Judge Freezes Assets of Hedge Fund Manager

Assets of KL Group, a Palm Beach, Fla., hedge fund manager, were frozen Thursday, one day after the firm was sued by the Securities and Exchange Commission over claims it defrauded investors of $70 million.

Funds affiliated with KL have only $11 million remaining of at least $81 million raised from more than 300 investors between 1999 and last month, the SEC said in a suit filed in federal court in West Palm Beach.

According to the complaint, KL is owned and operated by Won Sok Lee of Singer Island, Fla.; John Kim of Jupiter, Fla., and Yung Bae Kim of Irvine.

The complaint also named as a defendant Shoreland Trading, an Irvine-based broker-dealer that Lee allegedly controlled and that conducted all of the trading for KL’s hedge funds, the SEC said.

While the funds were losing money, KL used forged account statements to show it was generating annualized returns as high as 150%, the SEC said.

U.S. District Judge Kenneth Ryskamp granted the SEC temporary restraining orders, asset freezes and other unspecified relief measures.

Lee, John Kim and Yung Bae Kim did not return telephone calls to KL seeking comment. Tom Kim, a lawyer representing the funds who is unrelated to the defendants, couldn’t be reached for comment.