(Bloomberg News) Hedge fund founder Brian Kim was sentenced to a total of five to 15 years in prison after pleading guilty to grand larceny in connection with what prosecutors said was a $6 million Ponzi scheme.
Justice Charles H. Solomon handed down the sentence today in New York State Supreme Court in Manhattan. Kim, founder and operator of the hedge fund Liquid Capital Management LLC, pleaded guilty to nine of 26 counts against him in court on March 16. He faced as long as 25 years in prison for the most serious count.
Kim was taken into custody in October by authorities in Hong Kong, where he fled on the eve of his trial on charges that he stole $435,000 from the Christadora House, a condominium complex in Manhattan's East Village where he lived.
The judge didn't impose any fines or restitution.
Kim told the judge that he would seek to repay millions of dollars to his investors after he is released from prison.
"That's my sincerest hope," he said.
Kim was charged in February 2011 with running the scheme for eight years. He told clients they were investing in safe and stable securities while he traded in highly speculative contracts and diverted money to himself, prosecutors said.
"He was never motivated by greed," Kim's lawyer, Justin Levine, said prior to the sentencing. "He genuinely wanted to help his investors."
The U.S. Commodity Futures Trading Commission also sued Kim and Liquid Capital in February 2011, seeking an injunction preventing them from trading in commodities futures and foreign currencies. Kim and his employees told prospective clients the fund generated returns of more than 240 percent while hiding losses by making new investments look like profits, the agency said in the complaint.
Kim used withdrawals from the fund to finance shopping excursions at Barney's and Coach stores in New York City, skiing and gambling trips, car payments and dry cleaning, the CFTC said. A default judgment of $12.5 million, or three times Kim's gain of $3.1 million, was entered against him in the CFTC suit in April 2011 and he and his fund were banned from future commodity trading, according to court records.