San Jose man sentenced to 33 months in prison for investor fraud

A San Jose man was sentenced to 33 months in prison Monday for defrauding investors and making false statements to a bank to obtain loans, the U.S. Attorney's Office said.

Between 2015 and 2022, Joon Woo Kim, 58, of San Jose, convinced investors to put millions into the M5 Doctors Fund, a fund he founded in San Francisco. Kim told investors their money would be invested in publicly traded securities of electric vehicle makers such as Tesla, federal prosecutors said.

Instead, Kim transferred $4,690,000—almost all of the invested money—to CKR Enterprise, Inc., a failed private wholesale food company he ran with his wife. At the same time, Kim suggested to investors that the fund was solvent and sent them fake quarterly reports that suggested their money was invested in public securities.

In a second scheme, Kim defrauded Hanmi Bank by making false statements on his loan applications. Kim obtained a $1.3 million line of credit and a $3.2 million business loan for CKR based on false statements about his company, prosecutors said.

Many of the investors defrauded by Kim were nonprofit institutions that are only allowed to invest in public securities, prosecutors said in a memorandum filed for sentencing. The investors were persuaded to trust Kim because his resume included multiple degrees from elite universities and investment experience, prosecutors said.

Kim pleaded guilty in March to wire fraud and making false statements to a bank to obtain a loan.

In addition to 33 months in prison, Kim must serve three years' probation after his release and pay more than $4.7 million in restitution to his victims, U.S. District Judge James Donato ordered.

As a condition of his supervised release, Kim must also give at least three lectures to MBA students on the consequences of fraudulent business practices.

Kim is due to be taken into custody on September 3.

Reach Maliya Ellis: [email protected]