A Queens, New York, man pleaded guilty in federal court in Brooklyn to defrauding investors of more than $1.1 million in a financial derivatives scheme targeting Korean Americans. The local court sentenced him to five years in prison, forfeiture and fines.

Five years in prison for fraudsters

The Justice Department said on Tuesday (March 30, 2021 local time) that Tae Hung Kang, also known as "Kevin Kang," was arrested by federal authorities in 2018 and faces about five years in prison, forfeiture of property and fines.

In its statement, the Justice Department described in detail how the scheme worked. Tae Hung Kang is accused of lying about his trading credentials and duping KoreAn-Americans into opening accounts at his firm, safe Capital Management, to conduct business under the name Forexnpower.

False promises, deceiving the community

The 57-year-old allegedly promised double-digit returns to potential clients and claimed to have a secret algorithmic trading system capable of generating huge profits with minimal risk. However, Tae Hung Kang had little trading experience and his strategy never executed as promised, causing investors to suffer losses of about $400,000.

Tae Hung Kang has agreed to pay $835,000 in compensation to the investors.

In addition, federal prosecutors accused Kang's co-defendant, John Won, of making similar false promises. The two took out ads in local Korean-language newspapers to entice residents of their community to invest their money in shares issued by their company. The victims were told that their money would be used to trade financial derivatives or expand Forexnpower's business.

Eventually, almost all of the money invested in Forexnpower shares was misappropriated by Tae Hung Kang and his accomplices. Prosecutors said they misappropriated nearly all of the investment funds - about $700,000 - for advertising.

Acting U.S. Attorney Lesko said, "Under the plea, Tae Hung Kang is responsible for his fraud and for violating the trust of Korean Americans. Korean-americans invested hundreds of thousands of dollars in Kang's company stock because they believed in Kang's integrity."

warn

A reminder that there are never pies in the sky, only traps. For fraudsters to promote low-risk high-return investments, be careful, even very familiar people do not believe.