San Jose businessman gets federal prison after admitting to $9M in fraud schemes
A San Jose businessman was given nearly three years in federal prison on Monday after pleading guilty to $9 million in fraud, U.S. Attorney Ismail Ramsey announced.
Joon Woo Kim, 58, was given 33 months for fraud schemes involving investors in electric vehicles and defrauding a bank.
Kim was indicted in July 2023 after he induced investors to contribute to a fund he created in San Francisco called the M5 Doctors Fund by making false statements and omissions about the kinds of investments he would make while managing the fund's assets, prosecutors said.
For example, Kim advertised that he would invest assets from the M5 Doctors Fund in securities for Tesla, Inc. and other electric vehicle companies. Instead, he transferred nearly all the funds into a wholesale food company owned by both he and his wife.
From June 2015 through at least March 2022, Kim transferred $4.8 million of these investments into his company. Additionally, prosecutors said Kim misled fund investors that the fund was solvent and still engaging in investment activities.
The second fraud scheme involved Kim defrauding Hanmi Bank by applying for a $3.2 million business loan and $1.3 million line of credit with fraudulent promises and representations.
"Kim gained the trust of his investors due to his impressive profile, which included multiple Ivy League degrees and extensive investment experience," said the U.S. Department of Justice in a release Monday. "Many M5 Doctors Fund investors were non-profit institutions that could invest only in public securities and would not have invested with Kim if they knew the truth, that is, that Kim transferred their money to a private company owned by Kim and his wife. The government pointed out that while Kim drained this fund, he continued to deceive his investors into believing the fund still had money that it no longer had."
In addition to the 33-month federal sentence, Kim will have a three-year period of supervision following his release from prison and will have to pay more than $4.7 million in restitution to his victims. Kim was also ordered to make at least three 30-minute presentations to university MBA classes to inform students about the consequences of engaging in fraudulent business practices and behaviors.
Kim was ordered to surrender into custody on Sept. 3.