friday, prosecutors are trying to convey the fact that he is still a flight risk.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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Hindustan Times - Bernard Madoff, whose $50-billion fraud devastated individual and institutional investors worldwide, could spend the rest of his life in prison after pleading guilty later this week.
In a court hearing Tuesday, defence lawyer Ira Sorkin said that Madoff would plead guilty Thursday in federal court in New York. The news confirmed recent reports that Madoff was expected to enter a guilty plea.
At the hearing, Assistant US Attorney Marc Litt said that Madoff faces 11 criminal counts including securities fraud, mail fraud, wire fraud, three counts of money laundering and filing false statements with the Securities and Exchange Commission (SEC).
Litt said that Madoff faces up to 150 years in prison on the charges under federal sentencing guidelines, The Wall Street Journal reported online.
San Francisco Gate – Friday, January 9, 2009 Alexander James Trabulse, 61, was taken into custody Monday, according to U.S Customs and Border Protection officials. He appeared later that day before U.S. Magistrate Elizabeth Laporte in San Francisco and is to return to court today.
He was arrested three days after federal prosecutors charged him with mail fraud in a complaint filed in U.S. District Court in San Francisco.
Authorities said Trabulse sent account statements to investors in his Fahey Fund that inflated the hedge fund’s returns by as much as 200 percent, while using investor money to purchase cars and finance shopping sprees for family members.
The Daily Deal - Lehman Brothers Holdings may have gone bankrupt eight weeks ago, but the filing continues to reverberate throughout the financial world and even in some unexpected places like the National Football League’s New York Giants. The latest to join the ranks of the exposed are hedge funds. All those 140,000 failed or reconciled credit derivative swaps trades that PricewaterhouseCoopers is involved in identifying could hit the hedge funds and numerous other Lehman clients next month.
According to the Financial Times, four unnamed U.S. hedge funds are likely to close in mid-December because they cannot access holdings held at the London arm of Lehman Brothers. All of the shares and loans cannot be accessed so that PwC can unravel those CDS’s.
