U.S. District Judge Kenneth Ryskamp in West Palm Beach ruled that John Kim, 38, head portfolio manager of collapsed West Palm Beach hedge fund firm KL Group, was in contempt of court for allegedly defying an asset freeze by spending money that is to be returned to investors.
Ryskamp cited Kim's use of $384,658 from the sale of a home in South Korea, and $110,000 from selling his wife's Mercedes and his Porsche 911. Investigators say the hedge fund took in more than $200 million from about 230 investors from 1999 to February 2005, when SEC examiners raided KL's luxurious offices overlooking Palm Beach.
KL Group closed March 1 after the SEC and FBI spent two days examining the firm's offices at the Esperante building in downtown West Palm Beach. An investigation by the SEC and court-appointed receiver Guy Lewis, a former U.S. Attorney for South Florida, indicates a shortfall of at least $200 million and perhaps as much as $300 million in KL Group's six hedge funds.
SEC records do not show any Florida hedge fund failures with losses larger than KL Group. An undetermined number of South Floridians were among the investors in the KL funds.
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