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Kim and Liquid Capital Management, to pay more than USD12m in restitution and monetary sanctions for commodity pool fraud

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The US Commodity Futures Trading Commission (CFTC) on April 15, 2011, obtained a federal court order imposing more than USD12 million in restitution and civil monetary penalties on defendants Brian Kim and his company, Liquid Capital Management, LLC (LCM), for fraud in connection with the operation of a commodity pool.

The default judgment order requires Kim and LCM jointly and severally to pay restitution of USD3,129,161 to defrauded customers and Kim’s Condominium Association and a USD9,387,483 civil monetary penalty. The order also permanently prohibits them from engaging in any commodity-related activity and from registering with the CFTC.

The order, entered by Judge Denise L. Cote of the US District Court for the Southern District of New York, stems from a CFTC complaint filed on February 15, 2011, that charged the defendants with fraudulent solicitation, misappropriation and misrepresentation to investors and regulatory organizations (see CFTC press release 5984-11, February 15, 2011). The complaint also charged that the defendants concealed their fraud by issuing false account statements to pool participants regarding the profitability of their investments. Kim also was charged with stealing more than USD400,000 from his Condominium Association in 2008 to recoup futures trading losses and making false statements to the National Futures Association (NFA) regarding the solicitation and trading of customer funds.

The order finds Kim and LCM liable as to all violations alleged in the CFTC’s complaint.

A New York County Grand Jury indicted the defendants in February 2011.

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