UPDATE 1-NY investor charged over alleged $4 mln Ponzi scam

Tue Feb 15, 2011 7:08pm EST

* Brian Kim faces 26 felony counts in alleged Ponzi scheme

* Defendant had appeared on CNBC

* CFTC accuses Kim of hiding losses, improper fund use (Updates throughout; adds criminal charges, bylines, second dateline)

By Emily Stephenson and Jonathan Stempel

WASHINGTON/NEW YORK, Feb 15 (Reuters) - A New York investor who has appeared on CNBC television as a derivatives expert has been charged with running a Ponzi scheme that defrauded victims out of more than $4 million, Manhattan District Attorney Cyrus Vance Jr said on Tuesday.

Brian Kim, 35, was charged with 26 felony counts including grand larceny, scheming to defraud and falsifying business records.

The Commodity Futures Trading Commission filed a separate civil enforcement action against Kim and his hedge fund, Liquid Capital Management LLC.

A lawyer for the defendant could not immediately be reached for comment. Kim faces up to 25 years in prison on the most serious count, grand larceny in the first degree.

Vance said that Kim induced at least 45 victims, including some from the technology industry, to make risky and speculative investments by portraying himself as an "accomplished trader and money manager."

Instead, Vance said, Kim diverted client money to himself, while generating large financial losses in trades of "highly speculative" futures contracts.

Vance said Kim is considered a fugitive, after failing to appear in court last month in an unrelated criminal case in which he was charged with stealing money from a condominium in Manhattan's East Village where he lived.

References to Kim's appearances on CNBC appear on websites for both the television station and Liquid Capital.

The CFTC said a federal court has frozen assets held by Liquid Capital, after the firm was alleged to have fraudulently solicited $2.1 million of investments in a commodity futures pool.

That regulator also accused Kim and Liquid Capital of hiding substantial losses.

It said Liquid Capital improperly spent more than $800,000 on expenses including groceries, excursions to upscale retailers such as Coach and Barney's New York, trips to Atlantic City, New Jersey, and skiing in Vermont.

Kim graduated from Dartmouth College in 1997, according to Liquid Capital's website. (Reporting by Emily Stephenson in Washington, D.C. and Jonathan Stempel in New York; Editing by Gary Hill)

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