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British Columbia Securities Commission (LAURA LEYSHON/LAURA LEYSHON for the Globe and Mail)
British Columbia Securities Commission (LAURA LEYSHON/LAURA LEYSHON for the Globe and Mail)

B.C. investing fraud leads to record fine Add to ...

A B.C. investment dealer who targeted members of a Korean religious community in the province has been ordered to pay penalties totalling $47-million after a British Columbia Securities Commission panel ruled he committed fraud.

The BCSC said Sung Wan (Sean) Kim raised $15.7-million from 36 investors, and did not invest their money in futures and options contracts as promised. Instead, most of the money went into his personal bank account, and none was recovered for investors.

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"Kim set out to steal the investors' money," the BCSC hearing panel said in a ruling released Wednesday. "He lied to them about how their funds would be invested and the returns they would earn."

The penalty is a record amount for a BCSC case, said enforcement director Lang Evans. But while the commission will "aggressively" try to seize assets to enforce the latest ruling, Mr. Evans said it is unlikely much can be recovered to pay the penalty.

That is because most of the investors' money was transferred out of Canada before the BCSC could freeze the accounts, and because Mr. Kim is now in prison in South Korea. He was arrested there after fleeing Canada, and was recently convicted of the B.C. fraud and sentenced to 10 years in prison. He is appealing the conviction.

"It is a brazen fraud by this individual," Mr. Evans said in an interview Wednesday. "And it is a tragic story."

Mr. Kim's victims were from the Foursquare Korean Gospel Church in Vancouver, most of them holding dual Canadian-Korean citizenship. Mr. Kim promised them returns ranging from 26 per cent to 60 per cent annually on their investments.

As part of his fraud, he also forged letters purporting to be from the BCSC, falsely saying the commission was overseeing the business of his company, Cirplus Futures. He also prepared fake account statements showing profits earned by investors.

"All of these statements were false," the BCSC said. "Almost all of the investors received no returns and all of them lost their principal."

Most investors gave Mr. Kim hundreds of thousands of dollars, and one testified at the hearing he invested $1.4-million and is now essentially bankrupt.

The commission said there were not mitigating factors in the case, and the panel decided it was appropriate to require Mr. Kim to "disgorge" the $15.7-million raised from investors and pay a further administrative penalty equal to double the amount he took from his victims, or $31.4-million.

He is also permanently banned from acting as a director or officer of a public company or from working in the investment industry in the province.

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