San Jose Man Sentenced To Nearly Three Years For Defrauding Investors Of $4.7 Million
SAN FRANCISCO – Joon Woo Kim was sentenced today to 33-months in prison for two fraud schemes – the first, a scheme to mislead investors to contribute millions to an electric vehicle investment fund he formed in San Francisco, and the second, a scheme to obtain multi-million dollar business loans by lying to a bank – announced United States Attorney Ismail J. Ramsey and FBI Special Agent in Charge Robert K. Tripp. The sentence was handed down by United States District Judge James Donato.
On March 4, 2024, Kim, 58, of San Jose, Calif., pleaded guilty to two fraud charges against him, one count of committing wire fraud and the other for making false statements to a bank to obtain a loan. The first fraud scheme occurred from June 2015 through March 2022 and involved creating and running an investment fund that Kim named the M5 Doctors Fund. Kim admitted in his plea agreement that he ran the M5 Doctors Fund, along with a separate management entity M5 Management, with the intent to deceive investors. Kim represented to investors that he would invest the funds of the M5 Doctors Fund in securities of electric vehicle companies, including Tesla, and would always invest only in publicly traded securities. Instead, Kim transferred nearly all the millions invested by investors in the M5 Doctors Fund into a failing private company called CKR Enterprise, Inc. (CKR). CKR was a wholesale food distribution company operated by Kim and his wife and owned by them, among others.
Kim defrauded investors out of $4,690,000 due to his transfer of the M5 Doctors Fund assets to CKR. While this was occurring, Kim continued to mislead investors by sending quarterly reports to them suggesting their money was invested in public securities such as Tesla.
Kim engaged in a second fraud scheme in which he defrauded Hanmi Bank by applying for two loans for CKR, a $1,300,000 line of credit and a $3,200,000 business loan. Kim admitted the bank loan application contained materially false and fraudulent representations. Based on those representations, Kim obtained the proceeds of these loans.
In a memorandum filed for the sentencing hearing, the government argued that Kim gained the trust of his investors due to his impressive profile, which included multiple Ivy League degrees and extensive investment experience. 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.
A federal grand jury charged Kim on June 27, 2023, with multiple counts of wire fraud, bank fraud, and making a false statement to a bank. In his plea agreement, Kim pleaded guilty to one count of wire fraud, in violation of 18 U.S.C. § 1343, and one count of making a false statement to a bank, in violation of 18 U.S.C. § 1014.
In addition to the 33-month term of imprisonment, U.S. District Judge James Donato sentenced the defendant to a three-year period of supervision following his release from prison and ordered Kim to pay more than $4.7 million in restitution to his victims. Kim was ordered as one condition of his supervised release 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 September 3, 2024.
Chris Highsmith is the Assistant U.S. Attorney prosecuting the case, with the assistance of Tina Rosenbaum and Aarian Beti and Victim Specialist Alicia Guevara. The prosecution is the result of an investigation by the FBI.
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