SAN FRANCISCO – A federal grand jury in San Francisco indicted Joon Woo Kim with fraud in connection with two related fraud schemes—the first, an alleged scheme to mislead investors to contribute to a fund he formed in San Francisco, and the second, a scheme to obtain a multi-million dollar business loans and line of credit by lying to a bank—announced United States Attorney Ismail J. Ramsey and Federal Bureau of Investigation Special Agent in Charge Robert K. Tripp. Kim was arrested earlier today in New Haven, Conn., and appeared in U.S. District Court for the District of Connecticut to face the charges.
According to the indictment, filed June 27, 2023, and unsealed today, Kim, 57, of Montebello, Calif., allegedly engaged in the first fraud scheme beginning June 2015 through at least March 19, 2022. Kim created an investment fund called the M5 Doctors Fund and allegedly induced investors to contribute to the fund by making false statements and omissions about the kinds of investments Kim would make while managing the fund’s assets. For example, Kim allegedly advertised that he would invest assets of the M5 Doctors Fund in securities of Tesla, Inc. and electric vehicle companies. Nevertheless, rather than invest the funds as he promised, Kim allegedly transferred nearly all M5 Doctors Fund assets, including funds from the liquidation of investments and the return on those investments, to CKR Enterprise, Inc., a wholesale food distribution company owned and operated by Kim and his wife.
As General Partner of the M5 Doctors Fund and the person who held himself out as manager and person responsible for the fund, Kim had a duty to disclose all material business, transactions, and investments to the fund’s investors and Limited Partners. Nevertheless, according to the indictment, from 2015 through July 2018, Kim transferred approximately $4.8 million in M5 Doctors Fund assets to CKR without informing the fund’s investors. Additionally, the indictment alleges Kim continued to tell investors he was investing in Tesla stock and the stock of public electric vehicle companies; failed to disclose to M5 Doctors Fund investors that he had transferred essentially all of the fund’s assets to his business, CKR; and took actions to mislead fund investors into believing that the M5 Doctors fund was solvent and engaged in investment activities.
In the second fraud scheme, Kim defrauded Hanmi Bank by applying for two loans for CKR, a $1,300,000 line of credit and a $3,200,000 business loan, that contained materially false and fraudulent representations and promises.
In sum, the indictment charges Kim with eight counts of wire fraud, in violation of 18 U.S.C. § 1343; two counts of bank fraud, in violation of 18 U.S.C. § 1344; and one count of making a false statement to a bank, in violation of 18 U.S.C. § 1014.
Kim’s initial San Francisco federal court appearance is scheduled for July 28, 2023.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Kim faces a maximum sentence of 20 years in prison, and a fine of $250,000, plus restitution, if appropriate, for each violation of 18 U.S.C. § 1343; 30 years in prison, and a fine of $1,000,000, plus restitution, if appropriate, for each violation of 18 U.S.C. §§ 1344 and 1014. The court also may order an additional term of supervised release to begin after a prison term as part of any sentence. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The case is being prosecuted by the Corporate and Securities Fraud Section of the U.S. Attorney’s Office. Assistant U.S. Attorney Christiaan Highsmith is prosecuting the case, with the assistance of Elizabeth Kim. The prosecution is the result of an investigation by the FBI.