By SDCN Staff
San Francisco, CA–A federal jury convicted a New York man on 14 counts of wire fraud, international money laundering, and money laundering. The jury reached its verdict on March 5, following a three-week trial before Senior U.S. District Judge Charles Breyer.
According to court documents and evidence presented at trial, between October 2017 and June 2020, after moving to San Francisco, Douglas Jae Woo Kim, 32, engaged in a scheme to defraud investors, many of whom were friends and acquaintances, of over $7 million in money and cryptocurrency by holding himself out as a legitimate trader of cryptocurrency, a form of virtual currency. Kim falsely represented that he was seeking short-term liquidity in the form of loans or investments for cryptocurrency trading or other legitimate business purposes. He promised to trade or invest in the cryptocurrency provided by investors and lenders to make a profit. He also told victims that the loans carried no or very low risk, promised high rates of return on their loans, and claimed that he had sufficient funds to guarantee the loans personally.
“This case may involve the new world of virtual currency, but there’s nothing new about the defendant’s scheme to defraud,” said Acting United States Attorney Patrick Robbins. “Douglas Kim made bogus promise after promise to investors and lenders, only to cheat them and send their money to offshore gambling sites.”
“Mr. Kim deceived those who trusted him, exploiting their confidence to fund his personal gambling activities rather than the legitimate investments he offered his victims. The FBI remains committed to identifying and bringing to justice individuals who manipulate and defraud others for financial gain,” said FBI Acting Special Agent in Charge Dan Costin.
In October 2017, Kim contacted a victim by text message and said he was looking for investors interested in making what he called a short-term loan for a “fairly modest operation.” Kim represented that he was investing in a cryptocurrency operation in which he would make a profit from fees charged to a peer-to-peer network and from exchange transactions, and informed the victim that the operation “isn’t very risky to me.” Within days of receiving cryptocurrency from the victim to finance the investment, Kim transferred almost all of it to Bitcoin sports betting sites located outside the United States. Kim went on to obtain over a million dollars worth of funds from this victim throughout the scheme, the majority of which went to offshore sports betting sites.
In November 2017, Kim contacted another victim by email and said he was looking for cryptocurrency for a trading strategy. Kim assured the victim that “my activities are fairly low risk.” On Dec. 1, 2017, Kim obtained a cryptocurrency loan from this victim worth approximately $186,000. Once the cryptocurrency was obtained, Kim immediately sent it to offshore sports betting sites. In total, Kim obtained over $500,000 in funds from this victim.
In an agreement dated Jan. 1, 2018, Kim set out the terms of a similar investment with a third victim. The agreement called for the victim to provide cryptocurrency valued at approximately $200,000 at the time. The same day, Kim converted more than half of the funds to bitcoin and, in the following days, transferred substantially all the converted cryptocurrency to his account with an offshore casino. Kim went on to obtain over $4 million in funds from this victim.
Kim defrauded numerous other victims, including nine who testified at trial, until at least July 2020, when he was charged by federal complaint. In 2023, while he was out on pretrial release, Kim allegedly renewed his scheme to defraud. One count related to this renewed period of fraud remains pending.
The jury acquitted Kim of one count of international money laundering.
Kim is scheduled to appear on June 25 to set a date for sentencing. He faces a maximum penalty of 20 years in prison for each count of wire fraud and international money laundering, and 10 years in prison for each count of money laundering.
