A fraudulent investor has been fined $47 million for bilking money from the Korean religious community.
In a British Columbia Securities Commission (BCSC) decision handed down Wednesday, Sung Wan “Sean” Kim, president and director of Cirplus Futures Inc., was permanently banned from the capital markets for behaviour the commission described as “at the top range of seriousness.”
According to Lang Evans, BCSC director of enforcement, Kim targeted members of the Korean Foursquare Church on Princess Avenue in Vancouver to enrich himself.
Evans said the penalty is the largest of its kind ever handed to an individual.
“I think it speaks as clearly as anything to the size of the fraud and how the commission condemns Mr. Kim’s actions,” Evans told Business in Vancouver.
Between January 2007 and July 2009, Kim, via Cirplus, took $15.7 million from 35 B.C. investors and one Korean investor, saying their money would be invested in futures and options through accounts at a carrying broker.
According to the BCSC, the accounts did not exist and the money flowed into Kim’s personal bank account.
“Kim set out to steal the investors’ money,” the BCSC panel wrote. “He lied to them about how their funds would be invested and the returns they would earn.”
“It’s the only time I’ve seen someone use our letterhead to assist and help perpetrate their fraud,” Evans added.
“He put out letters purportedly under our letterhead, signed by a fictitious employee, directing investors to put money into bank accounts that we supposedly supervised and audited.
“All of that, from the top of the page to the bottom, is a complete lie … in close to 25 years I’ve been doing this I’ve never seen that.”
In its decision, the BCSC went on to say investors lost all their money, and at least one individual, who invested $1.4 million, testified he was essentially bankrupt.
Evans said Kim has since fled to South Korea where he was arrested in September 2009 and sentenced to 10 years in prison.
In addition to being banned from B.C.’s capital markets, Kim has been ordered to disgorge the $15.7 million to the commission and pay a penalty of $31.4 million.
Evans said the BCSC will continue to locate Kim’s assets and recover what it can for investors, but it is unlikely the commission will be able to recover any funds.
He added the case is a prime example of the financial illiteracy that is pervasive throughout society.
“I’d advise the investing public on any major financial decision to get a second independent opinion before you commit your funds,” said Evans.
“In this case, if some of these forged documents had been put to an independent adviser, I’m certain we would have been able to detect this earlier.”