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House flipper Sang-Min ‘Sonny' Kim sentenced to prison time for mortgage fraud

TAMPA — If any one person did his part to topple the local real estate market, it was Sang-Min Kim, a muscular tattoo artist with a taste for expensive cars.

Last year, he pleaded guilty to money-laundering and conspiracy to commit mail fraud in what the U.S. Attorney's Office called one of the biggest mortgage fraud cases it had ever investigated.

Kim, 37, relied on an extensive network of straw buyers, banks, real estate professionals and lawyers for his lucrative real estate scheme, which the St. Petersburg Times first exposed in 2008.

He was sentenced Thursday to three years and five months in federal prison. He also will have to pay $5.8 million in restitution.

"You did this again and again and again," U.S. District Judge Susan Bucklew told him. "There were a lot of people doing what you did and they created this horrible situation in this country. I don't consider this a small crime."

Kim will serve time in a Brooksville federal prison so he can remain close to his 13-year-old daughter. His sentence was reduced from a maximum of 50 years because he cooperated with federal officials in naming cohorts who helped him flip more than 100 homes from 2005 to 2008.

Records show buyers paid Kim $10.7 million for homes he bought in some of Tampa's poorest neighborhoods for $6.5 million. When the housing market collapsed in 2008, the houses Kim sold entered foreclosure, revealing the scope of the scam.

The trail of foreclosed homes was a microcosm of a financial system gone awry.

Shoddy homes with broken windows that were gutted from the inside out somehow managed to get mortgages approved by Wachovia, Washington Mutual, Bank of America, Lehman Bros., Fannie Mae and Wells Fargo — financial institutions that either went bust, survived by merging with other banks or took billions in a taxpayer bailouts.

Kim, also known as "Sonny," hired an attorney, Richard Escobar, in late 2008, shortly after the Times published its investigation. At the time, Kim was building a $1.1 million house in a gated Lutz subdivision. A former neighbor said his driveway at a Pasco home was filled with luxury cars: a Hummer, a Lexus and a Mercedes.

It had been an incredible climb for Kim. For 10 years, he owned Body Design Tattoos, an Asian-themed tattoo and body-piercing parlor on N Florida Avenue.

"Clients were coming to him saying they were flipping like there was no tomorrow," Escobar said. "Sonny was not a financial guy. He just wanted to make a lot of money."

By the time he started flipping homes, it was the real estate agents, mortgage brokers and lenders who told him how. They are the ones yet to be held responsible, Escobar said.

"The stated loans involved in this case are mind-boggling," he said. "What Kim did was wrong, but he didn't concoct this."

Last year, the U.S. Attorney's Office got him to sign a plea agreement that said he would forfeit his properties and assets and cooperate fully with prosecutors as they investigate other suspects.

During sentencing, Assistant U.S. Attorney Rachelle DesVaux Bedke said that Kim was "painstakingly cooperative" and that two additional people were likely to plead guilty because of his assistance. He made monitored phone calls to suspects and wore a wire in meetings.

During one transaction, from which Kim had to ultimately withdraw before it was final, the targeted subject became very agitated and threatened Kim's life.

Even though he was distraught, he didn't blow his cover, DesVaux Bedke said. Prosecutors won't name additional suspects until those investigations are complete.

Escobar said Kim was happy with the sentence because it could have been much harsher. But he said the case points to a larger issue of the banks' culpability.

"It was a mortgage gold rush," Escobar said. "There were no checks and balances. We find people like Sonny here and it should be corporate America. Instead, they're the ones getting bailed out."

Bucklew also pondered the greater role the banks played in the crisis.

"Someone should bring in all the banks," she said. "Someone wasn't watching."

Dressed in an oversized blue suit and with his wife and mother sitting in the courtroom, Kim spoke to Bucklew and appeared apologetic for what he did.

"I'm extremely remorseful and ashamed for my actions," he said. "This is not my true nature."

Kim, who has no prior criminal record, will serve 41 months in prison, followed by five years of probation. He'll have to get a probation officer's approval for any major purchases for as long as the restitution is outstanding and get approved for any credit.

Bucklew ordered Kim to pay 50 percent of what he makes while working in prison. Upon release, Kim will pay $200 a month or more depending on his earnings. If others who participated in the scheme are arrested and found guilty, they will help him pay down that amount.

Shortly before the sentencing, Kim sat alone on a bench outside the courtroom.

"It's been a long journey," he said.

Michael Van Sickler can be reached at (727) 893-8037 or mvansickler@sptimes.com.

House flipper Sang-Min ‘Sonny' Kim sentenced to prison time for mortgage fraud 05/26/11 [Last modified: Thursday, May 26, 2011 9:53pm]
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