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Pastimes : Investment Chat Board Lawsuits -- Ignore unavailable to you. Want to Upgrade?

To: rrufff who wrote (7614)	3/15/2005 11:44:32 AM
From: StockDung	Respond to of 12465

Principal of KL Financial investment firm apparently has fled country By David Sedore Palm Beach Post Staff Writer Tuesday, March 15, 2005 A West Palm Beach money manager under investigation for fraud fled the country last month for South Korea one day after being interviewed by the Securities and Exchange Commission. Won S. Lee, one of three principals of hedge fund firm KL Financial Group, apparently hopped aboard a Korean Air flight to Seoul on Feb. 23 with a one-way ticket in hand. "He's gone forever," said Gary Klein, a Boca Raton attorney who represents more than 30 investors who lost more than $30 million invested with the firm that operated from Esperante office building downtown before abruptly closing Feb. 25. "The question is did he go with the money or without?" Earlier this month, the SEC sued KL Financial in federal court, calling it a "massive hedge fund fraud." The agency also sued Lee, a former resident of Riviera Beach, and brothers Yung Kim and John Kim, all principals in the firm. John Kim is a Jupiter resident. A federal judge has ordered the temporary freeze of the remaining assets of KL Financial and its principals. At least $81 million, perhaps as much $300 million, is gone as a result of the collapse of the firm that specialized in high-risk hedge fund investing. Lee's flight, paid for by cashing in frequent flier miles, came a day after SEC examiners visited the Irvine, Calif., offices of Shoreland Trading, a brokerage that Lee and the Kims controlled and that handled securities trading for KL Financial's various investment funds. On Feb. 22, the SEC examiners interviewed Lee and Yung Kim in Irvine about Shoreland's operations. The Shoreland brokerage, according to audits, showed huge trading losses — $16 million in 2003 and $46 million in 2004 — at the same time that KL Financial was telling its investors that it was making huge profits. Lee and Yung Kim told the SEC that Shoreland hired young, inexperienced traders and that the money they were trading was Lee's. Shoreland, they said, had no retail customers. The two men agreed to meet again with the SEC the next day. Yung Kim showed; Lee did not. The SEC was told that Lee was on a plane to Florida, and the examiners agreed to continue the interview that Feb. 25 in West Palm Beach, where KL Financial and Shoreland shared the 17th-floor of the Esperante building. Lee and Yung Kim didn't show. "Won Lee on the 22nd, Yung Kim on the 23rd. That's the last anybody has heard from either of them," said Ivan Harris, a staff attorney with the SEC in Miami. The FBI and the U.S. Attorney's office in Miami also are investigating the firm and its principals, though no charges have been filed. FBI spokesman Judy Orhuela would not comment Monday. John Kim, the other principal, remains in Jupiter. According to court documents, on Feb. 26, the day after the SEC shut down the West Palm Beach office, Kim told investors that Lee controlled everything and was responsible for the trading losses. He also said Lee had fled the country. John Kim also asked investors for more money, promising he would make back lost money. KL Financial raised $10.1 million in January and February. On Feb. 5, less than three weeks before its collapse, the firm had asked SEC for permission to raise $2 billion from investors.