The US Commodity Futures Trading Commission (CFTC) has obtained a federal court order freezing assets held by defendants Brian Kim and Liquid Capital Management, LLC (Liquid Capital), both of New York, NY.
The order, entered by the Honourable Denise L Cote of the US District Court for the Southern District of New York, also prohibits the destruction of books and records. The court scheduled a hearing on the CFTC’s motion for a preliminary injunction on March 2, 2011.
The order stems from a CFTC civil anti-fraud complaint filed in the federal court on February 15, 2011, charging Kim and Liquid Capital with fraudulently soliciting at least USD2.1 million from at least 37 individuals to invest in a commodity futures pool operated by Kim and Liquid Capital.
Specifically, the CFTC’s complaint charges that the defendants misappropriated participant funds and concealed their fraud by issuing false account statements to pool participants regarding the profitability of their investments. Additionally, the complaint charges defendant Kim with stealing more than USD400,000 from his Condominium Association in 2008 to recoup futures trading losses and lying to the National Futures Association (NFA) regarding the solicitation and trading of customer funds.
From at least March 2009 through October 2010, Kim and Liquid Capital in their solicitations falsely claimed a successful track record and failed to disclose substantial losses, the complaint alleges. The complaint further alleges that Kim and Liquid Capital lost more than USD293,000 trading in 2010 alone, used USD300,000 to pay investors from an unrelated fund in a manner similar to a Ponzi scheme and spent more than USD800,000 on improper purposes and personal expenses, such as for groceries, car payments, trips to Atlantic city, skiing in Vermont and retail shopping at Coach and Barney’s New York.
In its continuing litigation, the CFTC seeks disgorgement of ill-gotten gains, restitution to defrauded customers, civil monetary penalties and permanent injunctions prohibiting trading and further violations of federal commodities law.
Separately, a New York County Grand Jury returned an indictment against Kim and Liquid Capital.
The CFTC thanks the NFA and the New York County District Attorney’s Office for their assistance in this matter.
The CFTC staff responsible for this case are Lara Turcik, Nathan B. Ploener, Christopher Giglio, Judith Slowly, Manal Sultan, Kelly Mok, Annette Vitale, Lenel Hickson, Stephen J. Obie and Vincent McGonagle.