The United States Securities and Exchange Commission ("Commission") announced that on June 8, 2004, the Honorable Gary A. Feess, United States District Judge for the Central District of California, issued a preliminary injunction in connection with a $36 million affinity fraud perpetrated by C+ Capital Management, LLC ("C+ Capital") and its principal owner and managing member, Won Charlie Yi ("Yi"), age 34. The Court: (1) granted the Commission's request for a preliminary injunction against C+ Capital; (2) continued to freeze assets of C+ Capital and Yi; (3) prohibited the destruction of documents by the defendants; and (4) ordered accountings from the defendants.
C+ Capital is a Delaware limited liability company registered as an investment adviser with the State of California. C+ Capital is headquartered in Los Angeles, California and operates an office in Seoul, South Korea. C+ Capital and Yi (also known as Won Charles Yi, W. Charlie Yi, W. Charles Yi, Won Chong Yi, and Charlie Yi), engaged in a scheme that targeted primarily members of the Korean community in Los Angeles. The Commission's complaint alleges that the defendants raised at least $36 million by soliciting members of the Korean community to invest funds through C+ Capital. According to the complaint, Yi misrepresented to investors that C+ Capital would establish brokerage accounts at Carlin Equities Corp., a registered broker-dealer, in which Yi would buy and sell stocks on behalf of the investors at discounted prices. He then instructed his clients to make checks payable to "Carlin Corp." The Commission further alleges that Yi not only failed to open brokerage accounts for his advisory clients, but he also deposited the checks into a bank account held in his own name. Yi then provided the clients with fabricated Carlin account statements, and lulled investors when they later sought to withdraw funds from their accounts by giving them various reasons why their holdings could not or should not be immediately liquidated. The Commission obtained a preliminary injunction enjoining C+ Capital from committing securities fraud in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The order also preliminarily enjoins C+ Capital from committing securities fraud in violation of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. A preliminary injunction was not obtained against Yi, since he has left the country and has not been served. The Court did order a continued freeze on the assets of C+ Capital and Yi.
In addition to the relief granted by the Court, the Commission seeks a final judgment against C+ Capital enjoining it from future violations of the foregoing antifraud provisions, ordering disgorgement of ill-gotten gains, and assessing civil penalties. The Commission will also seek a final judgment, after it serves Yi, enjoining him from violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and violations or aiding and abetting violations of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940.