Liquid Capital Founder Pleads Not Guilty in $6 Million Ponzi Scheme

A former hedge-fund manager who once appeared on CNBC pled not guilty to charged he ran a $6 million Ponzi scheme.  Brian Kim, 36, was originally indicted in 2009, but fled the United States using a fraudulently obtained passport before his trial was to begin.  He was apprehended and returned to the U.S. in October, and faced new charges related to his attempt to flee.  

Beginning in at least 2008, Kim operated Liquid Capital Management, LLC ("Liquid Capital"), which purported to trade commodity futures.  Kim solicited potential investors by representing that his commodity pool had generated returns exceeding 240% since inception.  Perhaps adding legitimacy and exposure to Liquid Capital, Kim twice appeared on financial network CNBC in 2009 as a guest commentator on derivatives trading.  In total, nearly 40 investors entrusted over $2 million to Liquid Capital.  However, authorities allege that Kim invested roughly thirty percent of investor funds in commodity futures, and lost nearly all of that amount.  The remainder was used to pay fictitious returns to existing investors and to sustain an expensive lifestyle that included shopping trips in New York and excursions to Atlantic City.  Additionally, Kim is also accused of falsifying documents to allow him access to funds controlled by his homeowner's association, from which he transferred nearly $500,000 for use in his scheme.  

The Commodity Futures Trading Commission also brought charges against Kim in February 2011, charging him with violations of the Commodity Exchange Act and seeking relief including permanent injunctions and disgorgement of ill-gotten gains.

A copy of the indictment is here.